Knowledge Management and the Adoption of Innovation in

Defence: The Case of PeSCo

Megghi Pengilia* and Tamiris Santosb

a Megghi Pengili is PhD Candidate, School of Politics and International Studies at the University of
Leeds. She is ass. Editor for the Civil Wars Journal. She is also a non-Resident Fellow at the
International Cyber Research Centre Blavatnik, Tel Aviv University (2021-present) sponsored under
the Rafa and Paula Atlas Endowment.

b
Dr. Tamiris Santos is a postdoctoral researcher at the Federal University of Rio Grande do Sul
(UFRGS) with a PhD in International Strategic Studies. Her research was sponsored by a
CAPES/Brazilian MoD grant in the scope of the Procad Defesa Project. She’s also a PhD student at
Cranfield University.

1
Knowledge Management and the Adoption of Innovation in Defence: The
Case of PeSCo
Megghi Pengili* and Tamiris P. Santos†
*University of Leeds, UK
Email: ptmp@leeds.ac.uk
†Centre for Defence Management and Leadership, Cranfield University, UK, and
Federal University of Rio Grande do Sul (UFRGS), Brazil.
Email: tpsantos88@gmail.com / tamiris.santos@ufrgs.br

speaks to the foundations of a multinational

Abstract - The EU Global Strategy's 2016 call for
enhanced cooperation in security and defence
from a "shared vision to common action" set the
clock ticking for Europe, which eventually led to
the establishment of the Permanent Structured
Cooperation (PeSCo) in December 2017. The
European Union pushed for a change in status
from “soft power actor” to “strategic actor,” or
the ability to pursue its political objectives using
hard power means. While PeSCo gave the EU an
air of hard power, defence integration was also
supposed to permeate other sectors in line with
the values of the European Union (EU) project.
In this regard, the governance and legislation
of this capability package, as well as its
procedural and structural processes, are of
current interest in the defence scholarship on
PeSCo. Theoretical explorations of Member
States' (MS) cooperation under PeSCo have also
begun. The connection between Knowledge
Management and the implementation of this
forward-thinking security policy has not been
explored until now. KM processes like knowledge
acquisition, knowledge re-use, knowledge sharing
and adoption are reflected in PeSCo
development, implementation, and operation,
indicating that KM is important to this type of
organisational structure. To fill this gap in the
literature, we will look into how the flow of
knowledge and its management affects the
adoption of PeSCo as an innovative arrangement.
As part of this process, we will investigate the
inner workings of the chosen operational and
capability projects, as well as the management of
this policy. As such, we hypothesise that the EU,
by adopting PeSCo, lays the groundwork for an
EU and multinational defence ecosystem and an
organised defence market. Therefore, we chose to
investigate two different projects: the European
Medical Command, which is already up and
operational; and the Materials and Components
for Technological EU Competitiveness (MAC-
EU), which is still going on. The EMC project
defence ecosystem created through multi-actor
knowledge distribution and institutionalisation.
The MAC-EU being centred on the development
of the European Defence Technological and
Industrial Base (EDTIB) could set the basis for a
Single Defence Market for the EU.
The cases support our investigation once
they consist of a field-based example of KM in
action and the potential for boosting regional
technological competitiveness, respectively. On
top of that, we aim to show how and why KM is
relevant in translating this innovative structure
into practice within European defence. We'll use
causal loop diagrams (CLDs), a technique for
modelling systems, to show how these dynamics
worked and how these projects were adopted.
I. INTRODUCTION
The Permanent Structured Cooperation
(PeSCo), the ‘sleeping beauty’, woke up when the
EU Global Security Strategy (2016) called for the
Union and its Member States (MS) to move from ‘a
shared vision to a common action’ with a twofold
purpose. First, as Jean Claude Juncker, former
President of the European Commission, stated ‘the
protection of Europe could not be outsourced any
longer’[1], and second, the defence integration would
spill over into other areas to foster the completion of
the European project through the achievement of the
European sovereignty. In this stance, one question is
raised: how to replace experience in defence issues
by vision for the defence? In this regard, Toffler
argued that the coming struggle for power will
increasingly turn into the struggle for the distribution
of knowledge[2, p. 81]. Applied to our case,
understanding ‘how and to whom knowledge
flows’[3] creates learning opportunities for the MS
and EU institutions to enhance cooperation
horizontally (MS level) and vertically (MS-EU
institutions) and to harmonise their strategic interests
by aligning their defence apparatuses under PeSCo.

2
This way, organisational knowledge would turn into
organisational power, therefore, adding to the EU
strategic autonomy in the world affairs
Until now, the extant literature in defence
reflects the scholars’ interest in PeSCO’s procedural
and structural processes. Theoretical explorations of
Member States' cooperation under PeSCo have also
begun. The connection between Knowledge
Management (KM) and the implementation of this
forward-thinking security policy has not been
explored until now. To fill this gap, we will look into
how the flow of knowledge and its management
contributed to the adoption of PeSCo as an
innovative arrangement by exploring the
interrelationship between KM, Organisational
Learning (OL) and Learning Organisation (LO) and
their connection with innovation in a broader sense
and, next, apply the rationale to address two PeSCo
projects: the European Medical Command (EMC)
and Materials and Components for Technological
EU Competitiveness (MAC-EU). As explained
above, the cases support our investigation once they
consist of a concrete example of KM in action and
the potential for boosting regional technological
competitiveness, respectively.
