Why does privatization, a practice that is generally employed to increase efficiency and effectiveness, actually appear to decrease effectiveness when applied to the military sphere? How does security privatization affect democracies' propensities to be victorious in war? This dissertation examines these two questions simultaneously, arguing that private security companies (PSCs) increase military effectiveness in certain situations and decrease military effectiveness in others. Of primary importance to these two issues, I argue, are the following: (1) the structural integration of private security contractors into the military forces with which they are deployed; (2) the cohesiveness of the collective identities of private and national military forces deployed together; and (3) the extent to which private security companies and their personnel operate in an ethical manner, complying with international humanitarian law. The dissertation explores three different types of cases, concluding that private forces: (a) tend to decrease military effectiveness and prospects for the democratic advantage in modern cases of PSC-military co-deployment due to a combination of these structural, identity, and ethical issues; (b) often increase military effectiveness in situations in which PSCs are deployed in place of national military forces, yet decrease the chances that the methods of operational behavior are performed with due respect for established legal norms, and decrease the prospects for the democratic advantage due to their impact on states' conflict selectivity; and (c) both increase and decrease military effectiveness in historical situations of hired forces deployed with national militaries, and consistently put ethical force employment at risk, due to a combination of structural and identity-based factors. In developing robust theoretical and policy-relevant conclusions, the case studies blend original and existing interview data with content analysis of academic, government, industry, media, and historical documents.