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Unproductive entrepreneurship in U.S. military contracting

Unproductive entrepreneurship in U.S. military contracting PurposeU.S. military contracting has been plagued by systematic corruption, fraud, and waste during both times of peace and war. These outcomes result from the inherent features of the U.S. military sector which incentivize unproductive entrepreneurship. Design/methodology/approachDrawing on the insights of Baumol (1990) as our base theoretical framework, we explore how the industrial organization of the U.S. military sector creates incentives for unproductive entrepreneurship. Evidence from U.S. government reports regarding U.S. efforts in Afghanistan and Iraq is provided to illustrate the central claims.FindingsThe military sector is characterized by an entangled network of government bureaus and private firms whose existence is dependent on continued government spending. These realities, coupled with a dysfunctional procurement processes, reward unproductive behaviors during peacetime. During wartime these incentives are intensified, as significant emergency resources are injected into an already defective contracting system. The recent experiences in Afghanistan and Iraq illustrate these dynamics.Originality/valueWe make three main contributions. First, contrary to common treatments by economists, much military spending fails to meet the definition of a public good. Second, waste, fraud, and abuse in military contracting is a result of rules and the incentives those rules create. Third, the only way to change the situation is to change the overarching rules governing the people operating in the military sector. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Enterpreneurship and Public Policy Emerald Publishing

Unproductive entrepreneurship in U.S. military contracting

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References (43)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
2045-2101
DOI
10.1108/JEPP-12-2015-0037
Publisher site
See Article on Publisher Site

Abstract

PurposeU.S. military contracting has been plagued by systematic corruption, fraud, and waste during both times of peace and war. These outcomes result from the inherent features of the U.S. military sector which incentivize unproductive entrepreneurship. Design/methodology/approachDrawing on the insights of Baumol (1990) as our base theoretical framework, we explore how the industrial organization of the U.S. military sector creates incentives for unproductive entrepreneurship. Evidence from U.S. government reports regarding U.S. efforts in Afghanistan and Iraq is provided to illustrate the central claims.FindingsThe military sector is characterized by an entangled network of government bureaus and private firms whose existence is dependent on continued government spending. These realities, coupled with a dysfunctional procurement processes, reward unproductive behaviors during peacetime. During wartime these incentives are intensified, as significant emergency resources are injected into an already defective contracting system. The recent experiences in Afghanistan and Iraq illustrate these dynamics.Originality/valueWe make three main contributions. First, contrary to common treatments by economists, much military spending fails to meet the definition of a public good. Second, waste, fraud, and abuse in military contracting is a result of rules and the incentives those rules create. Third, the only way to change the situation is to change the overarching rules governing the people operating in the military sector.

Journal

Journal of Enterpreneurship and Public Policy – Emerald Publishing

Published: Aug 15, 2016

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