Content uploaded by Joel A. C. Baum
Author content
All content in this area was uploaded by Joel A. C. Baum on Jan 19, 2018
Content may be subject to copyright.
A preview of the PDF is not available
Outsourcing War: The Evolution of the Private Military Industry after the Cold War
Abstract and Figures
In this paper, we study the evolution of private military corporations (PMCs), which are for-profit organizations that subcontract military field services to sovereign authorities as well as to others. Between Eisenhower’s famous “military-industrial complex” speech in 1961 and the post-9/11 war in Iraq, PMCs were transformed from relatively minor subcontractors to major companies with unique capabilities that made them strategically central to the sovereign military organizations from which they had grown. Throughout this period, PMCs exhibited a “hybrid organizational form” as delineated within organizational economics. Our purpose is grounded theorizing in which we derive insights about the evolution of PMCs as hybrid organizational forms. Our analysis suggests that hybrid forms of organization enable transactions and capability development that are not possible within either markets or hierarchies. Hybrid forms may thus represent a conduit for institutional entrepreneurship and the emergence of new industry structures. Their intertemporal characteristics warrant further theoretical study.
Figures - uploaded by Joel A. C. Baum
Author content
All figure content in this area was uploaded by Joel A. C. Baum
Content may be subject to copyright.
... Kivleniece and Quelin (2011) explore the challenges of private-sector management over resources that are traditionally and alternatively managed publicly. Baum and McGahan (2009) examine how private mercenaries work together with governments by engaging in activities of value to governments but that governments cannot perform directly. Cabral, Lazzarini, and de Azavedo (2013) show how private prisons are managed differently than public prisons on both cost and quality criteria. ...
... For scholars in the NST, these ideas can be integrated into the trajectories of research on both purpose and global challenges because they suggest that organizations with ambitious agendas can unwind ambiguity and uncertainty indirectly by building durable capabilities that are sure to be relevant without knowing precisely how. It is the potential performativity of resources that gives organizations an edge in value creation (Baum & McGahan, 2009;Penrose, 1959). ...
... The NST on organizational purpose and grand challenges is only just emerging. Important questions have rarely been raised in the NST about the issues covered in this section: intertemporal consistency in organizational commitment (Ghemawat, 1991), resource performativity (Baum & McGahan, 2009;Penrose, 1959), disruption (Bower & Christensen, 1995), endogeneity of technological development (Rosenberg, 1982;Mowery & Nelson, 2012), and organizational exchange of strategically vital resources (Arora & Gambardella, 1990, 2010Teece, 1986). This last idea-that strategically valuable resources can be traded across organizational boundaries-is particularly notable as it suggests that much more work is needed to understand whether and how resources become rare, costly to imitate, and organized to create value (Barney, 1991). ...
A powerful new stakeholder theory (NST) of strategic management is emerging. The theory, which is yet incomplete, offers novel and precise tools for understanding stakeholder involvement in organizations. This article identifies open questions in the NST in five areas (organizational formation, resource development, claims on value, governance, and performance) and suggests ways in which insights from the resource-based view of the firm advance answers to these questions. The conclusion emphasizes that because stakeholders bind resources to organizations, neither the resource-based view nor the new stakeholder view is complete without the other.
... Executive Outcomes (EO), a commercial, military organisation, performed its first critical security expedition in Angola in 1993. The organisation was contracted to represent the Angolan state by Anthony Buckingham, a high-ranking consultant to numerous North American oil firms [3]. Their mission was to retake and secure oil reserves from UNITA rebels, an undertaking that EO completed with precision. ...
... Their mission was to retake and secure oil reserves from UNITA rebels, an undertaking that EO completed with precision. The EO's exemplary performance gave rise to a $40 million deal with the Angolan state for training and supplying armaments to the country's military and offer security against UNITA [3]. Moreover, after the contract renewal with EO in 1994, government troops' accomplishment against UNITA forced the rebels to sign a peace agreement with the Angolan administration. ...
Making profits out of war is an ancient phenomenon. There are enterprises constantly supplying material to prepare armies and consequently profit from war. Enterprises have become aware that war itself and the post-war period is undoubtedly lucrative. However, the war also never works for any individual or group, except a dominant elite few: the wealth who propagate and influence patriotic and despotic war-peddling all over the world, making trillions of dollars in profit out of devastations and deaths, at the same time exciting their nationalism, and inspiring the citizen’s backing. The paper has examined Executive Outcomes (a commercial security firm) and the United States of America, Russia, Kenya and Uganda as countries that are examples of those engaging in Warpreneurship. But in the long run, the war in itself does not result in peace but immense profits and securing resources for the dominant elite few.
... The term PMC is contested (Akcinaroglu & Radziszewski, 2013;Alexandra et al., 2008;D. D. Avant & de Nevers, 2011;Basnet, n.d.;Baum & McGahan, 2009;Brooks, 2003). Terms such as Private Security Contractor and PMC, and Mercenary, are used interchangeably by many to describe those working within the international security services sector. ...