In order to present our research, we organised
this paper into four subsections, followed by
acknowledgements and references. They are the
conceptual background, methodology, discussion of
the case, and conclusion. The first draws on a brief
theoretical debate on key concepts such as
organisational learning and innovation, how they
relate to defence and from which standpoint we
proceeded with the discussion in this paper. In the
second subsection, methodology, we present the
approach used to address our case study, causal loops
diagrams, including thoughts on the limitations and
contributions that this approach brings to the analysis
of qualitative data. The third section is the case
study, illustrating the mentioned PeSCo projects.
The last section is our conclusions, which includes
our last remarks, insights, and research
opportunities.
II. CONCEPTUAL BACKGROUND
Our conceptual start point was assuming that the
EU, including its common policies such as the
Permanent Structured Cooperation (PeSCo),
corresponds to a learning organisation (LO) in the
sense that the organisational learning process (OL) is
not only envisaged but applied. Although there is a
lacunae across the literature regarding how to
address the learning process and what consists of a
LO[4]–[6], particularly considering the defence
context, our assumption was based on the fact that
3
inclusivity and modularity of PeSCo character is
built upon lessons learned/ knowledge built mainly
from the experience in NATO initiatives where MS
take part.
For this study purpose and based on Bontis et
al.’s approach we focus the level of analysis for
organisational learning at the macro and the meso
levels. PeSCo is hereby addressed as if it was an
organisation, while the MS clusters would
correspond to the group level[7]whenever we refer to
the flows of knowledge and exchanges in the context
we aim to present. The relationship between the two
levels of learning as per Bontis et al follows the
communication of to the two-level governance and
workflow in PeSCo: information integrated at the
group level is institutionalised at the organisation
level.
Lastly, we address innovation as the process of
acquiring, sharing, and assimilating knowledge with
the goal of producing not only new knowledge but
also other intangible assets such as methods,
techniques, approaches, and processes, as well as
tangible assets such as services and products[8], as
there is no consensus in the literature on how to
address this concept, including in the military and
defence debate[9].
Based on a literature review on KM, which
connects this concept with OL, LO, effectiveness
and innovation[8], [10]–[22], we could infer that KM
consists of an encompassing set of procedures,
practices and techniques aiming to create, acquire,
capture, disseminate and use knowledge in order to
enhance the organisational performance and
learning[4]. KM, in this sense, encompasses a set of
means with which knowledge flows within an OL
context, enabling not only the construction of
organisational memory[23] (and knowledge), but also
the possibility of increasing organisational
performance and carving the path to innovation,
herein addressed as new knowledge too, putting the
referred organisation into a continuous learning
loop[4], [19], [22].
Due to the different appropriations of KM across
the literature, reaching such an instrumental concept
demands some review effort, with particular
attention to Alvesson and Karreman's criticisms[10],
but it is not fully addressed in this paper as the
conceptual discussion is not its focus. Although
instrumentally oriented and based on a non-
exhaustive perspective of KM, our aim was to
illuminate a central defence issue in contemporary
Europe by means of this concept, as we understood
KM played a relevant role in “waking up PeSCo
from the dreams” and bringing it to the real world,
where the EU faced challenges in holding the
responsibility for a more autonomous defence
ecosystem which contributes to the Union’s strategic
autonomy[24]. Cooperation in PeSCo has reached 60
projects in seven fields engaging investments under
the European Defence Fund of €7.9bn reflecting a
balance between the EU Level of Ambition and its
pragmatic objectives[24].
In this regard, and based on the literature[4], [7], [8],
[25]
, we understand that upon PeSCo adoption, the
MS could benefit from an organised arrangement in
which their knowledge could reverberate across a
supranational level and could also have the means to
integrate such collaborative knowledge and efforts
back, translated into organisational actions with the
potential to develop innovations. KM acted
reinforcing this knowledge exchange and translation
into actions.
However, every process has gaps and challenges,
and knowledge management, as a potential
effectiveness and innovation enabler, was no
exception. As an organisational arrangement, such
gaps also extend to PeSCo, in such a way that
identifying the role played by KM includes also
identifying the impacts that those gaps bring in,
which will be discussed in detail in the fourth
section, after providing the means we used to address
KM dynamics. Thus, in the following section, we
will clarify how we translated this discussion into a
systemic approach by illustrating how these concepts
and variables connect within the learning and
innovation context.
III. METHODOLOGY
We illustrated the dynamics within PeSCo by
using causal loop diagrams along with the
conceptual basis previously mentioned, particularly
based on Rudawska[4], and an adaptation of stocks
and flows alignment based on Bontis et al[7] for the
following reasons:
1. Causal loop diagrams (CLDs) are largely used
to capture and illustrate the hypotheses of the
dynamics of systems[26] and are particularly
straightforward to show the feedback loops
occurring in PeSCo, as well as their impact.
a. Given that feedback loops are mechanisms
that reinforce a specific behaviour in the
system[27], identifying and addressing them
is useful for providing a dimension that
changes in PeSCo could cause.
b. Given that CLDs are supposed to
communicate the central feedback
structure of a system[26] and the basis of our
hypothesis rests on the feedback role
performed by KM within PeSCo, such an
approach converges with our aims.
2. CLDs can also be used to organise and illustrate
individuals’ mental models (here PeSCo MS)
4
providing greater clarity as they rely on an
underpinning rationale that is methodologically
supported[27], [28]. In addition to those reasons
and the didactic purposes relying on these
diagrams’ straightforwardness[26], the
possibility of replicating general models to
assess other cases, be them attaining to our
specific case or not, is a relevant trait to be
considered.
For the reasons stated, we took the following
steps to construct a general diagram based on the
conceptual background discussed and the system
behaviour deduced from the theoretical debate
about knowledge management, organizational
learning, and innovation.
