George Mason UniversitySchool of Business

Specialization Is Key for Government Contracting Industry Success

Written by Damian Cristodero on .

Brett Josephson

Brett Josephson, assistant professor of marketing, has studied government contracting since he was a PhD student. In recently published research, Josephson—together with Ju-Yeon Lee, assistant professor of marketing at Iowa State University, and Babu John Mariadoss and Jean Lynn Johnson, associate professors of marketing at Washington State University—recommended that companies focus on specialization.

Reviewing 16 years of data, Josephson and coauthors researched more than 1,300 publicly traded firms that do business with the government. Whereas diversification is often recommended for companies, this research shows that when it comes to the federal government, the more specialized a company can be, the higher the return in stock prices will be.

“Concentration is the key finding of this paper,” says Josephson. “You can’t serve all agencies. It’s very expensive. You have to concentrate on one or two within the federal government, build that core knowledge. That’s where firms see the largest increase to their stock price.”

Jerry McGinn, executive director of Mason’s Center for Government Contracting, says, “Brett is doing dynamite research that is directly applicable to the $500 billion government contracting industry. His work is providing great fuel for our center, and I very much look forward to continuing collaboration with Brett and other School of Business faculty.”