IDEAS home Printed from https://ideas.repec.org/a/eme/jepppp/v5y2016i2p221-239.html
   My bibliography  Save this article

Unproductive entrepreneurship in US military contracting

Author

Listed:
  • Christopher J. Coyne
  • Courtney Michaluk
  • Rachel Reese

Abstract

Purpose - – US 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 US military sector which incentivize unproductive entrepreneurship. The paper aims to discuss these issues. Design/methodology/approach - – Drawing on the insights of Baumol (1990) as their base theoretical framework, the authors explore how the industrial organization of the US military sector creates incentives for unproductive entrepreneurship. Evidence from US government reports regarding US efforts in Afghanistan and Iraq is provided to illustrate the central claims. Findings - – The 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/value - – The authors 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.

Suggested Citation

  • Christopher J. Coyne & Courtney Michaluk & Rachel Reese, 2016. "Unproductive entrepreneurship in US military contracting," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 5(2), pages 221-239, August.
    • Handle: RePEc:eme:jepppp:v:5:y:2016:i:2:p:221-239
    DOI: 10.1108/JEPP-12-2015-0037
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/JEPP-12-2015-0037/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/JEPP-12-2015-0037/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/JEPP-12-2015-0037?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Keith Hartley & Todd Sandler (ed.), 1995. "Handbook of Defense Economics," Handbook of Defense Economics, Elsevier, edition 1, volume 1, number 1.
    2. Israel M. Kirzner, 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 60-85, March.
    3. William F. Shughart II & Laura Razzolini (ed.), 2001. "The Elgar Companion to Public Choice," Books, Edward Elgar Publishing, number 459.
    4. Dunne, J. Paul, 1995. "The defense industrial base," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 14, pages 399-430, Elsevier.
    5. Richard E. Wagner, 2012. "Deficits, Debt, and Democracy," Books, Edward Elgar Publishing, number 14477.
    6. Sandler,Todd & Hartley,Keith, 1995. "The Economics of Defense," Cambridge Books, Cambridge University Press, number 9780521447287, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marcus Matthias Keupp, 2021. "Defense Economics," Springer Books, Springer, number 978-3-030-73815-0, March.
    2. Alshamy, Yahya & Coyne, Christopher J. & Goodman, Nathan, 2023. "Noxious government markets: Evidence from the international arms trade," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 87-99.
    3. Neto, Alcir Santos, 2020. "Limits and Possibilities of the United States Military in Post-Conflict Reconstruction and Stabilization," Thesis Commons 6syw3_v1, Center for Open Science.
    4. Marcus Matthias Keupp, 2021. "Opportunities for Reform," Springer Books, in: Defense Economics, chapter 0, pages 115-134, Springer.
    5. Neto, Alcir Santos, 2020. "Limits and Possibilities of the United States Military in Post-Conflict Reconstruction and Stabilization," Thesis Commons 6syw3, Center for Open Science.
    6. Joshua D. Ammons & Shishir Shakya, 2024. "Revolutions and corruption," Public Choice, Springer, vol. 201(1), pages 355-376, October.
    7. Žiga Kotnik & Maja Klun & Renata Slabe-Erker, 2020. "Identification of the Factors That Affect the Environmental Administrative Burden for Businesses," Sustainability, MDPI, vol. 12(16), pages 1-15, August.
    8. Marcus Matthias Keupp, 2021. "Institutions and Armed Forces," Springer Books, in: Defense Economics, chapter 0, pages 23-65, Springer.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Coyne,Christopher J., 2020. "Defense, Peace, and War Economics," Cambridge Books, Cambridge University Press, number 9781108724036, July.
    2. Christopher Coyne, 2015. "Lobotomizing the defense brain," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 28(4), pages 371-396, December.
    3. Hall Abigail R., 2015. "Drones: Public Interest, Public Choice, and the Expansion of Unmanned Aerial Vehicles," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 21(2), pages 273-300, April.
    4. Carlos Pestana Barros, 2002. "Small countries and the consolidation of the European defence industry: Portugal as a case study," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(4), pages 311-319.
    5. Jean Belin & Marianne Guille, 2008. "Defence and firm financial structure in France," Review of Financial Economics, John Wiley & Sons, vol. 17(1), pages 46-61.
    6. Joaquim José Martins Guilhoto & Paulo César Morceiro, Milene Simone Tessarin, 2016. "Productive Complex of Defense and Security in Brazil: dimension, sectoral and technological impacts," Working Papers, Department of Economics 2016_28, University of São Paulo (FEA-USP).
    7. Economou, Emmanouel/Marios/Lazaros & Metaxas, Theodore, 2011. "EU and US security policy from the cold war era to the 21st century: the institutional evolution of cfsp and the factors that determine the American military supremacy," MPRA Paper 41003, University Library of Munich, Germany, revised 2011.
    8. Renaud Bellais & Martial Foucault & Jean-Michel Oudot, 2014. "Économie de la défense," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01052607, HAL.
    9. William Shughart & Robert Tollison, 2005. "Public choice in the new century," Public Choice, Springer, vol. 124(1), pages 1-18, July.
    10. Joel Guttman & Rafael Reuveny, 2014. "On revolt and endogenous economic policy in autocratic regimes," Public Choice, Springer, vol. 159(1), pages 27-52, April.
    11. Duncan Thomas K. & Coyne Christopher J., 2015. "The Revolving Door and the Entrenchment of the Permanent War Economy," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 21(3), pages 391-413, August.
    12. Llussá, Fernanda & Tavares, José, 2011. "Which terror at which cost? On the economic consequences of terrorist attacks," Economics Letters, Elsevier, vol. 110(1), pages 52-55, January.
    13. Jia, Hao & Skaperdas, Stergios & Vaidya, Samarth, 2013. "Contest functions: Theoretical foundations and issues in estimation," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 211-222.
    14. Clémence Vergne & Camille Laville, 2018. "Comment analyser le risque sociopolitique ? Une composante clé du risque-pays," Post-Print hal-02358975, HAL.
    15. Bayer, Péter & Herings, P. Jean-Jacques & Peeters, Ronald, 2021. "Farsighted manipulation and exploitation in networks," Journal of Economic Theory, Elsevier, vol. 196(C).
    16. Rupayan Gupta, 2014. "Changing threat perceptions and the efficient provisioning of international security," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(4), pages 1312-1341, November.
    17. Rabah Arezki & Markus Brueckner, 2021. "Working Paper 351 - Between a Rock and a Hard Place: A New Perspective on the Resource Curse," Working Paper Series 2477, African Development Bank.
    18. Christophe Muller & Pierre Pecher, 2021. "Terrorism, Insurgency, State Repression, and Cycles of Violence," Working Papers halshs-03134347, HAL.
    19. Kyung Hwan Baik & Subhasish M. Chowdhury & Abhijit Ramalingam, 2014. "Resources for Conflict: Constraint or Wealth?," University of East Anglia Applied and Financial Economics Working Paper Series 061, School of Economics, University of East Anglia, Norwich, UK..
    20. Bruno Frey & Simon Luechinger & Alois Stutzer, 2009. "The life satisfaction approach to valuing public goods: The case of terrorism," Public Choice, Springer, vol. 138(3), pages 317-345, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:jepppp:v:5:y:2016:i:2:p:221-239. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.