1. Recovering the research questions and the
central claim.
a. General question: What is the role of KM
in the adaptation of innovation and its
implementation?
b. Specific question: Which role did KM play
in the implementation of PeSCo as an
innovative organisational structure?How
do we measure it? What factors support or
hamper KM?
c. Central claim: as an innovative defence
policy, PeSCo lays the groundwork for a
multinational ecosystem and organised
market in the European Union (EU). If KM
plays an underpinning role in the
implementation of PeSCo, it is possible to
infer that an effective KM is the basis to the
establishment of a multinational EU
defence ecosystem and harmonised
defence market.
2. Establishment of the key variables to assemble
the analytical model (stocks and flows). Stocks
of learning is the capital of information that
resides within the group and the organisation.
The stock is accumulated from learning, while
flows is the processes of learning itself at both
levels.
a. Adapting Bontis et al. approach[7] to our
case, by excluding the individual level. We
therefore make the following
considerations.
i. Addressing the group level as PeSCo
State-members (and their projects) and
the organisational level as PeSCo itself.
ii. Establishing the stocks of the system:
group level and organisation level
learning are stocks that act as inputs for
the organisational knowledge stock.
Innovation will also be considered as a
 stock, being an output and an input for
a new learning/knowledge cycle.
iii. Feed-back and feed-forward learning
addressed as knowledge flows in the
system, affected by feedback loops
(that can reinforce or balance these
flows).
iv. Knowledge management processes
were identified as reinforcement
loops[26] once they are supposed to
intensify the knowledge flows or their
effectiveness before they are
transformed into organisational
knowledge and after, when such
knowledge is transformed into actions.
v. The barriers or gaps to knowledge
management were identified as
balancing loops[26], affecting the flows
of the system as well as the stocks and
envisaged outputs.
3. Establishment of the causal relation involving
the variables identified.
a. Innovation was understood as an output
and a function of organisational
learning translated into organisational
actions upon effective knowledge
Figure 1 - Causal Loop Diagram for the dynamics of organisational learning, knowledge management and innovation
Source: Elaborated by the authors (2022).
5. Presenting the diagram rationale, how it works,
limitations, and possibilities.
The diagram rationale:
a. Organisational learning and group level
learning present flows of knowledge
exchange. Both the result of this exchange and
5
management application[8], [10], [14], [25],
[29]–[31]
. In other words, it is possible to
understand that organisational learning
corresponds to the "means," knowledge
management processes to the "ways,”
and innovation and effectiveness as the
“ends”.
4. Sketch of the general CLD
The following diagram, illustrated in Figure 1,
was sketched based on the previous steps
mentioned using a modelling software, Vensin
PLE 9.3.4. The CLDs from the following section
were also sketched using the same software. It
illustrates the general organisational process
discussed in the previous section, starting with
the group level and organizational level learning,
which culminates into organisational knowledge,
which translates into organisational actions and
yielding in innovations, closing an organisational
learning loop. Such a loop counts with flows of
knowledge exchange between the group level and
the organizational level, as well as reinforcing
and balancing feedback loops.
the amount of knowledge each level acquired
will compose the organisational knowledge.
b. Such knowledge exchange is subject to the
action of balancing loops (the knowledge
management gaps) and reinforcing loops (the
knowledge management processes).
c. Knowledge management acts as a
reinforcement loop once it enables not only a
greater alignment between group learning and
organisational learning, but also as its
 processes comprise knowledge creation,
organisation, storage, sharing and
[8]
utilisation . The workflow in PeSCo
exemplifies this: projects initiated at MS level,
examined by the Secretariat, approved by the
Council to be lastly implemented at cluster
MS level engage all the knowledge processes
mentioned above.
d. The more gaps, the more barriers to
knowledge flows and their translation into
effective organisational actions, increasing the
challenge to generate innovation.
e. Innovation generation, as well as
organisational effectiveness is conditioned to
the organisational actions and their
performance in translating the organisational
knowledge and memory into new tangible and
intangible assets that could be aggregated as
innovation to the group and organisational
learning levels.
f. To summarise, the diagram depicts
organisational knowledge as the sum of lessons
and experience learned and transmitted within
the group and organisational levels. KM works
by reinforcing not only the creation of
knowledge but also its translation into
organisational actions, which can lead to
innovation; and, finally, the repetition of the
organisational learning cycle.
How the diagram works for the case study:
a. By depicting the role of knowledge
management within PeSCo.i.e. what knowledge
is created at group level for example to
conceptualise a package project. What
knowledge informs the need for that project and
what knowledge should be integrated to realise
the project.
b. By depicting at what portion of the process
barriers to the KM could impact on the
effectiveness of the projects and their
continuity. For example, considerations are
made regarding the diversity of strategic
cultures of MS, on the protectionism that
characterises the national defence industries…
c. By stressing the relationship of organisational
learning cycles at project and PeSCo levels, and
KM application as innovation enablers
The CLD approach limitations and possibilities:
a. The analytical basis was inferred from the
observation of the existence or absence of
mechanisms within PeSCo. There was no
analysis regarding effectiveness or capability
to generate innovations, as such assessments
6
would require further specific inquiry,
particularly the use of in-field techniques,
such as surveys and interviews with project
officers from the national defence institutions
or the industries involved in EMC or MAC-
EU projects, or other PeSCo projects.
b. Given the absence of in-depth information
collected through secondary sources, it was
not possible to provide an evaluation based on
quantitative indicators. However, the sketched
model can be validated provided further
inquiry and in-depth data availability,
similarly with the cases addressed by Bontis et
al[7].
c. The model offers the possibility of diagnosing
MAC-EU and EMC specific and general gaps
within the organisation, as well as potential
replicability to other cases.
d. It also provides further insights as an
additional qualitative tool of analysis through
an alternative approach compared to that
commonly addressed by social sciences.
