IDEAS home Printed from https://ideas.repec.org/a/kap/sbusec/v49y2017i4d10.1007_s11187-017-9860-z.html
   My bibliography  Save this article

Effects of federal socioeconomic contracting preferences

Author

Listed:
  • Grant H. Lewis

    (George Mason University)

Abstract

The 8(a) business development program supports small disadvantaged U.S. federal contractors through benefits such as set-aside and sole-source contracts, management and technical assistance, and mentor-protégé relationships with established firms. This study examines the effectiveness of the 8(a) program at producing positive firm-level outcomes by comparing 8(a) firms with those participating in other preferential contracting programs with different benefits. The average 8(a) program participant performs well relative to baseline firms that do not receive contracting preferences; however, these effects are driven directly by funding and not by broader stimulation of sound business practices as intended by program designers. Program participants perform similarly to service-disabled veteran-owned businesses, which benefit from comparable contract preferences but none of the mentorship, administrative support and management assistance offered to 8(a) firms. While growing at similar rates, 8(a) firms are substantially more likely to go out of business than firms in this comparison group.

Suggested Citation

  • Grant H. Lewis, 2017. "Effects of federal socioeconomic contracting preferences," Small Business Economics, Springer, vol. 49(4), pages 763-783, December.
    • Handle: RePEc:kap:sbusec:v:49:y:2017:i:4:d:10.1007_s11187-017-9860-z
    DOI: 10.1007/s11187-017-9860-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11187-017-9860-z
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11187-017-9860-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x, December.
    2. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 577-598.
    3. Robert W. Fairlie & Alicia M. Robb, 2007. "Why Are Black-Owned Businesses Less Successful than White-Owned Businesses? The Role of Families, Inheritances, and Business Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 25(2), pages 289-323.
    4. Aaron K. Chatterji & Kenneth Y. Chay & Robert W. Fairlie, 2014. "The Impact of City Contracting Set-Asides on Black Self-Employment and Employment," Journal of Labor Economics, University of Chicago Press, vol. 32(3), pages 507-561.
    5. Zoltan Acs & Thomas Åstebro & David Audretsch & David T. Robinson, 2016. "Public policy to promote entrepreneurship: a call to arms," Small Business Economics, Springer, vol. 47(1), pages 35-51, June.
    6. Samuel L. Myers & Tsze Chan, 1996. "Who benefits from minority business set-asides? The case of New Jersey," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 15(2), pages 202-226.
    7. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    8. Cavalluzzo, Ken S & Cavalluzzo, Linda C, 1998. "Market Structure and Discrimination: The Case of Small Businesses," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(4), pages 771-792, November.
    9. Ryan Decker & John Haltiwanger & Ron Jarmin & Javier Miranda, 2014. "The Role of Entrepreneurship in US Job Creation and Economic Dynamism," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 3-24, Summer.
    10. Ken Cavalluzzo & John Wolken, 2005. "Small Business Loan Turndowns, Personal Wealth, and Discrimination," The Journal of Business, University of Chicago Press, vol. 78(6), pages 2153-2178, November.
    11. Tommaso Minola & Giuseppe Criaco & Martin Obschonka, 2016. "Age, culture, and self-employment motivation," Small Business Economics, Springer, vol. 46(2), pages 187-213, February.
    12. Thomas Åstebro, 2017. "The private financial gains to entrepreneurship: Is it a good use of public money to encourage individuals to become entrepreneurs?," Small Business Economics, Springer, vol. 48(2), pages 323-329, February.
    13. Timothy Bates & Darrell Williams, 1995. "Preferential Procurement Programs Do Not Necessarily Help Minority-Owned Business," Working Papers 95-1, Center for Economic Studies, U.S. Census Bureau.
