| This study will explain the collaboration paradox of aerospace firms operating in exposed markets. Federal policies aimed at enhancing the competitiveness of this industry assume that all firms will require similar incentives in order to collaborate for product and progress development. This study will demonstrate the contrary. Firms operating in exposed markets are collaborating differently than those in sheltered markets and thus require unique incentives to compete. Typically, large aerospace firms are sheltered because they continue to produce largely for the defense oligopoly; they are insulated from external forces including price, quality and technology. Small aerospace firms that are diversifying their production, however, are increasingly exposed to the intense competition of the commercial sector.;Small aerospace suppliers are the focus of this study because they are a vital link in the County's high-technology industrial complex. They generate the lion's share of employment and growth and are more active innovators than large firms in developing new commercial products using advanced technologies. Commercialization and diversification of production are the keys to retaining the competitiveness of small firms and putting the County's rich aerospace/defense legacy to work. In their attempt to commercialize and diversify production, however, small firms are facing profound adjustment crises in exposed markets. They must create organizational flexibility in order to respond effectively to changing market demands, establish quicker cycles times and higher quality standards to compete in an increasingly competitive global market, and obtain seed and expansion capital for new commercial ventures.;A regional, network-based industrial system is the means through which these firms can overcome their adjustment problems. Network-based systems are collective commitments between private enterprise, local government, and community and academic organizations that foster information exchange, diffuse knowledge about economic resources and reduce the costs of technology development and market adjustments. A dynamic network system can enhance the value-added of the region. What this necessitates however, are policies and programs that account for the unique incentives small firms require in exposed markets. |
