THE ROLE OF INDEPENDENT RESEARCH AND DEVELOPMENT IN DEFENSE CONTRACTING FIRMS AND ITS RELATION TO CORPORATE STRATEGY

Independent Research and Development (I R&D) performed by defense contractors differs from contrqact R&D in that it is company initiated and its costs are recovered by the contractor as overhead. In selecting potential I R&D projects, contractors must not only consider technical merit and innovativeness but also government interest and an available government customer. This thesis assesses the importance of these factors (innovativeness vs. ready sponsorship) as they relate to corporate strategy. The performance of a critical case study was used to determine the outcome. For corporations which rely solely on the Department of Defense (DOD) as their customer base, it was determined that the availability of government interest is the most critical factor in the selection of an I R&D project. For corporations that have a diverse customer base, including both DOD and commercial customers, technical merit and innovativeness should influence project selection.