    14. Blanchard, Lloyd & Zhao, Bo & Yinger, John, 2008. "Do lenders discriminate against minority and woman entrepreneurs?," Journal of Urban Economics, Elsevier, vol. 63(2), pages 467-497, March.
    15. Mirjam Strupler Leiser & Stefan C. Wolter, 2017. "Empirical Evidence on the Effectiveness of Social Public Procurement Policy: The Case of the Swiss Apprenticeship Training System," LABOUR, CEIS, vol. 31(2), pages 204-222, June.
    16. Davis, Steven J & Haltiwanger, John & Schuh, Scott, 1996. "Small Business and Job Creation: Dissecting the Myth and Reassessing the Facts," Small Business Economics, Springer, vol. 8(4), pages 297-315, August.
    17. Inés Butler & Gabriela Galassi & Hernán Ruffo, 2016. "Public funding for startups in Argentina: an impact evaluation," Small Business Economics, Springer, vol. 46(2), pages 295-309, February.
    18. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    19. David Neumark & Harry Holzer, 2000. "Assessing Affirmative Action," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 483-568, September.
    20. Bates, Timothy & Williams, Darrell, 1996. "Do Preferential Procurement Programs Benefit Minority Business?," American Economic Review, American Economic Association, vol. 86(2), pages 294-297, May.
    21. Timothy Bates, 2009. "Utilizing Affirmative Action in Public Sector Procurement as a Local Economic Development Strategy," Economic Development Quarterly, , vol. 23(3), pages 180-192, August.
    22. David G. Blanchflower & Phillip B. Levine & David J. Zimmerman, 2003. "Discrimination in the Small-Business Credit Market," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 930-943, November.
    23. Kotlowski, Dean, 1998. "Black Power—Nixon Style: The Nixon Administration and Minority Business Enterprise," Business History Review, Cambridge University Press, vol. 72(3), pages 409-445, October.
    24. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-640, June.
    25. Justin Marion, 2009. "How Costly Is Affirmative Action? Government Contracting and California's Proposition 209," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 503-522, August.
    26. Tommaso Minola & Giuseppe Criaco & Martin Obschonka, 2016. "Age, culture, and self-employment motivation," Small Business Economics, Springer, vol. 46(2), pages 187-213, February.
    27. Maria Figueroa-Armijos & Thomas G. Johnson, 2016. "Entrepreneurship policy and economic growth: Solution or delusion? Evidence from a state initiative," Small Business Economics, Springer, vol. 47(4), pages 1033-1047, December.
    28. Dennis E. Black, 1983. "Effectiveness of the Mandatory Minority Business Set-Aside Contracting Goals," Evaluation Review, , vol. 7(3), pages 321-336, June.
    29. Timothy Bates, 1985. "Impact of preferential procurement policies on minority-owned businesses," The Review of Black Political Economy, Springer;National Economic Association, vol. 14(1), pages 51-65, June.
    30. Rosa, Peter & Carter, Sara & Hamilton, Daphne, 1996. "Gender as a Determinant of Small Business Performance: Insights from a British Study," Small Business Economics, Springer, vol. 8(6), pages 463-478, December.
    31. Rodrigo Lovaton Davila & Inhyuck “Steve” Ha & Samuel L. Myers, 2012. "Affirmative action retrenchment in public procurement and contracting," Applied Economics Letters, Taylor & Francis Journals, vol. 19(18), pages 1857-1860, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sheela Pandey & Alejandro S. Amezcua, 2020. "Women’s business ownership and women’s entrepreneurship through the lens of U.S. federal policies," Small Business Economics, Springer, vol. 54(4), pages 1123-1152, April.
    2. Karolis Matikonis & Matthew Gobey, 2024. "Small Business Property Tax Reductions and Firm Productivity," Small Business Economics, Springer, vol. 62(1), pages 307-324, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aaron K. Chatterji & Kenneth Y. Chay & Robert W. Fairlie, 2014. "The Impact of City Contracting Set-Asides on Black Self-Employment and Employment," Journal of Labor Economics, University of Chicago Press, vol. 32(3), pages 507-561.
