Abstract
Summary This study evaluates the effects of innovation policy for defense acquisition on productive efficiency of Korean defense firms. After identifying the efficiency gaps among the production units by applying Data Envelopment Analysis (DEA) to the production data of 1997–2004, the determinants affecting the input mix decisions of defense firms are analyzed through the Tobit regression analysis. The results identify competition in the market, capacity utilization level, R&D investment, and the firm's defense revenue share as the influential factors to the productive efficiency of Korean defense firms.
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