ABSTRACT
Many US smaller defense firms have shown flexibility in adapting to commercial markets. To understand this point, this chapter provides examples. It then summarizes initiatives of the small and medium-sized defense firms that are hardly the only businesses engaged in vigorous efforts to break into commercial markets. The Defense Department in 1994 released a national survey of small defense firms' strategies for dealing with a shrinking military market. The study found that firms trying to enter commercial markets reported significantly more difficulty obtaining financing for product development than did the overall group of respondents. Firms trying to go commercial also had trouble securing credit for market assessments, marketing, and retooling. The solution, says Jon Kutler, a former Navy officer, lies in setting up a venture capital fund, with the federal government putting up 10-15 percent and private investors the rest.
