DEVELOPMENT OF DEFENSE INDUSTRY INNOVATION SYSTEM WITH THE APPROACH POLICY ANALYSIS

This study applies the system dynamics (SD) methodology to find the factors that influence defense industry innovation, which is very important to determine the domestic industry's competitive advantage. The work is limited to verbal descriptions of thought processes and is discussed in context as the first step towards mathematical modeling for computer simulations. This study uses four critical interactive dimensional innovations: product innovation, process innovation, marketing innovation, and organizational innovation. The management of strategic and defense industries in several countries is almost always faced with three main issues, namely: first, the development of defense technology which relies on two schemes, strengthening research and development / R&D of the defense industry, and through offset schemes and technology transfer. Second, the defense industry budget with various funding models, and the third problem is to improve the quality of resources Human (HR) from the defense industry. The three of them are related to each other in supporting needs Main Equipment Weapon System (Alutsista) in a country. Successful management of an innovation system can drive both companies and the national economy. The discussion is not limited to the defense industry's innovations but can be applied to other commercial companies of similar size, growth, and operating characteristics.