Investigating the effect of tendering capabilities on SME activity and performance in public contract competitions

Abstract

Barriers to small and medium-sized enterprise (SME) participation in public procurement have been the focus of research for many years. Much less attention has been paid to the predictors of SME success. This article examines the role that tendering capabilities – relational and procedural – play in explaining SME activity and performance in public contract competitions. Analysis of primary survey data from 3010 SMEs supports a capability-based perspective. Procedural capability has a significant effect on number of tenders submitted and value of contract sought. Relational capability does not. However, procedural and relational capabilities have a significant and positive effect on contract win-ratio and percentage of total revenue derived from public contracts. For SMEs, these findings underline the importance of investing in tendering skills and devising buyer engagement strategies. Enterprise support agencies and public sector organisations can play their part through the provision of targeted training programmes and better communication with SME suppliers, respectively.