Five developments changing the face of the space commerce and governance.
The space race has changed. Fifty years ago, government agencies dominated space. Today, that picture has changed with the space entrepreneur becoming the main actor in the skies above our heads. This evolution poses significant opportunities but also threats to our world today, and for future generations.
Our recent research explores these changing industry ecosystems, and challenges, and specifically the ecosystems that both reflect and enable important developments in the global space sector. [i]
Ecosystems frameworks are valuable instruments for the analysis of nascent markets.
They allow us to:
- explore the diverse types of organisations, firms and agencies, and their interdependencies
- explore the microstructures of collaborations, partnerships and supply chains
- appreciate the shifts and plurality of purposes of different stakeholders.
The space ‘case’ provides a vivid and tangible view of the dynamic nature of industry ecosystems.
Our ecosystem analysis of the global space sector shows how in considering the 'business case for space' leaders need to look at the big picture [ii]. Instead of focusing on individual firms seeking to build a business in space it is crucial instead to look beyond individual firm boundaries and to consider the interplay and emerging forms of collaboration and competition among different groups of stakeholders and economic sectors. It’s also vital in looking at the so-called 'wild west of space' to take into account the lack of relevant regulation of this global commons.
This post, the first of three articles, sketches out five salient shifts in the global space sector and provides an initial working framework for analysis.
1. The rise of space entrepreneurship
The first of these shifts is a dramatic upsurge in entrepreneurial ventures, with over 1,000 space ventures receiving equity investments in the last decade. These are often funded by new era venture capital firms and other early-stage funding activities. These firms generally have a broad focus of using fourth industrial era technologies (e.g. artificial intelligence, robotics, quantum computing). These technologies grapple with and resolve low earth orbit (LEO) challenges like space debris as a hazard for continued development of launch efforts and a threat to initiatives like the International Space Station. As a result, many of these ventures pioneer the use of artificial intelligence capabilities to analyse huge amounts of (satellite-provisioned) data on climate change, migration, agriculture, and more, on earth. They are born in the era and the agenda of the sustainable development goals (SDGs).
2. Private capital fuelling the new wave of growth
This recent wave of private investment funding – equal to more than $160 billion in venture funding since 2009, according to Space Capital, marks a shift from the decades-long primacy of government space agencies. This includes both state-run enterprises and also substantial government funding of early privately run companies such as SpaceX, Virgin Galactic and Blue Origin.
These ventures differed in recognisable ways from this current wave of entrepreneurial activity. They were founded by well-known entrepreneurs with track records in businesses unrelated to space. They benefited from funding that included substantial amounts of government subsidy. This shifted core functions from public sector space initiatives to private firms. One such example is SpaceX taking on responsibility for the delivery of cargo to the International Space Station.
3. Rethinking the purpose of the government space agency
The evolving nature of the business and commercial space race means the purpose of those original government space agencies is shifting, with changes in focus, funding and accountability. These include the founding government space players, including NASA in the US, the European Space Agency and, in Russia, Roscosmos. But the rethinking must also include those two dozen national space agencies founded in recent decades, many of which are located in the global South.
In our research we have also noted growing investments in the development of space-related infrastructure and capabilities at the regional and local level. These include, but are not limited to, investments in developing regional clusters of space ventures, launching facilities for spacecrafts, and a plurality of training and capacity building activities for space entrepreneurs, often in coordination with the work of government space agencies.
4. Complex challenges require new forms of collaboration
In the early days of modern space activity, relationships were often standard government–university ties funding basic research and the legacy of standard government collaborations with incumbent aerospace and defence firms, along with characteristic frames of supply chains and tiered subcontractor relationships. This was shaped by primarily one-way flows of funding (from governments) and mandates (from state agencies).
This situation has changed, per the development outlined in points 1- 3. For instance we observe new space ventures partnering with space agencies to address problem-policy areas like space detritus. We see entrepreneurs using satellite data to help governments solve mobility challenges in large cities, or co-creating solutions for food security in extreme environment, with use cases both on earth and in space.
These emerging architectures of collaboration and competition contribute to further ecosystem complexity for analysis and policy within any view of ‘the’ space sector. The variety of organisational actors bring distinct premises, working assumptions, and cultures, all of which shape the complexity of hybrid activity and governance challenges.
5. Space initiatives will benefit from relevant regulation today and for the long now
Space, limitless and vast as it is, will benefit from more relevant ‘rules of the road’. We are in an era when space has enormous commercial potential. Yet, standards of practice, rules of engagement and conventions are thin, reflecting some accords from the 1970s. And, importantly, organised global debate on the importance of regulating space is also in early days.
On one hand, this absence of law and regulation has spawned descriptions of space commerce as a 'wild West,' where winners can come away with huge gains.
But it also risks becoming another case of a 'tragedy of the commons,' the institutional term for a situation in which individual users, who have open access to a common resource and unhampered by formal rules, act according to their short-term self-interest, potentially contrary to the common good. In relation to space, such a tragedy could have negative repercussions that echoes not only over decades, but over the longer-term in ways that compromise the well-being of Earth and all of us.
For example, the overuse of space resources on behalf of few, the filling of the orbital space with the detritus of rocket bodies or satellites, and the lack of accountability for their removal describe one of several issues that require direct attention.
This situation is freighted with potential for difficulty: Too often this sector is characterised by a restricted view on technology as both enabler and complete solution, unconnected with core questions of ethics and governance; the lack of engagement of humanists, artists and others, whose perspectives and expertise can serve to enrich and deepen the foundational and fundamental questions that scientists explore in more discrete focus.
The focus on ecosystems provides a fresh view for space analysis, commerce, and policy. Current work on ecosystems in social sciences research starts from basic interdependencies around technologies, enabling infrastructure, the role of complementary assets, emerging forms of collaboration among a plurality of organisations from the public and private sectors, and the novel capabilities required to operate in such context.
These developments suggest that conventional strategy analysis may not have the tools to analyse and propose policy for the unsettled area of the global space sector and the variety of component industries, markets, and fields of activity that comprise this heterodox ‘sector.’ These developments point to the further promise of integrating edge research in strategy on ecosystems, with two partner research fields: work in the tradition of Nobel prize recipient Elinor Ostrom on the potential for solutions to the governance of the commons and work from contemporary theories of institutions, organisations, and activity fields.
[i] We appreciate financial support for this work from UK Higher Education Innovation Fund (HEIF), ESRC IAA Stage 1 Knowledge Dialog funding, along with the insights from many professionals across the space ecosystem and especially recent alumni from Saïd Business School who are working in the space sector. We also benefit from ongoing conversations with the Oxford Space Initiative team.
[ii] We chronicle specifics of the space ecosystem case in a recent article: Rottner, Sage and Ventresca, 2021 in Enterprises et Histoires.