| Using a combined resource approach, this research examines the implicit return on sales for firms with substantial U.S. Department of Defense contracts, in terms of customer and geographic segments, to assess whether multinational firms obtain tangible or intangible benefits from the contract. Publicly traded firms were selected from the Top 100 Contractors Report, Federal Procurement Data System-Next Generation, between 2006 and 2010. For the entire sample of military contractors, nonmilitary sales segments and international sales segments were profitable, but U.S. military sales segments were not. After splitting the sample, it was found that the military sales segment was profitable for smaller firms and defense-oriented firms. Smaller firms realize greater profits from the international component of their nonmilitary sales segment, whereas large firms, defense-oriented firms, and nondefense-oriented firms realize profits from both the nonmilitary domestic and international sales segments. U.S. Department of Defense contracts are a valuable resource which may be leveraged differently to increase profitability, depending on the size and nature of the company. |
