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.