While most discussions on military innovation
and defence organisations are based on a
variety of methodological approaches to
analyse qualitative data[32]–[34], the majority of
which are linear in nature, such as
comparative politics, path dependence,
comparative historical analysis, and grounded
theory, to name a few, our decision to use a
systemic approach to address our case studies
was based on bringing an alternative path as a
contribution to the field.
IV. DISCUSSION AND THE CASE
Based on Figure 1, it is possible to infer that
innovation requires previous organisational
knowledge and a converging stock of OL emerging
from the group and the organisational level. This
structure corresponds to the basis of effective
organisational actions that could be translated into
innovations. This means that before PeSCo, the EU
necessarily had to act as a LO, converging the MS
knowledge and experiences into the cooperation
policy in defence that posed the mentioned novel
organisational arrangement. PeSCo operates through
EU institutions and agencies that are directly and
indirectly involved in governance and workflow. Yet,
most intergovernmental institutions (except the EU
Council) are directly involved, while the
supranational institutions are not. The actors/bodies
involved in PeSCo’s workflow are organised into
three divisions: the decision-making/managerial, the
secretariat, and the advisory/coordinative, with
respective functions and roles assigned as per the
Council Decisions 2017/2315 and 2018/909[35], [36]
 The workflow initiates with MS proposing
projects in line with the PeSCo Level of Ambition
(LoA) while informing other members through the
CODABA platform launched in April 2018. Here we
see the OL process driven by knowledge integration
as per Bontis et al [7] Once consolidated, the project-
proposals are submitted to the Secretariat in which
EDA assesses the capability dimension of the
proposals and makes sure that there is no duplication
with ongoing projects. Next, EEAS together with
EUMS evaluates the operational dimension. On this
basis, the High Representative prepares a report
identifying the eligible projects for execution to be
handed to the Council for a final decision. Again,
referring to Bontis et al [7], this is where we reach
organisational learning through instuionalised
knowledge.
However, despite being a novel organisational
arrangement with the aim of laying the groundwork
for a more autonomous and sovereign Europe, PeSCo
presents considerable structural gaps that affect not
only the successful implementation of its projects but
also its organisational capability to manage
knowledge, promote innovations and OL on a
continuous basis. Based on the KM literature and the
information available on the projects selected for this
paper and the other projects in general, we observed
that those gaps act in the opposite sense to KM; while
the latter reinforces the knowledge flows through
processes, systems, etc., enabling organisational
knowledge, memory and translation into actions, the
gaps consist of barriers to the KM, acting as balancing
loops. Those balancing loops (gaps) were categorised
and identified as opposite to the KM processes,
implementation requirements and enablers[11], [14], [25],
[29].
We’ve described them on Table 1.
Type of gap Description
Cultural gap The (reflection of or) absence
of effective mechanisms of
sharing not only information,
but values crafted upon a
common ground towards a
shared goal.
Leadership gap The (reflection of or) absence
of effective mechanisms that
hold a leader accountable or
directly responsible for
guiding the involved partners
and the processes until
completion. Lack of
ownership is also related to
this gap.
7
Strategic gap The (reflection of or) absence
of clear guidance and/or
milestones providing ground
for further actions in the long
term e.g.: clarity of goals,
mission, lines of action etc.
Technological gap The asymmetry of access or
capability to manufacture
technological or high-
aggregated value assets. Also,
a reflection of economic
asymmetry.
Table 1 - Gaps to the KM processes
Source: Elaborated by the Authors (2022), based on [14], [25],
[29].
Based on studies about the foundation of PeSCo
and its institutional framework, we understand that
the efforts were in place to counter the effect of the
mentioned gaps. The main examples are the actions
of other bodies along with the PeSCo Secretariat,
such as the European Defence Agency (EDA) and the
European External Action Service (EEAS)[34],[35], the
existence of binding commitments[39], the report
mechanism made available by the Coordinated
Annual Review on Defence (CARD)[40], the
Europeanisation as a cultural mechanism to promote
synergy among the MS, the investment in knowledge
sharing across different electronic portals and web-
based tools, and the possibility of MS late joining in
“Category B” projects ruled by the EDA[40], [41].
Nevertheless, the gaps presented in Table 1 are a
reality. Divergent economic capabilities are a reality
among the MS, which, by the way, corresponds to one
of the challenges embraced by PeSCo by fostering
complementary industrial capabilities and facing the
instabilities of international politics)[37], [40], [42], [43, p. 63].
But the most flagrant challenge to the organisation
corresponds to the lack of accountability and
compliance mechanisms apart from the binding
commitments and reliance on the good faith of the
MS, which is expected to commit to the projects until
their completion. On the other hand, once there are no
sanction or enforcement mechanisms, pMS and other
third countries-to which invitation might be
extended-) are encouraged to join projects. On the
other hand, there are no guarantees that the projects
will be completed.
Also, PeSCo still doesn't present clear long-term
goals or systematic ways to figure out which projects
should be the most prioritised, even though its scope
and number of projects are growing. These flaws
manifest as the gaps listed in Table 1 and reinforce
the balancing loops, undermining the knowledge
management and effectiveness processes
implemented.
 In this sense, bringing innovation becomes a
more difficult task amidst the interactions between
participating member states (pMS), the entire group
of MS at PeSCo, the flows of knowledge, OL, the
Figure 2 - Causal Loop Diagram for PeSCo, identifying structural gaps and available organisational resources
Source: Elaborated by the authors (2022).
