The policy–practice divide and SME-friendly public procurement

Abstract

Policies aimed at supporting small- and medium-sized enterprises (SMEs) are now standard in public procurement. Interest in these policies has yet to be matched by evidence on their implementation. Using an institutional perspective, we examine public buyers compliance with SME-friendly policy recommendations. The results, which are based on the self-reported behaviours of 436 respondents, show that public buyers are complying with some but not all policy measures. Compliance is high on measures including open tendering, provision of feedback and self-declaring financial capacity, but low on measures that impose higher transaction costs, such as dividing contracts into lots and encouraging consortium bidding. Further analysis reveals that involvement in procurement, policy familiarity and perceived importance of SME access act as positive predictors of compliance; being part of a semi-state/utility company, local authority or education institution has the opposite effect. Possibilities to increase compliance and bring about a more SME-friendly tendering system are discussed.