The role of training in dismantling barriers to sme participation in public procurement
| Date | 01 March 2017 |
| DOI | https://doi.org/10.1108/JOPP-17-01-2017-B001 |
| Pages | 1-30 |
| Published date | 01 March 2017 |
| Author | Jani Saastamoinen,Helen Reijonen,Timo Tammi |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue |
JOURNAL OF PUBLIC PROCUREMENT, VOLUME 17, ISSUE 1, 1-30 SPRING 2017
THE ROLE OF TRAINING IN DISMANTLING BARRIERS TO SME
PARTICIPATION IN PUBLIC PROCUREMENT
Jani Saastamoinen, Helen Reijonen and Timo Tammi*
ABSTRACT. This paper examines entry barriers to inv olvement in public
procurement of small and medium-sized enterprises and the role of training
in dismantling those barriers. We find that firms’ perceptions of barriers are
of five main types. Regression analysis shows that a lack of ongoing training
is associated with SMEs’ perceptions of resource constraints and practical
skills that hinder their participation in public procurement . We also observe
a positive connection between a positive attitude toward training and SMEs’
participation rates in public procurement. As a managerial implication, the
value of training should be ap praised at the firm level, a nd organizing
training and providing information concerning public procurement could be a
recommended policy to improve the S ME participation rate in public
procurement.
INTRODUCTION
Small and medium-sized enterprises (SMEs) are generally under-
represented in public procurement (GHK, 2010; Nicholas &
Fruhmann, 2014; Pwc, 2014). To tackle the issue, the European
Union (EU) has made efforts to better accommodate the
requirements of SMEs in public sector tendering (e.g. Commission of
the European Communities, 2008b) based on experiences of the
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*Jani Saastamoinen, Ph.D., is University Lecturer, Business School,
University of Eastern Finland. His re search interests include public
procurement, industrial organization and the analysis of financial decision
making. Helen Reijonen, Ph.D., is a University Lecturer, Business School,
University of Eastern Finland. Her research interest s include strategic
orientations, public procur ement and small firm and entrepreneurial
marketing. Timo Tammi, Ph.D., is University Lecturer, Business School,
University of Eastern Finland Business School. His teaching and research
interests are in behavioral economics, public procurement and decision-
making.
Copyright © 2017 by PrAcademics Press
2 SAASTAMOINEN, REIJONEN & TAMMI
performance of public procurement and SME surveys (KMU 2004;
GHK, 2010). Currently, however, barriers that impede SMEs’
involvement in public procurement are not adequately understood
(Pickernell, Kay, Packham, & Miller, 2011). While an extensive
approach to the barriers SMEs encounter is lacking, there are some
studies that have addressed the SME barrier problem in public
procurement. Loader (2005) discloses several barriers to SME
participation, such as a lack of awareness of procurement
opportunities and difficulties getting approved as a supplier. Peck and
Cabras (2011) find that SMEs perceive bureaucracy and the time-
consuming procurement process as key disadvantages in public
procurement. Flynn, McKevitt, and Davis (2015) show that in
comparison to small and medium-sized firms, micro-enterprises in
particular face resource constraints in public sector tendering. Based
on a survey of suppliers involved in public procurement of
innovations, Uyarra et al. (2014) argue that barriers are related to the
procurement process, such as contract size, a lack of feedback and
communication.
As a direction for research, Flynn, McKevitt, and Davis (2015) call
for more refined research on SME characteristics and how they
influence tendering. On this front, recent empirical studies emphasize
the importance of the strategic behavior of SMEs in public
procurement participation. Tammi, Saastamoinen, and Reijonen
(2014) argue that market-oriented SMEs are more likely to become
suppliers to the public sector. In a similar manner, Reijonen, Tammi,
and Saastamoinen, (2016) show that entrepreneurial orientation
could play an important role in an SME’s decision to find business
opportunities in public procurement. While identifying entrepreneurial
capabilities as an important factor in securing business with large
public and private purchasing organizations, Woldesenbet, Ram, and
Jones (2012) also highlight the need to develop human capital with
respect to skills and competences.
This paper proposes that one explanation for the observed low
participation rate may lie in difficulties and barriers linked to the
characteristics of public procurement and to participating in
procurement itself. The former group consists of difficulties and
barriers such as inadequate exchange of information and biased
selection criteria, whereas the latter category refers to barriers such
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