A national policy of defense conversion: Do the constraints imposed by organizational elements of Department of Defense institutions prohibit efficient conversion of defense contractors to commercial practices

The research question was, "Do Department of Defense institutions affect transaction costs as described by Douglass C. North's theory in a way that constrains the efficiency outcome of a national public policy of defense conversion?".;This research used North's theory (1990) about the influence of institutional constraint on economic performance, or efficiency, to explain a policy issue, and to predict the likely success or failure of the policy. North argues that institutions express the culture of a society by constraining behavior using both formal (rules that express cultural substance) and informal (human interpretation of cultural substance) constraints. These constraints cause transaction costs (i.e., the cost of one social arrangement over another social arrangement), which, together with the costs of production, directly affect economic efficiency. This research studied the effect of the defense institution on transaction costs.;This research used a case study approach over time from a systems tradition to assess transaction costs at an overall Department of Defense level, and for three weapon systems, the C-17, the F/A-18E/F and the Comanche Helicopter. Transaction costs were assessed by analyzing General Acounting Office reports as the primary source of data.;The results were that transaction costs by category as well as inefficiencies in the conduct of the defense market were found in every General Accounting Office report. The data indicated there was pervasive evidence of rigid structures and path dependency brought about through the expression of particular myths and ideologies (in the form of underlying assumptions), as framed by the parameters of the overall culture and modified by the subcultures of the respective services. Path dependency blocked both the implementation of a policy of defense conversion and the achievement of economic efficiency.