As we progress through the cases, the next two
CLDs will discuss the European Medical Command
(EMC) and the Materials and Components for
Technological EU Competitiveness (MAC-EU), as
well as the identified gaps selected for the reasons
mentioned above (see introduction) The Figures 3 and
4 will demonstrate how KM fits into PeSCo as a way
to improve knowledge flow and potentially enable
innovation.
Figure 3 illustrates a CLD for the EMC. It is
pretty similar to the CLD in Figure 2, but there are
some substantial differences related to the project
specifically. All the additional and specific factors
enhancing the balancing and the reinforcing loops are
underlined only for easier identification purposes.
These four additional traits caused significant
differences compared to PeSCo CLD, once:
1. The pMS involved in the EMC were involved
in a previous experience at NATO, the Centre
of Excellence for Military Medicine
(COEMED) [44].This factor not only mitigates
the effects of future technological gaps but also
increases knowledge flows that are transformed
into organisational knowledge and memory,
adding to the easiness of absorbing and then
adopting innovation.
2. The project presented clear objectives and a
robust basis coming from NATO[44], [45], as
8
supporting forces of KM, and the undermining forces
of the gaps. We represented these structural dynamics
illustrating the factors of reinforcement to the loops
in Figure 2.
the lack of a strategic goal was not present in
the CLD either. However, as this project was
partly dependent on civil-military
cooperation, greater attention was demanded
to avoid transforming the ethos differences
into an unbridgeable cultural gap.
3. The constitution of MMCC was also an
enhancement factor to knowledge
management since the project could rely on
previously established interoperability
among the pMS[46], [47].
4. Lastly, the increase in the number of pMS
engaged in the project, with enhanced
cooperation, coordinated effective actions
towards achieving a greater interoperability
degree with NATO through the pMS
engagement made possible with the creation
of this command. This achievement laid the
groundwork for the generation of new
knowledge, procedures, best practices, and
assets for the pMS, PeSCo participants, and
the EU as a whole[48], [49]. Thus, despite co-
existing with PeSCo structural gaps, the
EMC was successfully implemented with the
support of policy learning formed by
previous organisational experience and
effective KM.
Figure 3 - Causal Loop Diagram for the European Medical Command, a completed project within the scope of PeSCo
Source: Elaborated by the authors (2022).

Figure 4 - Causal Loop Diagram for the MAC-EU, an ongoing project within PeSCo
Source: Elaborated by the authors (2022).

Figure 4 shows that, unlike the EMC, MAC-EU acquire greater sensitivity when it comes to dealing
lacks a clear strategy, despite the fact that it has the with defence industry base and market, particularly
potential to be a game changer in assisting Europe in due to the investments performed in terms of
establishing an organised defence ecosystem, budget, personnel, research and development, and
particularly when it comes to developing a common so forth. Even though EDA’s support is a
agenda for the pMS defence industry. significant asset to be considered[50], acting as a
For the sake of accuracy, it is not possible to assess reinforcement loop along with PeSCo secretariat
the project as a whole once it is ongoing. However, by and countering potential technology and leadership
assembling a CLD for this project, it was possible to gaps with “Category B”, the lack of mechanisms to
observe that, in addition to the structural gaps hold the pMS accountable still provide an uncertain
presented by PeSCo—and illustrated by Figure 3— terrain.
there are other factors affecting the dynamics of the 2. Despite being strategic for the EU and providing
loops which could undermine the project's the defence industry support in the development of
performance. They are underlined just for joint capabilities to manufacture sensors, radars,
representation purposes and are discussed as follows: and other electronic components whose market is
1. The lack of accountability and compliance highly restricted[51], [52], the presence of multiple
mechanisms along with clearer strategic goals stakeholders within the scope of a potential

9
 European Defence and Technology Industrial
Complex (EDTIC)[53] corresponds to a significant
enhancement of gaps, particularly due to the gaps
mentioned in the previous point.
3. Another enhancement for the illustrated gaps is the
lack of prioritisation mechanisms, not only within
the scope of PeSCo and EDA but also within the
MAC-EU as it envisages dealing with multiple
stakeholders and components.
4. Lastly, complementarily to CARD, the presence of
the Annual National Implementation Plans (NIPs)
increases the information sharing among the pMS
and is a relevant enhancement to KM, being both
under the PeSCo secretariat’s scrutiny[38].
However, such reinforcement and the coherence
with the commitment degree involved in this
cooperation effort[54] seem timid compared to the
challenges imposed by bringing more actors and
their interests into consideration.
Thus, even though there are relevant possibilities
lying ahead of this encompassing project, PeSCo
structural gaps along with additional factors enhancing
balancing loops within the MAC-EU dynamics
impose limitations to the performance of KM in the
project and leave room for uncertainty regarding its
capability to generate innovation. This is not only due
to the fact that the project is still ongoing; however,
compared to the EMC experience and CLD, it is
possible to infer that having a previous stock of
organisational knowledge along with KM provides a
more robust ground to cope with the organisational
structural gaps and imbalances.
V. CONCLUSION
This paper main goal was to demonstrate how and to
what extent knowledge management (KM) affects the
adoption of innovation in defence. To this purpose we
organised our investigation around the case study of
PeSCo by focusing on two ongoing projects: the
European Medical Command (EMC) and the
Materials and Components for Technological EU
Competitiveness (MAC-EU). We translated our
investigation into a systemic approach by illustrating
the relationship between KM and adaptation of
innovation through the employment of the Casual
Loops Diagram (CLD). CLDs are snapshots of
relations that matter; they reveal the natural constraints
within the system (here PeSCo and its projects),
helping us develop more realistic expectations
regarding the KM ability to bring and absorb change.
