Search results

This paper aims to investigate the role of micro, small and medium enterprises (MSMEs) within the Canadian public procurement, by seeking to identify barriers and supporting factors of MSMEs’ participation and success in public tenders.

The empirical analysis builds on a unique survey run by the Canadian federal government, which addressed firms either participating or not participating in public tenders. Model estimation on the survey data relies on sample selection methodologies, which allow separating determinants of MSMEs’ decision to participate from determinants of success.

Results provide evidence that costs stemming from asset specificity and uncertainty (e.g. costs of bidding, requirements for participation, bundling of contracts and award rules based on minimum price) affect participation in public procurement. Within MSMEs, micro-firms are the most discouraged from participating. However, after controlling for factors affecting participation, micro-firms emerge as having a higher success rate, possibly because of high specialization and joint participation with larger firms.

Because of the cross-sectional nature of the data used for hypotheses testing, endogeneity may arise if ex post variables affect ex ante decisions. This may apply if participation in procurement feeds on success in past tenders.

Findings may inform policies for the inclusion of smaller firms in the public marketplace.

To the best of the authors’ knowledge, this study is the first attempting to disentangle determinants of participation in public tenders from determinants of success. Separating the two aspects helps fine-tune SME-friendly public procurement policies, by identifying actions that effectively facilitate success of MSMEs in public tenders.

Adversarial contracting methods are used for most public infrastructure procurement and timely delivery on budget remains a problem. In the past 20 years, OECD countries have adopted a number of alternative procurement methods that are based on collaborative principles including public private partnerships, long-term outsourcing arrangements and relationship/alliance contracts. We review the theoretical principles that operate for both adversarial and collaborative contracting methods. We identify the characteristics of non-adversarial contracting methods such as the output specification, qualitative selection criteria, the alignment of incentives, discrete allocation of residual control rights, life cycle costing, and risk-weighted value for money measurement that are delivering better procurement outcomes for government.

When creating a private market to provide a public good, government agencies can influence the market's competitive characteristics. Markets have predictable, often counter-intuitive, behaviors. Attempts to foster competition can increase or decrease costs, depending on the specific details of the procurement situation and the specific implementation. We modeled impacts of competition where there are economies of scale and government is obligated to purchase a fixed total quantity of a good. This model estimates cost savings from several alternative plans for a buyer exploring competitive procurement. The results indicate the approximate magnitude of changes in cost that would be associated with changes in the market structure within which such procurement occurs.

Small businesses are critical to economic health and encouraged in government spending by set-asides – annual small business sourcing goals that often are not attained. Little research has explored the negative and risky stigmas associated with small business sourcing.

This research explores reduced transaction costs of small business sourcing to government buyers. A survey of 350 government source selections reveals lower transaction costs derived from lower perceived risk of receiving a bid protest and via more efficient source selection processes.

Contrary to common bias, the performance level of small businesses is no less than that of large business. Thus, small businesses engender lower transaction costs for correcting supplier’s performance. On the basis of these findings, managerial and theoretical implications are discussed.

Public procurement is widely used to promote objectives of an economic, environmental and social nature, such as the economic development of disadvantaged social groups. This article elaborates a detailed taxonomy of such “horizontal” policies. This study is valuable, first, to facilitate analysis of the practical phenomenon of horizontal policies and of the policy implications of different approaches and, second, to illuminate and develop the relevant regulatory frameworks under national and international regimes. The taxonomy is based on three key distinctions between the following: 1. policies limited to securing compliance with legal requirements and those that go beyond such requirements; 2. policies applied only to the contract awarded and those that go beyond it; and 3. nine different mechanisms by which policies are implemented in the procurement process.

E‐business developments represent a significant step in the evolution of inter‐organisational systems (IOS). Their impact on external supply chains is a major area of discussion and analysis in the literature, principally examining issues of governance structure and process efficiencies. This paper, however, addresses issues relating to the impact of e‐business developments on internal customer service with a focus on electronic procurement introduction – in other words it concentrates on the intra‐organisational system dynamics of e‐business. The procurement process is the basis for one of the primary internal customer‐provider interfaces and thus presents a valid and useful domain of study in internal customer service. In contributing to the emerging e‐service field the article first contends that much of the recent research into e‐service has taken a primarily external customer focus. However, reports suggest that the potential of e‐business comes from applications both within and between businesses. Consequently, this paper focuses on the findings relating to internal e‐service obtained from an extensive, primarily qualitative and exploratory, research programme incorporating 97 organisations. The article concludes that internal customer satisfaction is central to the success of e‐procurement deployment and is a significant determinant of the cost benefits to be gained from its adoption.