The confirmation report submitted as part of the confirmation process for full admission to the PhD programme at Massey University
... Ideational theory sees private security practitioners as actively engaged in the national and transnational proliferation of neoliberal economic and governance practices (Cutler, 2010;Krahmann, 2010a and2010b;Petersohn, 2010;2011a;Walker and Whyte, 2005). Baum and McGahan (2009) interpret this ideological alignment with neoliberalism as an almost 'conditioned' response to increases in privatisation, while others (Fredland, 2004;Berndtsson, 2012) interpret these beliefs as nested in a more fundamental ideological commitment to the efficiency of market mechanisms. (Cusumano and Kinsey, 2015:593). ...
This study examines the market for British military expertise in the commercial security sector. It focuses predominantly on people who have served in the armed forces, or worked closely with them in private security. It is argued that the UK private military security sector forms a coherent social ‘field’ based around the commodification of military forms of capital through which the emotional reward of military style work can be re-experienced in civilian life. Using in-depth interviews, the study analyses the experiences of practitioners working across the field and explores the implications that this has for our understanding of the private security phenomenon. The study demonstrates how the private military security sector commoditises the emotionally reliable capacity to exercise coercive force inherent to the military habitus. Thorough the exchange of this ‘military capital’, private military security replicates the more ‘offensive’ practices of state militaries. These practices often sit in tension with the commercial imperative of the sector. The experience of military service and transition into private security work is examined highlighting how the combat-oriented culture of elite military sub-units dominates the commercial security sphere, particularly in those ‘fringe areas’ of the field where transparency is limited and ethical boundaries ambiguous. The replication of these state-like practices in the civilian marketplace highlights paradoxes inherent to these forms of ‘security’. This provides an opportunity for researchers to better understand our social construction of ‘security’ in its state and private forms. The study explores how the ‘symbolic capital’ of state exceptionalism, possessed by veterans of ‘high policing’ Special Forces units, has been central to the evolution of the field, and provides indicative evidence of the opportunity this affords state and private elites to extend their capacity to exercise autonomy and control in a manner that creates new, ‘hybrid’ forms of sovereignty.
... They were engaged in activities such as weapons procurement, police training, intelligence gathering and the close personal protection of civilian leaders as part of the foreign military assistance (Stephenson, 2010). After 9/11, the US decision to invade Afghanistan and Iraq soon after, with the consent of the Bush administration, opened the door for PMCs to play a key role in the military operations (Karli, 2009;Baum, 2009). Over the years, PMCs have become a major industry with transnational enterprises that offer the required services to wage a war with military ranks and hierarchy, or avert security environment interventions via negotiation, advisory or intelligence services (Baum and McGahan, 2009, p. 6). ...
The main purpose of the article is to examine the causal relationship between key elements of the geostrategic environment (i.e. political, military, and technological) and the changes in the characteristics of proxy force. Qualitative data analysis is used to identify the geopolitical environment conditions, actors, and their relationship. The causal analysis between key elements of the geopolitical environment, such as politics, military, and technological, therefore influences how proxy forces change character. The findings imply that the contemporary geopolitical environment is changing the character of the proxies. They can be used as multipurpose forces depending on the desired strategic outcome. The results advocate that proxies have a global reach beyond the traditional battlefield. These capabilities allow proxies to be used in a wide range of political, economic, and military activities, especially in peacetime, and, therefore, influencing, changing, and damaging the state’s mutual relationships. Despite differences between several theoretical perspec- tives of security theories, many concur on the low desirability of proxy force. The changing characteristics of proxy war allow state and non-state actors to wage war with a minimal use of force, or none at all, beyond the traditional battlefield. Political violence dem- onstrated through proxy force to fulfil foreign policy goals has become even more violent. In such action, disregarding the sustainable strategic goal can easily damage the state’s international relations and threaten international and regional stability. The overall find- ings show the urgency for a more holistic approach in the analysis of proxy warfare as part of security studies and military operations.
... They also have access to a variety of financing mechanisms (international organizations and banks, charities, social bonds, private investment, etc.) (Herzberg & Sisombat, 2016). The range of activities is broad, such as education, health care, penitentiary, sanitation, but also defense and infrastructure (transportation, energy and water) and food security and rural development (Barlow & Köberle-Gaiser, 2008;Baum & McGahan, 2009;Cabral et al., 2010;Chong et al., 2006;Kwak et al., 2009;Rangan et al., 2006). ...