The analysis looped, and then compared across two
levels: the macro for PeSCo, and the meso for projects
where state members operate in clusters. We
concluded that while at macro level, factors such as the
divergent economic capabilities of the EU member
10
states participants in the projects, lack of a regulatory
framework and clear-long term objectives condition
KM effectiveness, and therefore they condition the
adoption of innovation in PeSCo. At project level we
obtained a different view. On the one hand, the EMC’s
CLD showed how the adoption of the innovative
project is due to organisational learning (OL) and KM
despite the PeSCo structural gaps. EMC, thus, has the
potential to create an EU/multinational defence
ecosystem by giving birth to two subsystems: the
socio-cultural and the institutional one. On the other
hand, the MAC-EU project, notwithstanding its final
goal to harmonise towards a Single EU Market for
defence, still seems to necessitate clarity in terms of
visionary strategic goals which is entailed with the
lack of a regulatory framework and prioritisation of
mechanisms. Both projects, each reflects challenges
related to the management of the knowledge flows and
their integration into complex defence establishments
such as those at the EU level. The backstage of
dynamics at the EU level institutions and the policies
they run, PeSCo included, consists in supranational
and intergovernmental forces that fuse or diverge to
generate common positions when it comes to the
consolidation of the EU strategic actorness.
Though confined at the PeSCo contexts and at two
ongoing projects, this analysis is a first stepstone to
explore the importance of the organisation as a theatre
for innovation, and to connect our understanding of
knowledge management in the adoption of the
innovation within complex policy settings such as the
Union joint common policy packages are. We hope
that in our minuette, this paper would be of interest to
the defence scholarship in general and to the policy
makers- who definitely in the case of PeSCo have to
solve Kissinger’s dilemma 'which prefix to dial for the
EU, if 01 is for the US?'.
VI. ACKNOWLEDGEMENTS
We are grateful to our dear supervisors, Dr Neil
Winn, Dr James Worrall, Dr Érico Duarte, and Dr Ifti
Zaidi, for all the comments, support and
encouragement. We also would like to thank João
Gabriel Burmann and Victor Ventura for the
comments on our proposal, our Defence Research
Network and Military Innovation Research Network
colleagues for bringing us together, and Heather
Moore for the insightful and enthusiastic
conversations, without which the methodological part
of this article would not be possible.
VII. REFERENCES
[1] J.-C. Juncker, ‘Speech by President Jean-
Claude Juncker at the Defence and Security
Conference Prague: In defence of Europe’. European
Commission, Jun. 09, 2017. Accessed: Oct. 21, 2022.
[Online]. Available:
https://ec.europa.eu/commission/presscorner/detail/es
/SPEECH_17_1581
[2] A. Toffler, The Third Wave: The Classic
Study of Tomorrow, 1st edition reissued. New York:
Bantam, 1984.
[3] W. F. A. Wan Zakaria, ‘Alvin Toffler:
Knowledge Technology and Change in Future
Society’, Int. J. Islam. Thought, vol. 1, no. 1, pp. 54–
61, Jun. 2012, doi: 10.24035/ijit.01.2012.007.
[4] A. Rudawska, ‘The Learning Organization
Idea in the Context of Organizational Learning and
Knowledge Management’, Int. J. Contemp. Manag.,
vol. 12, no. 4, pp. 97–109, 2013.
[5] P. M. Senge, The fifth discipline: the art and
practice of the learning organization, 1. Currency
paperback ed. New York, NY: Currency Doubleday,
1994.
[6] A. J. DiBella, ‘Organizational Theories:
Perspectives on Changing National Security
Institutions’, Jt. Force Q. JFQ Wash., vol. Second
Quarter, no. 69, pp. 13–19, 2013.
[7] N. Bontis, J. Hulland, and M. M. Crossan,
‘Managing an Organizational Learning System by
Aligning Stocks and Flows’. Rochester, NY, May 06,
2003. Accessed: Oct. 15, 2022. [Online]. Available:
https://papers.ssrn.com/abstract=313496
[8] L. A. Y. AL-Hakim and S. Hassan, ‘The Role
of Middle Managers in Knowledge Management
Implementation for Innovation Enhancement’, Int. J.
Innov., vol. 2, no. 1, pp. 86–94, 2011.
[9] M. C. Horowitz and S. Pindyck, ‘What Is A
Military Innovation And Why It Matters’. Rochester,
NY, Oct. 25, 2021. doi: 10.2139/ssrn.3504246.
[10] M. Alvesson and D. Karreman, ‘Odd Couple:
Making Sense of the Curious Concept of Knowledge
Management’, J. Manag. Stud., vol. 38, no. 7, pp.
995–1018, Nov. 2001, doi: 10.1111/1467-
6486.00269.
[11] M. Gloet and M. Terziovski, ‘Exploring the
relationship between knowledge management
practices and innovation performance’, J. Manuf.
Technol. Manag., vol. 15, no. 5, pp. 402–409, Jul.
2004, doi: 10.1108/17410380410540390.
[12] G. Hedlund, ‘A model of knowledge
management and the N-form corporation’, Strateg.
Manag. J., vol. 15, no. S2, pp. 73–90, Jun. 2007, doi:
10.1002/smj.4250151006.
[13] A. C. Agwamba, U. J. Onwudiwe, and C. O.
Ugwuegbu, ‘KNOWLEDGE MANAGEMENT AND
ORGANIZATIONAL INNOVATION’, Strateg. J.
Bus. Soc. Sci., vol. 2, no. 2, pp. 1–20, 2019.
