Are entrepreneurial and market orientations of small and medium-sized enterprises associated with targeting different tiers of public procurement?

Abstract

A general view is that small and medium-sized enterprises are underrepresented in public procurement due to their resource constraints. The recent literature suggests that small and medium-sized enterprises' strategic orientations could also have a role in the underrepresentation. In addition, small and medium-sized enterprises tend to position themselves either towards national or wider level public sector customers or towards sub-national level public sector customers. This paper studies how strategic orientations, namely entrepreneurial orientation and market orientation, affect small and medium-sized enterprises’ targeting of public sector customers, and how this affects their performance. Our findings show that market-oriented small and medium-sized enterprises tend to focus on sub-national level public sector customers, whereas entrepreneurially oriented small and medium-sized enterprises have more often national or wider level public sector customers. It also appears that higher performance is associated with national or wider level rather than sub-national level public sector customers. In consequence, more attention should be paid to the differentiation of public procurement markets in developing and refining policies aimed at increasing small and medium-sized enterprises participation in public procurement and at using public procurement as a means to strengthen small and medium-sized enterprises’ roles in promoting overall economic development.

Public Procurement and Small Businesses: Estranged or Engaged?

“…While such studies provide an insight into the practice–policy interface, they tend to be less grounded in theories, which would help to explain why smaller firms often find supplying public sector organizations challenging. A few exceptions to this approach were the recent works by Tammi et al () and Flynn and his colleagues (). Tammi, Reijonen, and Saastamoinen () showed that strategic orientation, namely entrepreneurial and market orientation, of the small and medium‐sized enterprises affect their targeting of different tier of the public sector market and its impact on their performance.…”

“…A few exceptions to this approach were the recent works by Tammi et al () and Flynn and his colleagues (). Tammi, Reijonen, and Saastamoinen () showed that strategic orientation, namely entrepreneurial and market orientation, of the small and medium‐sized enterprises affect their targeting of different tier of the public sector market and its impact on their performance. Flynn and Davis () used an institutional perspective to examine the extent to which the public sector buyers comply with the policy measures aimed at encouraging small and medium enterprises engagement in the public sector market.…”

Incentives and risk-sharing in public procurement of innovations

“…Further, Pickernell et al (2011) highlight a spatial aspect of innovation procurement by noting that the public-sector demand from non-local sources provides support for innovative firms. This is corroborated by Tammi et al (2017) who report that entrepreneurial SMEs tend to seek public sector contracts from non-local sources.…”

Does collaboration with public and private sector actors in public procurement of innovations improve SME competitiveness?

“…Further, Pickernell et al (2011) highlight a spatial aspect of innovation procurement by noting that the public sector demand from non-local sources provides support for innovative firms. This is corroborated by Tammi et al (2016) who report that entrepreneurial SMEs tend to seek public sector contracts from non-local sources.…”