First and foremost the Merlin was one of the most capable inline engines available in the world in the 1930s, especially for the UK. This is why it was favored for the Mustang over the Allison inline engine.

Secondly, it benefitted from the leadership vision of Rolls-Royce's Ernest Hives. He initially rebuked the UK government's ideas of using shadow factories (factories built using state funds but would sit dormant until needed) due to the impact on quality it would have on the engines. Hives proposed a US styled subcontractor system where the engine plans would be handed over to non-Rolls Royce entities and allow them to produce the engine under license. This was highly successful and allowed Rolls Royce to meet production requirements for the Merlin engine. About one third of the 170,000 Merlin engines were produced under license by Packard in the United States.

While the combination of shadow factories and subcontractors allowed Rolls Royce to meet requirements, again, the requirements were only there due to the Merlins performance threshold.

Source: Creating Modern Capitalism: How Entrepreneurs, Companies and Countries Triumphed in Three Industrial Revolutions by Thomas K. McCraw