Satellite services, the Moon and Mars: from the entrepreneurial State to entrepreneurs in space

The space economy encompasses economic activities ranging from Earth’s orbit, with satellite services and commercial space stations, and beyond, with missions to the Moon and Mars. Government initiatives have traditionally dominated the space economy. But thanks to strategic public procurement, private companies are getting involved in developing technologies, which in turn has led to the creation of competitive business models, as I report in one of the studies in my doctoral dissertation.

Today, government strategies are setting their sights on the Moon once again. The aim is to exploit business opportunities, as reflected in NASA’s Artemis Accords, recognizing the key role of the private sector in developing and deploying space technologies, and encouraging private capital investments to materialize these innovations.

The European Space Agency (ESA) is also rolling out initiatives to onboard European companies in developing complete payload delivery services to and from space stations in low Earth orbit by 2030. ESA is also working on lunar communications and navigation services, as well as the lunar infrastructure needed to support commercial and institutional missions. All this is fostering the development of an actual Lunar Economy.

Thanks to Public-Private Partnerships (PPPs), the State aims to attract long-term investments and develop commercial applications, building solid, sustainable infrastructures. This represents a major paradigm shift: we’re moving from projects backed exclusively by public funding to models in which risks and benefits are shared with private players, to include infrastructure development, which necessitates long-term investments.

Several specific influencing factors determine the role of the State in the space economy and the relative results. Therefore, an analysis of the State’s role must begin with an investigation of these factors. Based on prior studies, to build our model we considered the following: technology readiness, top-down initiatives by public players and bottom-up initiatives by private players, market opportunities, public procurement, and governance mode. These factors emerge from interactions between public and private players, offering a more thorough understanding of the dynamics and complexity of the expanding collaboration.

Consequently, the role of the State and the relative results vary depending on these factors. Here are the roles we identified (with examples of each):

• entrepreneur, in lunar missions
• facilitator, for commercial space stations
• client, for satellite services

The interaction between influencing factors and the role played by the State has a significant impact on specific results indicators built into our model, pertaining to the effects of the actions and strategic decisions of the State. These results include innovative business models, complementary economies, and enabling technologies.

The US has taken up a leadership role with NASA’s strategic procurement models, such as PPPs, which encourage private investments and accelerate the commercial development of space. But Europe is still playing the part of the follower. To guarantee sustainable business models and promote competitiveness, it’s essential to avoid excessive dependency on public funds, especially at a European level. Indeed, when companies become too dependent on public resources, their incentive to stay competitive may slip.

Here are the fundamental factors to foster a competitive innovative ecosystem:

• Avoid redundant R&D investments. Mitigate market fragmentation and optimize the use of available resources.
• Implement specific policy measures to attract private capital. Guarantee sustainable financing for the companies involved in space projects, including fiscal incentives, co-financing programs, and a regulatory environment that facilitates private investments.
• Consider new approaches to public procurement, striking a balance between public investments and private contributions. This would encourage companies to pursue innovative solutions, enhancing their effectiveness and ultimately contributing to the sustainable growth of the space economy.
• Promote strong integration in the industrial sector: Avoid allowing obsolete technologies or operational delays to discourage private investments, and incentivize transnational collaboration, facilitating partnerships between companies in different sectors.

Clelia Iacomino, “The Transformative Role of the Entrepreneurial State: Evidence from the Space Economy,” in Space Economy Innovation Policies, Public-Private Collaborations and Companies’ Strategies, doctoral thesis in Management and Innovation, Università Cattolica, Milan.