Public procurement policy for small and medium enterprises in developing countries

Abstract

Purpose Increasing the share of small and medium enterprises (SMEs) in public procurement through targeted support policies is often fraught with organisational and institutional challenges as can be seen from the experiences of many developed countries. This has profound implications for emulating such policies in developing countries where administrative capacities may be low for efficient policy management. The purpose of this paper is to widen the canvass of SME procurement policy discourse by exploring a developing country context. Design/methodology/approach The study provides qualitative assessment using insights from policy implementation-related theories. Due to limited reporting of target data on SME participation in India, the study conducts analysis based on key informant interviews with 20 public sector enterprises. Findings The evidence drawn from India mainly shows uneven performance among the procurers in achieving the SME procurement targets, and reveals serious policy implementation shortcomings. These findings correspond and complement the earlier studies on SME procurement in the developed world. The Indian case additionally reveals barriers which may be common to other developing countries such as the lack of policy-administrative capacity compounded by the prevalence of “efficiency syndrome” on the part of procurers. Originality/value By providing an in-depth developing country-specific assessment, the study helps informing assumptions underpinning SME-oriented procurement policies. The study, therefore, fills a gap in the literature on SME-oriented public procurement policy-making and its execution.

The “baby steps” in mainstreaming sustainable public procurement in Ghana: A “double‐agency” perspective

“…Notwithstanding the presence of some SPP requirements, they are discretionarily enforced and complied with based on the financial and technical capacity of the procurement entities, suppliers' ability to respond to SPP, and local capacity for subcontracting amid other normative factors by political executives. Similarly, in a more recent discussion on SMEs, Patil () found that a public procurement policy meant to increase local participation in India is hampered by weak administrative capacity and unfavourable risk‐averseness measures by public authorities, which he termed as “efficiency syndrome” (p. 402). It is therefore plausible to suggest that developing countries lack capacity for SPP.…”

“…In addition to lack of clear SPP legal framework, Table shows that entities including those responsible for enforcing SPP standards lack the requisite capacity to design SPP criteria and to evaluate suppliers. This is no different in the SME public procurement policy in India (Patil, ). SPP practice involves several national stakeholders: the procurement entities and their bureaucrats, members of the tender evaluation committees at the various sectors, suppliers, regulatory and standardisation institutions, and citizens and political executives (policymakers).…”

“…The World Bank (), for example, notes that public procurement is interconnected with the three main pillars of effective governance: enhanced delivery of public service, value for money, and a supportive environment for private sector growth. Parker and Hartley (), however, caution that stretching the selection criteria to meet these several policy outcomes has negative implications as it leads to vaguely specified contracts with little contributions to achieving expected outcomes (see also Patil, ).…”

“…The social facet of public procurement is also applied in copious ways to promote social justice and to elicit supplier activities that promote human rights, welfare, and favourable working conditions for employees (McCrudden, ). Notwithstanding its contribution towards promoting the interest of minority such as women, the disabled, and small‐ and medium‐scale enterprises (SMEs) (see Brammer & Walker, ; Patil, ; Walker & Brammer, ), the social variable is often difficult to enforce as they are mostly not standardised compared with those of environmental nature (McCrudden, ; Wilhelm et al, ).…”

Contracting in Brazilian public administration: A machine learning approach

“…Public procurement can be used to achieve social, economic and technological objectives (Ribeiro, Júnior, Raun, & Li, , p. 4), to promote small and medium business in developing countries (Patil, , p. 391) or even enforce sustainability, as analysed by Aragão and Jabbour (). It refers to the acquisition of goods or contracting services by the public administration (Sorte Junior, , p. 30), which are ultimately used to provide some service to the population.…”