Defense Conversion in Small Companies: Risk, Activities, and Success Assessment

The defense industry has been experiencing a large draw-down during the 1990s. This has left many companies, large and small, in a situation where they had to examine the viability and future of their businesses. While large and medium-size companies were somewhat assisted by government policies and support, small subcontractors were often left alone, facing higher risks and severe threats to their future. This research investigated the events, decisions, activities and success of small defense contractors, which had to face this new situation. It developed a specific framework, which may be used to help companies in assessing their conversion efforts. The study was conducted by utilizing a within-case and cross-case methodology for case study analysis. Results assert the difficulties for highly defense dependent companies to enter and succeed in the commercial market and explain why many conversion efforts have often failed in the past. Our findings show that to convert successfully, companies must streamline and improve their internal processes, develop a strategic plan, develop their marketing capabilities, and must have management and employee commitment to the process. Although such recommendations were expected, we found, that to many of these companies, they were completely new. As a by-product to this study, we found that managers in small businesses are typically not aware of modern concepts of strategic management and do not normally read the management literature. A new approach to educating such managers is needed, and thus suggested.