Finnish defence industry and the U.S. defence market

Abstract

This thesis aims to analyse how the sales and export process of defence industry products to the U.S. is seen from the perspective of Finnish small and medium-sized enterprises operating outside of industrial participation agreements. The objective of this qualitative study is to determine the perceived external challenges against a successful market entry and to provide insight into what kind of internal capabilities and external collaborations are required from the companies to overcome them.

The literature review of this study first justifies the selection of the existing frameworks and models of international business and industrial organisation. Then, it suggests how they align with the selected foreign market entry planning model. After further discussion of these models and frameworks with elaborative examples from the context of this study, a literature-based briefing of the Western defence industry is given. As a result, the reader should be equipped with an understanding of the theoretical framework used to examine the discussed topics.

In this study, the methodology chapter describes how the interview study favouring a cultural perspective was conducted and how the philosophy of critical realism is additionally utilised during the discussions concerning this thesis’ topics. The dataset used in this study consisted of primary and secondary data, and both included interviews held with defence industry experts and representatives of private companies, and the secondary data additionally included interviews from the representatives of government organisations. Due to the sensitivity of the chosen topic, research limitations and ethical considerations are discussed in detail. Due to its role in national defence, the defence industry is tightly linked with politics, and the political aspect of defence product sales is often discussed during the findings section of this study.

The defence industry being product-centric, this study’s empirical findings presented in the discussions chapter confirm that the U.S. defence market consists of structures that are responsible for the high entry barriers to overcome. Hence, understanding the external environment’s characteristics, the company’s internal capabilities and its external collaborations, and the procurer’s needs and associated politics are vital for planning a foreign market entry strategy in the context of defence product sales. With the freedom of cultural studies perspective, the theoretical contribution of this study is centred on the suggestion of a connection between the chosen existing frameworks. In the managerial implications, the process of formulating a foreign market entry strategy is discussed. Further, policy implications and ideas for further research of offsets are made.