Frontiers of Strategic Alliance Research - edited by Farok J. Contractor March 2019
... This definition specifies that PPPs are essentially constructed around voluntarily collaborative structures, shared competences and resources, and focus on the provision of public goods. This also means that a variety of PPPs can be empirically observed in more traditional sectors such as transportation (Estache et al., 2007), prisons (Cabral et al., 2010), and water distribution (Chong et al., 2006), as well as in more innovative and knowledge-intensive partnerships in sectors such as energy (Dinica, 2006), health care (Rangan et al., 2006), and defence (Baum and McGahan, 2009). In this sense, given the number of diverse actors linked by different kinds of relationships aimed at sharing goods and services for a common objective, this new way of organizing can be conceived of as a new hybrid organizational form (Kivleniece and Quelin, 2012). ...
Public-Private Partnerships (PPPs) are an important form of hybrid organization that may, if properly designed and managed, generate innovative solutions to complex problems by combining different institutional logics. Using data from a comparative case study of the creation of two PPPs in the Italian healthcare sector, we draw on ideas from business model design and organizational hybridity to explore how complexity can be managed inside PPPs and how this drives the creation of value for stakeholders. We link the literature on hybrid organizations with the one on business models by looking at the organizational mechanisms and processes that are implemented in PPP project governance, assets and processes. We go on to develop a theoretical model showing how effective business model design can help to bridge different logics and create value for stakeholders in the creation and operation of PPPs. This article is protected by copyright. All rights reserved.
... UK industry recognises that governments, outside of the USA, can rarely, if ever, afford to adopt a major national defence programme and unless industry is offering collaborative solutions they are unlikely to be successful. For example, even though the UK has withdrawn from the HORIZON programme to provide up to twenty-two new frigates for the Royal Navy and will adopt a national solution for the hull and command system, the intention is still to equip it with PAAMS 19 , the multinational missile system where the UK partner is Matra / BAe Dynamics. ...
This book contains a series of case studies, both fictional and factual, that was designed as an aide to learning for students undertaking a particular MSc programme at the National Defence University in Kuala Lumpur.
Cambridge Core - Strategic Management - Frontiers of Strategic Alliance Research - edited by Farok J. Contractor
After the Cold War, changes in demand and supply of armed forces created a gap in the security market. At the same time, a transformation of warfare and technological developments enabled small groups to obtain large, destructive weapons. These two developments, in combination with positive associations with privatization in other areas, facilitated the formation and caused the worldwide expansion of the private military industry. The privatization of the military brings forth multiple challenges, including complex relationships and mutual interdependency between public and private actors, profit-driven motives, law enforcement, transparency, and accountability.
This paper focuses on dynamic capabilities and, more generally, the resource‐based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed ‘best practice’). This suggests that they are more homogeneous, fungible, equifinal, and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic, stable processes with predictable outcomes. In contrast, in high‐velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well‐known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high‐velocity markets, it is on selection. At the level of RBV, we conclude that traditional RBV misidentifies the locus of long‐term competitive advantage in dynamic markets, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high‐velocity markets. Copyright © 2000 John Wiley & Sons, Ltd.
The dynamic capabilities framework analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining), shaped by the firm's (specific) asset positions (such as the firm's portfolio of difficult-to-trade knowledge assets and complementary assets), and the evolution path(s) it has adopted or inherited. The importance of path dependencies is amplified where conditions of increasing returns exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding internally) and imitatability (replication by competitors). If correct, the framework suggests that private wealth creation in regimes of rapid technological change depends in large measure on honing internal technological, organizational, and managerial processes inside the firm. In short, identifying new opportunities and organizing effectively and efficiently to embrace them are generally more fundamental to private wealth creation than is strategizing, if by strategizing one means engaging in business conduct that keeps competitors off balance, raises rival's costs, and excludes new entrants. © 2003 by World Scientific Publishing Co. Pte. Ltd. All rights reserved.
This paper focuses on dynamic capabilities and, more generally, the resource-based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed 'best practice'). This suggests that they are more homogeneous, fungible, equifinal and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic stable processes with predictable outcomes. In contrast, in high-velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well-known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high-velocity markets, it is on selection. At the level of REV, we conclude that traditional REV misidentifies the locus of long-term competitive advantage in dynamic markers, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high-velocity markets. Copyright (C) 2000 John Wiley & Sons, Ltd.
This book traces the history of private military companies, with a special focus on UK private forces. Christopher Kinsey examines the mercenary companies that filled the ranks of many European armies right up to the 1850s, the organizations that operated in Africa in the 1960s and early 1970s, the rise of legally established private military companies in the late 1970s and early 1980s, and today's private and important actors in international security and post-conflict reconstruction. He shows how and why the change from the mercenary organizations of the 1960s and 1970s came about, as the increasing newness of private military companies came to be recognised. It then examines how PMCs have been able to impact upon international security. Finally, Kinsey looks at the type of problems and advantages that can arise for organizations that decide to use private military companies and how they can make an unique contribution to international security. Corporate Soldiers and International Security will be of great interest to all students of international politics, security studies and war studies.