UNDERSTANDING THE DEFENSE CONVERSION DILEMMA

Two major sectors of the economy-commercial and defense-are facing ext ensive change and are undergoing considerable downsizing. The defense sector was forced in recent years to adjust to a post-Cold War era and to find commercial uses for many of its military-related technologies , and the commercial industry is challenged by increased competition, higher productivity goals, and higher demand for quality products and shorter development cycles. Under these circumstances, conversion from defense into commercial activity became inevitable, and joint venture s of defense and commercial companies are common. Yet, many conversion attempts are unsuccessful, with failures attributed to differences in culture, practices, and experience of the two sectors. The purpose of this article is to discuss the defense conversion problem faced by de fense contractors for a better understanding of the difficulties assoc iated with conversion efforts. We start by discussing briefly the situ ation, policy, and environment of the American industrial base-governm ent, defense. We then suggest a specific conceptual framework for anal yzing the conversion dilemma. Such a framework may help defense compan ies during the decision-making process while considering transitions i nto civilian markets and serve as a basis for additional research on t he defense conversion dilemma. (C) 1998 Elsevier Science Inc.