A review on participation of SMEs in public procurement: opportunities, challenges, and policy implications

Document Type : Original Article

Authors

Department of Procurement & Supply Management, College of Business Education, Mbeya, Tanzania

Abstract

In recent years, there has been growing interest in the participation of small and medium-sized enterprises (SMEs) in public procurement. This research aims to provide a comprehensive understanding of the opportunities, challenges, and policy implications related to SME participation in public procurement through an extensive review of existing literature in the field. Bakker's (2010) review approach was employed using the Emerald and Google Scholar databases, resulting in the identification and critical analysis of 31 studies that addressed the research objectives. We revealed that limited access to information, complex tendering procedures, financial constraints, limited capacity and skills, and unequal competition with larger firms are the most significant challenges that hinder the effective participation of SMEs in public procurement. On the other hand, several opportunities are available for SMEs to leverage public procurement opportunities. These include, but are not limited to, diversified training and capacity-building programs on public procurement procedures, diversity programs and policies that provide preferential treatment to SMEs, simplified procedures for minor and micro procurement, online platforms and tender portals, enhanced collaboration between SMEs and large firms, and expanding procurement requirements. Existing literature offers limited reviews that thoroughly examine SME participation in public procurement. Moreover, further research is needed to assess the effectiveness of policy measures and their impact on SME engagement in public procurement.

