Public procurement strategy: the impacts of a preference programme for small and micro businesses

Reconciling Conflicting Policy Objectives in Public Contracting: The Enabling Role of Capabilities

“…In order to avoid this serious problem and to ensure the robustness of the obtained findings, the Propensity Score Matching (PSM) procedure was used (Rosenbaum and Rubin, ). PSM techniques deal with selection bias issues (Heckman et al, ) and have been recently adopted by management and public administration scholars to reproduce the conditions of quasi experiments by assuring the comparability of the observations and by allowing causality analysis (Bifulco, ; Chang et al, ; Kapoor and Lee, ; Reis and Cabral, ). To operationalize PSM in the present study, I consider favoured SMEs as the treatment group and non‐favoured companies as the control group.…”

“…In general, preference programs (such as the US Small Business Act) reduce entry barriers for SMEs in public contracting by assigning exclusive bids or a percentage of the eligible lots to SMEs, and making the awarding of government contracts possible to favoured bidders if their price is not more than a given percentage above the lowest bid from non‐favoured bidders (Dimitri et al, ; Marion, ; Reis and Cabral, ).…”

“…Incentives can lead to quality shading in the presence of fixed‐price contracts with favoured companies in public contracting especially when an excessive pursuit for cost reductions is prevailing (Loader, ). Furthermore, inherent characteristics of small firms may lead to deficient provision and increase the odds of contractual sanctions against favoured firms in public contracting (Reis and Cabral, ). Indeed, small firms are more susceptible to market risks (Hoffmann and Schlosser, ) and normally face greater financial constraints that can hamper their development and their ability to deliver goods and services to acceptable standards (Beck and Demirguc‐Kunt, ).…”

Explaining sme participation and success in public procurement using a capability-based model of tendering

“…Demonstrating an ability to professionally manage awarded contracts is particularly apposite for SMEs. Findings adduced by Reis & Cabral (2015) from the Brazilian public procurement market reveal that SMEs more than large firms are vulnerable to early contract termination.…”

“…Through networking and establishing personal business contacts, small suppliers can build trust with buyers (Maser & Thomson, 2013). Trust is an important factor in supplier selection (Ahimbisibwe, Muhwezi & Nangoli, 2012) and can help to allay reservations that buyers may have over awarding contracts to small or newly created firms (Reis & Cabral, 2015). Tellingly, small firms have acknowledged that past performance is a primary determinant of future success in public procurement (Withey, 2011).…”