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Corporate Governance and Performance During Consolidation of the United States and European Defense Industries

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  • John Harper

Abstract

Under a market-oriented corporate governance system, the United States defense industry consolidate quicker and gained a comparative advantage in simple measures of firm performance, including profit margin and market share, than the continental European defense industry, which is more oriented toward stakeholder relationships in corporate governance. The defense industry in the United Kingdom, also characterized by market-oriented governance, performed well. On a wider set of measures related to firm performance and other stakeholders, the evidence is less clear. Concerns have been expressed about the European defense industry's survival in its current form. Likewise, concerns have been raised about the increasing level of concentration in the United States, its potential effect on innovation, and the erection of trade barriers. This paper concludes that corporate governance concepts are useful in analyzing firm conduct and performance in the defense industry and other traditionally -- 'national' industries. It also concludes that policy concerns might successfully be addressed through increased Transatlantic cooperation, attention to the flexibility inherent in the Anglo-American system of corporate governance, and recommendations to modify public procurement policies. Copyright Kluwer Academic Publishers 1998

Suggested Citation

  • John Harper, 1998. "Corporate Governance and Performance During Consolidation of the United States and European Defense Industries," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 2(4), pages 335-355, December.
    • Handle: RePEc:kap:jmgtgv:v:2:y:1998:i:4:p:335-355
    DOI: 10.1023/A:1009923025657
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    References listed on IDEAS

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    1. Sandler,Todd & Hartley,Keith, 1995. "The Economics of Defense," Cambridge Books, Cambridge University Press, number 9780521447287, January.
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