Keywords

Main Subjects

References

Abdellatif, L., & Zaky, M. (2015). Characteristics of private markets and accessibility of small and medium enterprises to public procurement markets: Pharmaceuticals in Egypt. Journal of Public Procurement, 15(4), 476-513.
AfDB. (2012). Rules and Procedures for Procurement of Goods and Works. Procurement and Fiduciary Services Department, Tunis.
Aguilar, S. (2016). Promoting the participation of Small and Medium Size Enterprises (SMEs) in Green Public Procurement. The United Nations Environment Programme, Nairobi.
Akenroye, T. O., & Aju, O. (2014). Barriers to SMEs participation in public procurement in Nigeria: some preliminary results. International Journal of Entrepreneurship and Innovation Management, 17, 4-6.
Akenroye, T.O., Owens, J.D., Elbaz, J., & Durowoju, O.A. (2020). Dynamic capabilities for SME participation in public procurement. Business Process Management Journal, 26(4), 857-888.
Akenroye, T., Owens, J.D., Oyegoke, A.S., Elbaz, J., Belal, H.M., & Jebli, F. (2022). SME’s disinclination towards subcontracting in the public sector markets: an attributional perspective. Journal of Public Procurement, 22(2), 109-127.
Asgary, A., Ozdemir, A., & Hale, O. (2020). Small and Medium Enterprises and Global Risks: Evidence from Manufacturing SMEs in Turkey. International journal of disaster risk science, 11(2), 59–73.
Azam, M. S. (2015). Diffusion of ICT and SME Performance", E-Services Adoption: Processes by Firms in Developing Nations Advances in Business Marketing and Purchasing, 23, Emerald Group Publishing Limited, Bingley, 7-290.
Bakker, R. M. (2010). Taking stock of temporary organizational forms: A systematic review and research agenda. International Journal of Management Reviews, 12(4), 466–486.
Essien, E., Lodorfos, G., & Kostopoulos, I. (2019). Antecedents of supplier selection decisions in the public sector in Nigeria. Journal of Public Procurement, 19(1), 15-45.
Flynn, A., & Davis, P. (2016). Firms’ experience of SME-friendly policy and their participation and success in public procurement. Journal of Small Business and Enterprise Development, 23(3), 616-635.
Flynn, A., & Davis, P. (2017). Explaining SME participation and success in public procurement using a capability-based model of tendering. Journal of Public Procurement, 17(3), 337-372.
Glas, A.H., & Ebig, M. (2018). Factors that influence the success of small and medium-sized suppliers in public procurement: evidence from a centralized agency in Germany. Supply Chain Management, 23(1), 65-78.
Ismail, I.J., & Changalima, I.A. (2022). Thank you for sharing! Unravelling the perceived usefulness of word of mouth in public procurement for small and medium enterprises", Management Matters, Vol. 19 No. 2, pp. 187-208.
Israel, B., & Kazungu, I. (2019). The role of public procurement in enhancing SMEs: experience from Mbeya, Tanzania. Journal of Business Management and Economic Research, 3(1), 17-27.
Israel, B. (2021). Unlocking public procurement from corruption: examining the role of ethical training and education in selected LGAs, Tanzania. European Journal of Education Studies, 8(1), 51–63.
Israel, B. (2022). Joint ventures for SMEs competitiveness and inclusive growth: A comparative analysis of SMEs in Mbeya, Tanzania. E-Journal of Humanities, Arts and Social Sciences, 3(8), 337-353.
Kidalov, M.V. (2013). U.S. and E.U. SME subcontracting policy and practice trends: Towards a transatlantic accountability consensus. Journal of Public Procurement, 13(1), 39-71.
Kotturu, C.M.V.V., & Mahanty, B. (2017). Determinants of SME integration into global value chains: Evidence from Indian automotive component manufacturing industry. Journal of Advances in Management Research, 14(3), 313-331.
Loader, K. (2013). Is Public Procurement a Successful Small Business Support Policy? A Review of the Evidence. Environment and Planning: Government and Policy, 31(1), 39–55.
Loader, K. (2015). SME suppliers and the challenge of public procurement: Evidence revealed by a UK government online feedback facility. Journal of Purchasing and Supply Management, 21(2), 103-112.
Loader, K., & Norton, S. (2015). SME access to public procurement: An analysis of the experiences of SMEs supplying the publicly funded UK heritage sector. Journal of Purchasing and Supply Management, 21(4), 241-250.
Mingming, L. (2016). Personal communication, China Environmental United Certification Centre Co. Ltd, China.
Manu, P., Mahamadu, A.-M., Booth, C., Olomolaiye, P.O., Coker, A., Ibrahim, A., & Lamond, J. (2019). Infrastructure procurement capacity gaps in Nigeria public sector institutions. Engineering. Construction and Architectural Management, 26(9), 1962-1985.
Mark McKevitt, D., Flynn, A., & Davis, P. (2014). Public buying decisions: a framework for buyers and small firms. International Journal of Public Sector Management,27(1), 94-106.
Mauro, C., Ancarani, A., & Hartley, T. (2020). Unravelling SMEs’ participation and success in public procurement. Journal of Public Procurement, 20(4), 377-401.
McKevitt, D., & Davis, P. (2013). Microenterprises: how they interact with public procurement processes. International Journal of Public Sector Management, 26(6), 469-480.
Mphela, T., & Shunda, J.P.W. (2018). Can small, medium and micro enterprises survive in public procurement? Lessons from Botswana. Journal of Public Procurement, 18(2), 90-110.
Namagembe, S., Ntayi Mpeera, J., & Kalid, A. (2021). An examination of SME involvement in public procurement under bid lot sizing. Journal of Public Procurement, 21(4), 370-398.
NBS, (2020). Quarter three gross domestic report. Tanzania Government Press. Dar es Salaam, Tanzania.
Nicholas, C., & Fruhmann, M. (2014). Small and medium-sized enterprises policies in public procurement: Time for a rethink? Journal of Public Procurement, 14(3), 328-360.
Patil, K. (2017). Public procurement policy for small and medium enterprises in developing countries: Evidence from India. International Journal of Public Sector Management, 30(4), 391-410.
Pickernell, D., Jones, P., Packham, G., Thomas, B., White, G., & Willis, R. (2013). E-commerce trading activity and the SME sector: an FSB perspective. Journal of Small Business and Enterprise Development, 20(4), 866-888.
Reijonen, H., Saastamoinen, J., & Tammi, T. (2022). The importance of SMEs’ network partners in consortium bidding for public sector tenders. International Journal of Public Sector Management, 35(1), 1-15.
Saastamoinen, J., Reijonen, H., & Tammi, T. (2017). The role of training in dismantling barriers to SME participation in public procurement. Journal of Public Procurement, 17(1), 1-30.
Sanusi, A., & Connell, J. (2018). Non-market strategies and Indonesian SMEs: casualties of decentralisation? Asia-Pacific Journal of Business Administration, 10(2/3), 200-217.
Siwandeti, M., Sanga, C., & Panga, F. (2021). Perceived benefits of participation in public electronic procurement: A comparative analysis of vendors in Ilala district, Tanzania. Journal of Co-operative and Business Studies, 6(1), 165-176.
Svidronova, M.M., & Mikus, T. (2015). E-procurement as the ICT innovation in the public services management: Case of Slovakia. Journal of Public Procurement, 15(3), 317-340.
Tammi, T., Saastamoinen, J., & Reijonen, H. (2014). Market orientation and SMEsʼ activity in public sector procurement participation. Journal of Public Procurement, 14(3), 304-327.
URT. (2013). The public procurement regulations (As amended in 2016). Public Procurement Regulatory Authority, Dar es Salaam.
Wadhwaa, A., Phelpsb, C., & Kothac, S. (2016). Corporate venture capital portfolios and firm innovation. Journal of Business Venturing, 31(1), 95–112.
World Bank. (2014). Procurement guidelines for goods, works, and non-consulting services. World Bank, Washington DC.
World Bank. (2020). Procurement report in investment project financing Goods, Works, Non-consulting and Consulting Services. World Bank, Washington DC.
WTO. (2020). Joint declaration on trade and economic empowerment on the occasion of the WTO ministerial conference in Buenos Aires: Argentina.
New Applied Studies in Management, Economics & Accounting
Volume 6, Issue 4
December 2023
Pages 18-33

Files

History

  • Receive Date: 09 June 2023
  • Revise Date: 06 July 2023
  • Accept Date: 17 July 2023

Share

How to cite

Statistics