The purpose of this paper is to contribute to a better understanding of the economic consequences of aiming for sustainable procurement. The authors develop and apply a framework designed to identify and measure the risk-related cost trade-offs inherent in initiatives designed to improve sustainability in procurement.

The research uses a combined conceptual and case-based research method. A model is developed from theory; subsequently, it is applied using an action research approach and its limitations in use are identified.

Specifically, the authors develop and exemplify a framework designed to measure the risk-related cost impact of initiatives to improve sustainability in procurement and develop an initial list of difficulties and constraints when in use.

This research presents one instance of a model that is applied in one single setting. The purpose is not to generalize, but to provide a deeper understanding of the interconnectedness between sustainability initiatives, risk mitigation and their economic effect. The framework and its calculation methods have to be further developed and refined using more case studies.

The model can provide initial inspiration and a starting point for firms with the ambition to develop business case models to assess initiatives to improve sustainability in procurement. Its main strength is to demonstrate the multiple cause–effect relationships as well as trade-offs involved in accounting for the risk related effect of a sustainable procurement initiative.

The presented research contributes to the existing literature by conceptually developing a framework with the potential of outlining the risk-related cost implications of investments initiatives designed to improve sustainability in procurement.

This paper aims to explore effective supply chain principles, through the theory of transaction cost economics, as measures to improve current contingency pharmaceutical item shortfalls in the Air Force Medical Service (AFMS) Contingency Pharmaceutical Programme.

In this research, AFMS contingency pharmaceutical data was collected from various databases, including the Joint Medical Asset Repository, Medical Contingency Requirements Workflow and the Medical Requirements List. Through the methodology of cost-benefit analysis, alternative sourcing and fulfilment practices are evaluated.

The findings of this research indicate that the application of centralized purchasing principles, in an effort to leverage prime vendor contract fill rates for shortage items, can lead to 12%–17% increases in pharmaceutical material availability across the programme.

This research clearly shows that consolidating demand for shortage items across Active Duty War Reserve Material assemblages, though applications of centralized purchasing principles that leverage prime vendor contract fill rates, can lead to substantial increases in material availability at costs that justify the calculated benefits.

Health sector is one of the most important sectors when the size of spending and the number of people and organizations involved are considered. An important characteristic of this sector is the dominance of governments as health care providers and/or financers. This fact has important procurement policy implications. This paper gives a detailed overview of the health sector in Turkey and issues surrounding public procurement in this sector. It presents a model for implementation of eprocurement in Turkey’s public health sector, a discussion about the extent to which e-procurement can solve prevailing problems and suggestions to improve procurement in this sector.

This paper seeks to adopt a resource‐based approach to investigate the link between procurement capabilities, internet resources, and performance. It aims to cover two gaps in the operations management literature: the missing links between procurement capabilities and the performance of a firm, and the role of internet resources in shaping such links.

After the identification of two key capabilities in procurement and the introduction of internet resources, the relationships with performance are empirically tested in a sample of 93 firms in the textile and clothing industry in Italy. Data were analysed using a partial least‐squares technique and main and interaction effects were investigated.

First, process efficiency and process integration capabilities provide a significant (and equally important) contribution to firm performance, but there are no complementary effects between them. Second, and contrary to expectations, the internet has been found to enhance the effect of process integration capability, but not that of process efficiency capability. Third, a new finding reveals that the internet not only interacts with each of these capabilities in procurement separately, but it also enhances the synergistic effect between them.

The investigation is based on a self‐reported cross‐sectional analysis, and it is specific to a single industry and the procurement of one type of material. Nonetheless, it suggests a number of different implications. Achieving excellence in procurement requires the development of distinct capabilities, because the management of core purchasing activities and the integration of procurement in the supply chain are not complementary. Contrary to common expectations, employing the internet in procurement has little power to reduce transaction costs, although it can be fruitful for improving inter‐functional coordination. The internet can also help in “putting the pieces together” by exploiting the otherwise latent complementary effects between procurement capabilities.

This paper is unique in that it employs a strategic management theory – the resource‐based view – to unpack the mechanisms through which procurement activities contribute to performance. It represents a first response to the call for research into the use of such theoretical frameworks which has recently been made in the operations management literature. The paper also offers the first empirical test of how the internet interacts with existing capabilities in the procurement domain, providing clear guidance on how to exploit its often undervalued potential.