The Institutional Context and Manufacturing Performance: The Case of the U.S. Defense Industrial Network

Abstract

U.S. manufacturing firms that make sophisticated weapons systems for the Pentagon are subject to an unusual regulatory regime that obligates them to volunteer' information on their business practices to the government and to prime contractors as a condition of their special relationship with the government. Within this organizational community information sharing with and assistance to other firms have come to be viewed as an ordinary obligation - i.e., a condition of citizenship. This cooperative learning environment is indicative of a collaborative manufacturing network that enables member organizations to learn quickly about relevant process technology innovations and to implement them effectively. We find that defense contractors learn about information technology applications more quickly than enterprises outside the network. Moreover, learning advantages are not confined to transactions specific to the Pentagon, but benefit the non-military operations of the networked enterprises as well.