[14] R. K. Rai, ‘Knowledge management and
organizational culture: a theoretical integrative
11
framework’, J. Knowl. Manag., vol. 15, no. 5, pp.
779–801, Sep. 2011, doi:
10.1108/13673271111174320.
[15] K. Venkitachalam and H. Willmott, ‘Factors
shaping organizational dynamics in strategic
knowledge management’, Knowl. Manag. Res.
Pract., vol. 13, no. 3, pp. 344–359, Aug. 2015, doi:
10.1057/kmrp.2013.54.
[16] J. Xu and M. Quaddus, ‘Examining a model
of knowledge management systems adoption and
diffusion: A Partial Least Square approach’, Knowl.-
Based Syst., vol. 27, pp. 18–28, Mar. 2012, doi:
10.1016/j.knosys.2011.10.003.
[17] J. Xu, R. Houssin, E. Caillaud, and M.
Gardoni, ‘Fostering continuous innovation in design
with an integrated knowledge management
approach’, Comput. Ind., vol. 62, no. 4, pp. 423–436,
May 2011, doi: 10.1016/j.compind.2010.12.005.
[18] Z. Yang, V. T. Nguyen, and P. Le,
‘Knowledge sharing serves as a mediator between
collaborative culture and innovation capability: an
empirical research’, J. Bus. Ind. Mark., 2018, doi:
10.1108/JBIM-10-2017-0245.
[19] W. R. J. Baets, Ed., Knowledge management
and management learning: extending the horizons of
knowledge-based management. New York: Springer,
2005.
[20] K. N. Pandey, Paradigms of Knowledge
Management, vol. 60. New Delhi: Springer India,
2016. doi: 10.1007/978-81-322-2785-4.
[21] S. Husain and J.-L. Ermine, Knowledge
Management Systems: concepts, Technologies and
Practices. Bingley, United Kingdom: Emerald
Publishing, 2021.
[22] I. M. Prieto and E. Revilla, ‘THE SOCIAL
APPROACH OF KNOWLEDGE MANAGEMENT:
THE EFFECT ON THE ORGANIZATIONAL
LEARNING CAPACITY’, Working Paper DO8-
155–I, Apr. 2003. Accessed: Oct. 15, 2022. [Online].
Available:
https://www.latienda.ie.edu/working_papers_econom
ia/WP03-08.pdf
[23] P. C. de Weerd‐Nederhof, B. J. Pacitti, J. F.
da Silva Gomes, and A. W. Pearson, ‘Tools for the
improvement of organizational learning processes in
innovation’, J. Workplace Learn., vol. 14, no. 8, pp.
320–331, Dec. 2002, doi:
10.1108/13665620210449164.
[24] A. Marrone, ‘European strategic autonomy
between ambition and pragmatism’, in Progressive
Yearbook 2022, Brussels: Foundation for European
Progressive Studies, 2022, pp. 133–143. [Online].
Available:
https://www.iai.it/en/pubblicazioni/european-
strategic-autonomy-between-ambition-and-
pragmatism#:~:text=European%20strategic%20auton
omy%20between%20ambition%20and%20pragmatis
m,-
Authors%3A&text=Allocations%20have%20started
%20of%20the,EU%20member%20states%20in%202
022.
[25] Y. Yeh, S.-Q. Lai, and C.-T. Ho, ‘Knowledge
management enablers: a case study’, Ind Manag Data
Syst, vol. 106, pp. 793–810, 2006, doi:
10.1108/02635570610671489.
[26] J. D. Sterman, Business Dynamics—Systems
Thinking and Modeling for a Complex World. New
York: Irwin McGraw-Hill, 2000.
[27] D. H. Meadows, Thinking in systems: a
primer. London: Earthscan, 2009.
[28] E. Kenzie, ‘Get Your Model Out There:
Advancing Methods for Developing and Using
Causal-Loop Diagrams’, Doctor of Philosophy in
Systems Science, Portland State University, 2021.
doi: 10.15760/etd.7536.
[29] L. A. Al-Hakim and S. Hassan, ‘Core
requirements of knowledge management
implementation, innovation and organizational
performance’, J. Bus. Econ. Manag., vol. 17, no. 1,
pp. 109–124, Jan. 2016, doi:
10.3846/16111699.2012.720597.
[30] A. Iqbal, F. Latif, F. M. Viadiu, U.
Sahibzada, and S. Hussain, ‘From knowledge
management to organizational performance’, J
Enterp Inf Manag, vol. 32, pp. 36–59, 2019, doi:
10.1108/JEIM-04-2018-0083.
[31] J.-A. Kim, ‘Organizing knowledge in
knowledge management systems’, Int. J. Innov. Eng.
Technol., vol. 13, no. 3, p. 7, 2019, doi:
https://dx.doi.org/10.21172/ijiet.133.11.
[32] D. Deschaux-Dutard, Ed., Research methods
in defence studies: a multidisciplinary overview.
London ; New York: Routledge, Taylor & Francis
Group, 2020.
[33] J. Soeters, P. M. Shields, and S. Rietjens,
Eds., Routledge Handbook of Research Methods in
Military Studies, Edição: 1. Abingdon, Oxon:
Routledge, 2016.
[34] A. Klotz and D. Prakash, Eds., Qualitative
Methods in International Relations. New York:
Palgrave Macmillan, 2008. Accessed: Oct. 20, 2022.