    2. Timothy Bates & William D. Bradford & Robert Seamans, 2018. "Minority entrepreneurship in twenty-first century America," Small Business Economics, Springer, vol. 50(3), pages 415-427, March.
    3. Timothy Bates & Alicia Robb, 2013. "Greater Access to Capital Is Needed to Unleash the Local Economic Development Potential of Minority-Owned Businesses," Economic Development Quarterly, , vol. 27(3), pages 250-259, August.
    4. Timothy Bates & Joseph Farhat & Colleen Casey, 2022. "The Economic Development Potential of Minority-Owned Businesses," Economic Development Quarterly, , vol. 36(1), pages 43-56, February.
    5. Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x, December.
    6. Robert Fairlie & Justin Marion, 2012. "Affirmative action programs and business ownership among minorities and women," Small Business Economics, Springer, vol. 39(2), pages 319-339, September.
    7. Robert Fairlie & Alicia Robb & David T. Robinson, 2022. "Black and White: Access to Capital Among Minority-Owned Start-ups," Management Science, INFORMS, vol. 68(4), pages 2377-2400, April.
    8. Lois M. Shelton & Maria Minniti, 2018. "Enhancing product market access: Minority entrepreneurship, status leveraging, and preferential procurement programs," Small Business Economics, Springer, vol. 50(3), pages 481-498, March.
    9. Pham, Tho & Talavera, Oleksandr, 2018. "Discrimination, Social Capital, and Financial Constraints: The Case of Viet Nam," World Development, Elsevier, vol. 102(C), pages 228-242.
    10. Iryna Demko & Ana Claudia Sant’Anna, 2023. "Impact of Race, Ethnicity, and Gender on the SBA Paycheck Protection Program (PPP) Loan Amounts," Economic Development Quarterly, , vol. 37(3), pages 211-229, August.
    11. Fairlie Robert & Woodruff Christopher M., 2010. "Mexican-American Entrepreneurship," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-44, February.
    12. Sabarwal, Shwetlena & Terrell, Katherine, 2008. "Does Gender Matter for Firm Performance? Evidence from Eastern Europe and Central Asia," IZA Discussion Papers 3758, Institute of Labor Economics (IZA).
    13. Mirjam Strupler Leiser & Stefan C. Wolter, 2017. "Empirical Evidence on the Effectiveness of Social Public Procurement Policy: The Case of the Swiss Apprenticeship Training System," LABOUR, CEIS, vol. 31(2), pages 204-222, June.
    14. Timothy Bates & William E. Jackson III & James H. Johnson Jr., 2007. "Advancing Research on Minority Entrepreneurship," The ANNALS of the American Academy of Political and Social Science, , vol. 613(1), pages 10-17, September.
    15. Timothy Bates, 2009. "Utilizing Affirmative Action in Public Sector Procurement as a Local Economic Development Strategy," Economic Development Quarterly, , vol. 23(3), pages 180-192, August.
    16. Agier, Isabelle & Szafarz, Ariane, 2013. "Microfinance and Gender: Is There a Glass Ceiling on Loan Size?," World Development, Elsevier, vol. 42(C), pages 165-181.
    17. Labie, Marc & Méon, Pierre-Guillaume & Mersland, Roy & Szafarz, Ariane, 2015. "Discrimination by microcredit officers: Theory and evidence on disability in Uganda," The Quarterly Review of Economics and Finance, Elsevier, vol. 58(C), pages 44-55.
    18. Cole, Rebel & Sokolyk, Tatyana, 2016. "Who needs credit and who gets credit? Evidence from the surveys of small business finances," Journal of Financial Stability, Elsevier, vol. 24(C), pages 40-60.
    19. Rodrigo Carril & Audrey Guo, 2023. "The Impact of Preference Programs in Public Procurement: Evidence from Veteran Set-Asides," Working Papers 1417, Barcelona School of Economics.
    20. Lina Aldén & Mats Hammarstedt, 2016. "Discrimination in the Credit Market? Access to Financial Capital among Self-employed Immigrants," Kyklos, Wiley Blackwell, vol. 69(1), pages 3-31, February.

    More about this item

    Keywords

    Entrepreneurship; Firm sales; Firm size; National subsidies; Policy; Public economics; Public expenditure;
    All these keywords.

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:sbusec:v:49:y:2017:i:4:d:10.1007_s11187-017-9860-z. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.