Integration of Small Technology-Based Firms in Aeronautics

This paper examines the role of small technology-based firms (TBF) in aeronautics industrialization processes. In particular, given the susceptibility of these firms to the changing nature of industrial production, it focuses on the integration and growth of small TBFs in aeronautics supply chains. We use the case study of Embraer, the Brazilian firm that leads the regional aircraft segment, to uncover processes through which small TBFs can integrate its supply chain, creating value and enhancing regional technological capabilities. This case is of particular relevance since Embraer pioneered the introduction of risk-sharing partnership for product development in aeronautics, followed by other aircraft manufacturers, which led to significant changes in the supply chains structures. Based on 100 semi-structured interviews with leading experts in Brazil and Portugal, our research shows that aeronautics inherent specificities impose several challenges to the integration and growth of small TBFs into the aeronautics supply chain. We identify 11 main challenges for the integration and growth of small TBF suppliers in aeronautics, and 5 major reasons why despite these challenges, some of these firms make the strategic decision of entering this sector. In addition, we argue that small TBFs should be promoted through regulatory frameworks that take into account the aircraft development process.