Abstract
This article investigates the case of Nanoquest, a small diversification project that was tied to BAE Systems' earlier incarnation as British Aerospace (BAe). The article shows that British military firms can have success when diversifying into civilian markets, but the process can be sabotaged by managerial interference. The article also illustrates the limited utility of dual-use theories in explaining diversification outcomes. Success and failure are also shaped by power relationships rather than simply by technological similarities or limitations. The article shows why discourses about dual use, the relatedness of military and civilian technologies, networks, learning, and information exchange cannot fully explain how and whether diversification barriers are overcome. One key reason is that the degree of dual-use relationships, or the commonality between military and civilian markets, is based on an historical process of learning and resource acquisition over time. This learning and resource acquisition in turn is mediated by various power structures and struggles within the firm as identified by institutional economists and various management theorists.
Highlights
Ttied to BAE Systems’ earlier incarnation as British Aerospace (BAe).1 It is shown that a military firm can have success when diversifying into civilian markets, but that the process can be sabotaged by managerial interference
The case shows that when market or product similarities exist between military and civilian firms, diversification – even when successful – is not accomplished. This finding goes against claims made by some dual-use scholars who argue that similarities between military and civilian products help explain why diversification barriers are often slight
One key aspect of its development lies in the history of how the firm’s resources were organized as part of a wider context defined by different components of a larger family of companies and managerial structures at British Aerospace
Summary
Defense firms’ development of new civilian products and entry into new civilian markets can make several important contributions. Some defense companies can learn how to handle differences between military and commercial applications, but even after doing so others can be constrained by managerial interference.17 These managerial constraints occur because competition over financial and human resources – key ingredients for developing any new product – is a central part of the innovation process.. Nanoquest’s managing director, Paul Johnson, was highly entrepreneurial He had experience in civilian markets, having worked on commercial optical systems for Xerox copying machines, engraving machines, LCD and fibre optics, including a brand-new product for motorway signing. Nanoquest was established as a small firm with a more commercially-oriented environment This became important because the military market for Steinheil products was rather competitive.. The ability to use common resources in military and civilian markets proved to be insufficient for long-term success
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