[Online]. Available:
https://link.springer.com/book/10.1057/97802305841
29
[35] Council of the European Union, Council
Decision (CFSP) 2017/2315 of 11 December 2017
establishing permanent structured cooperation
(PESCO) and determining the list of participating
Member States. 2017, pp. 57–77. [Online]. Available:
http://data.europa.eu/eli/dec/2017/2315/oj
[36] Council of the European Union, Council
Decision (CFSP) 2018/909 of the Council
establishing a common set of governance rules for
PESCO projects. 2018, pp. 37–41.
12
[37] M. Pengili, ‘IN SEARCH OF A THEORY
FOR PESCO A Dialogue Between Rational Choice
and Fusion Thesis’, Master’s Thesis, Centre
International de Formation Européenne, Rome, Italy,
2018.
[38] European Union, ‘Pesco Secretariat |
PESCO’, Permanent Structured Cooperation
(PESCO), 2017. https://www.pesco.europa.eu/pesco-
secretariat/ (accessed Oct. 26, 2022).
[39] European Union, ‘Binding Commitments |
PESCO’, Permanent Structured Cooperation
(PESCO), 2017.
https://www.pesco.europa.eu/binding-commitments/
(accessed Oct. 26, 2022).
[40] S. Seitz, ‘Tracing the Path of EU Defense
Reform and Considering the Future of Permanent
Structured Cooperation’, Politics in Theory and
Practice, Feb. 05, 2018.
https://www.politicstheorypractice.com/2018/02/05/p
escos-prospects-tracing-the-path-ofeu-defence-
reform-and-considering-the-future-of-permanent-
structured-cooperation (accessed Oct. 15, 2018).
[41] B. Heuninckx, Ed., ‘Rules for EDA Projects
and Programmes’, in The Law of Collaborative
Defence Procurement in the European Union,
Cambridge: Cambridge University Press, 2016, pp.
187–192. doi: 10.1017/9781316443170.021.
[42] D. Rometsch and W. Wessels, The European
Union and member states: towards institutional
fusion? Manchester, UK: Manchester University
Press, 1996.
[43] C. Glaser, Rational Theory of International
Politics – The Logic of Competition and
Cooperation. Princeton, N.J: Princeton University
Press, 2010.
[44] NATO, ‘Memorandum of Understanding
Concerning the Establishment, Administration and
Operation of the Centre of Excellence for Military
Medicine (NATO MILMED COE)’. NATO, 2014.
Accessed: Oct. 27, 2022. [Online]. Available:
https://www.coemed.org/files/MILMED%20COE%2
0OPS%20MOU.pdf
[45] European Union, ‘European Medical
Command (EMC) | PESCO’, Permanent Structured
Cooperation (PESCO).
https://www.pesco.europa.eu/project/european-
medical-command/ (accessed Oct. 27, 2022).
[46] European Military Medical Services,
‘European Military Medical Services’. Presse- und
Informationszentrum des Sanitätsdienstes der
Bundeswehr Kommando Sanitätsdienst der
Bundeswehr, 2018. Accessed: Oct. 27, 2022.
[Online]. Available:
https://wehrmed.de/media/story/3358/attachment-
1525244515.pdf
[47] ‘Multinational Medical Coordination Centre /
European Medical Command’, German Armed
Forces (Bundeswehr).
https://www.bundeswehr.de/en/organization/bundesw
ehr-medical-service-/mmcc-emc- (accessed Oct. 27,
2022).
[48] R. Maderthoner, ‘MMCC/EMC expands its
network of experts’, German Armed Forces
(Bundeswehr), Sep. 06, 2022.
https://www.bundeswehr.de/en/organization/bundesw
ehr-medical-service-/mmcc-emc-expands-its-
network-of-experts-5489968 (accessed Oct. 27,
2022).
[49] R. Maderthoner, ‘First visit by MMCC/EMC
in Georgia’, German Armed Forces (Bundeswehr),
Aug. 16, 2021.
https://www.bundeswehr.de/en/organization/bundesw
ehr-medical-service-/new-initiative-to-develop-
georgian-military-medical-capabilities-5209270
(accessed Oct. 27, 2022).
[50] European Defence Agency, ‘Helping hands’,
EDM - European Defence Matters, no. 20, 2020.
Accessed: Oct. 27, 2022. [Online]. Available:
https://staging.eda.europa.eu/docs/default-
source/documents/edm20-web.pdf
[51] AeroSpace and Defence Industries
Association of Europe (ASD), ‘Position Paper on
Commission contribution to European Defence’.
ASD Europe, Apr. 12, 2022. Accessed: Oct. 27,
2022. [Online]. Available: https://asd-
13
europe.org/sites/default/files/2022-
08/ASD%20PP%20on%20Commission%20contribut
ion%20to%20European%20Defence.pdf
[52] Plataforma das Indústrias de Defesa
Nacionais (IDD) and República Portuguesa,
‘Propostas de projetos no âmbito da 3a vaga da
PESCO’. European Defence Agency, Oct. 08, 2019.
Accessed: Oct. 27, 2022. [Online]. Available:
https://www.iddportugal.pt/wp-
content/uploads/2021/01/PESCO-
PropostasProjetos3vaga-2019_01.pdf
[53] R. Csernatoni, ‘The EU’s Defense
Ambitions: Understanding the Emergence of a
European Defense Technological and Industrial
Complex’, Carnegie Eur. WP, 2021, [Online].
Available:
https://carnegieendowment.org/files/Csernatoni_EU_
Defense_v2.pdf
[54] European Union External Action and
European Defence Agency, ‘PESCO Project
Proposals Assessment Report’. PESCO Secretariat,
Sep. 17, 2021. Accessed: Oct. 27, 2022. [Online].
Available:
https://www.statewatch.org/media/2806/eu-eeas-
pesco-projects-recommendation-hr-2021-136-annex-
b.pdf