France and Italy are working to strengthen their partnership in the space industry, focusing on supporting start-ups and small and medium-sized enterprises (SMEs) to develop innovative technologies. Both countries have unique ways of encouraging growth in their space sectors, and a closer collaboration could benefit the broader European space industry. This comes as Europe aims to maintain its position in the global space race, especially as the U.S. and China continue to advance their space capabilities. At the International Space Summit in Paris in September, the need for European space industry independence was emphasized. In 2025, public investments in the space sector worldwide reached 119 billion euros, with Europe contributing 11% of that amount (13.5 billion euros) and 12% of private investments (1.4 billion euros). The European space industry, once dominated by large institutional players, is now increasingly driven by start-ups and SMEs, particularly in the "New Space" economy. These companies, inspired by American models, focus on innovation, reducing the cost of space access, and using digital tools to target specialized markets. Despite government efforts to create a unified European space industry, national ecosystems remain fragmented. A space ecosystem includes a range of players, from large corporations and public institutions to universities, research centers, investors, and support organizations. France and Italy are two of the leading forces in Europe's space sector, with strong participation in the European Space Agency (ESA) and robust public support for research and digital transformation. In 2024, the French space sector generated 4.76 billion euros in revenue, while the Italian space sector reached 4.5 billion euros. The rise of the "New Space" economy has increased the importance of start-ups and SMEs, as seen in groups like Alliance NewSpace France, which includes nearly 60 such companies. However, these smaller firms often rely on their national ecosystems to develop digital capabilities, which can have both strengths and weaknesses. In France, the ecosystem is more centralized and coordinated, with institutions like the Centre national d'études spatiales (Cnes) and organizations such as Bpifrance and French Tech supporting industrial policy, digital transformation, and financing. However, French start-ups often struggle with limited access to supply chains and weaker collaboration between public and private sectors. In Italy, the space ecosystem is more decentralized, with the Agenzia Spaziale Italiana (ASI) playing a central role and regional districts like those in Piedmont and Puglia driving innovation. Italian start-ups and SMEs are integrated into local networks and specialized value chains, maintaining close ties with large companies, universities, and research centers. However, they face challenges due to territorial fragmentation and limited access to private capital. These differences in structure may influence how companies in each country develop their digital capabilities. The concept of dynamic capabilities, introduced by economist David J. Teece, explains how companies build digital skills to stay competitive. It involves three stages: identifying opportunities, mobilizing resources, and reconfiguring them as needed. In France, centralized coordination helps companies identify and mobilize resources more effectively. In Italy, the decentralized structure allows for faster adaptation and reconfiguration of digital capabilities through collaboration with local partners. The unique strengths of France and Italy could complement each other, helping to build a more cohesive European space industry. Their collaboration through the ESA and joint ventures like Thales Alenia Space—formed by Thales and Leonardo—demonstrates the potential for cross-border innovation. Strengthening ties between public and private sectors in both countries could help companies develop new technologies, access new markets, and build more integrated supply chains. These synergies are crucial for the digital transformation of start-ups and SMEs, which are vital to the competitiveness and independence of Europe's space industry.