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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
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    References listed on IDEAS

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    1. 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.
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    3. 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.
    4. Richard E. Wagner, 2012. "Deficits, Debt, and Democracy," Books, Edward Elgar Publishing, number 14477.
    5. Sandler,Todd & Hartley,Keith, 1995. "The Economics of Defense," Cambridge Books, Cambridge University Press, number 9780521447287, January.
    6. Keith Hartley & Todd Sandler (ed.), 1995. "Handbook of Defense Economics," Handbook of Defense Economics, Elsevier, edition 1, volume 1, number 1.
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    Citations

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    Cited by:

    1. Marcus Matthias Keupp, 2021. "Defense Economics," Springer Books, Springer, number 978-3-030-73815-0, July.
    2. 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.
    3. Joshua D. Ammons & Shishir Shakya, 2024. "Revolutions and corruption," Public Choice, Springer, vol. 201(1), pages 355-376, October.
    4. 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.
    5. Marcus Matthias Keupp, 2021. "Opportunities for Reform," Springer Books, in: Defense Economics, chapter 0, pages 115-134, Springer.
    6. 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.
    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.

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