Procurement strategies influencing small and medium contractor development in South Africa

Abstract

In South Africa, the post-apartheid regime offers small and medium enterprise (SME) construction firms opportunities to develop through targeted procurement strategies. However, there are limited studies that determine the level of the relationships between the procurement strategies and the development of SME construction firms. Hence, this study investigated whether there is a variation in the effect of procurement strategies on the development of SME construction firms. A quantitative research approach was employed in collecting data from 176 SME construction firms in South Africa. The data collected were analysed using partial least squares structural equation modelling, mean item scores and the Kruskal–Wallis test. The findings revealed that there is a relationship between procurement strategies and the socio-economic development of specific classes of SME construction firms in South Africa. The study also found that there is a slight mismatch between procurement strategy and SME development outcomes for different SME sizes. It was concluded that the achievement of SME development has little to do with preferences or the use of specific procurement strategies. The study recommends that public-sector clients should not entirely treat SMEs as a homogenous block when using traditional project procurement. Further studies that examine how different characteristics of SMEs influence SME development are recommended.