Inclusive Sourcing: Exploring Missing Links in Procurement and Contracting That Adversely Affect the Upward Mobility of Minority Businesses

Abstract

While large purchasing organizations (LPOs) continue to push their supplier diversity and development efforts, disparities remain between minority- and majority-owned businesses. We examine existing disparities, investigate the factors contributing to these gaps, and discuss how LPOs may improve their engagement initiatives with minority-owned businesses, leading to mutual economic success. Through interviews with representatives of minority- and majority-owned businesses, we uncover the difficulties that minority-owned businesses face in accessing LPOs. They receive fewer development opportunities and are less upwardly mobile than their majority-owned counterparts. Trust emerged as a critical factor required for minority-owned businesses to gain access to LPOs. We explore additional factors that may influence LPO procurement decisions beyond racial biases, such as the dense networks of minority-owned businesses, the risks associated with engaging minority-owned businesses, and the complexity of LPO organizational structures. This essay contributes to the operations and supply chain literature on diversity, equity, and inclusion by providing researchers and LPOs with a pragmatic view of their buyer–supplier relationships and strategies to improve contracting practices with minority-owned businesses.