Research on the Value Creation Process of Investments in Defense Innovations

Abstract

Changes in the European security environment after 2022 have reinforced the need to view defense innovation not only as the creation of technological solutions, but also as a coherent process of investment, institutional coordination, testing, and practical application. This topic is relevant due to growing defense funding, an increasingly active defense technology sector, and the need to ensure that investments in innovation generate real operational, strategic, and economic value. The research problem arises because, in emerging defense innovation ecosystems, the stages of funding, technology development, testing, validation, and practical application are not yet sufficiently integrated into a cohesive value creation process. Due to institutional fragmentation, insufficiently clear end-user involvement, and a limited transition from prototype to pilot procurement, some innovations risk failing to overcome the “valley of death” and failing to achieve actual use in the defense system. The aim of the study was to provide recommendations for improving the value creation process of investments in defense innovation within the defense innovation ecosystem and to develop a conceptual management model of this process for the defense industry sector. The main objectives of the study were to analyze the scientific literature on innovation management, value creation processes, and the specifics of defense innovation ecosystems; to assess the structure of the value creation process for investments in defense innovation, determine its main stages, and identify key problem areas that affect investment effectiveness and the practical application of innovations; to present a conceptual model for managing the value creation process of investments in defense innovation and directions for its application. To achieve the research objective, methods such as scientific literature analysis, process analysis, expert assessment, in-depth interviews, and comparative analysis were employed, enabling the integration of theoretical insights with practical expert evaluation. The research results showed that the defense innovation ecosystem is characterized by growing activity, but the value creation process for investments in defense innovation remains fragmented: the stages of funding, testing, validation, end-user involvement, and procurement are not sufficiently integrated into a coherent chain. Data from the expert study revealed that the greatest problem areas arise during the transition from prototype to practical application; therefore, it is necessary to strengthen institutional coordination, pilot procurement mechanisms, testing infrastructure, and funding continuity at TRL stages 6–9.