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Preferential Procurement Programs Do Not Necessarily Help Minority-Owned Business

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  • Timothy Bates
  • Darrell Williams

Abstract

Some minority business enterprises (MBEs) benefit from their participation in government preferential procurement programs and some do not. A subset of minority vendors identified in this study behaves in ways suggesting sensitivity to penalties for violating minority business certification and procurement program regulations. These firms flourish in the absence of fraud penalties. A different group of minority vendors selling to government benefits from an environment in which MBE certification is comprehensive, bonding and working capital assistance are available, and assistance is delivered by a staff dedicated to aiding potential and actual MBE vendors. The preferential procurement program can serve as either a valuable economic development tool for fostering minority business development, or it can promote MBE front companies that pass on their procurement contracts to nonminority firms. Some governments choose to operate the former type of program; others opt for the latter.

Suggested Citation

  • 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.
    • Handle: RePEc:cen:wpaper:95-1
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    File URL: https://www2.census.gov/ces/wp/1995/CES-WP-95-01.pdf
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    References listed on IDEAS

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    1. Timothy Bates & Robert McGuckin, 1990. "The Characteristics of Business Owners Data Base," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 736-751.
    2. Evans, David S, 1987. "The Relationship between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 567-581, June.
    3. Faith Ando, 1988. "Capital issues and the minority-owned business," The Review of Black Political Economy, Springer;National Economic Association, vol. 16(4), pages 77-109, March.
    4. Timothy Bates & Caren Grown, 1991. "Commercial Bank Lending Practices And The Development Of Black-Owned Construction Companies," Working Papers 91-9, Center for Economic Studies, U.S. Census Bureau.
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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. Grant H. Lewis, 2017. "Effects of federal socioeconomic contracting preferences," Small Business Economics, Springer, vol. 49(4), pages 763-783, December.
    5. Ollinger, Michael & Fernandez-Cornejo, Jorge, 1998. "Innovation and Regulation in the Pesticide Industry," Agricultural and Resource Economics Review, Cambridge University Press, vol. 27(1), pages 15-27, April.
    6. Timothy Bates, 2002. "Minority businesses serving government clients amidst prolonged chaos in preferential procurement programs," The Review of Black Political Economy, Springer;National Economic Association, vol. 29(3), pages 51-70, December.
    7. Douglas W Dwyer, 1995. "Whittling Away At Productivity Dispersion," Working Papers 95-5, Center for Economic Studies, U.S. Census Bureau.
    8. 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.
    9. Timothy Bates & David Howell, 1998. "The Declining Status of Minorities in the New York City Construction Industry," Economic Development Quarterly, , vol. 12(1), pages 88-100, February.
    10. Bates, Timothy, 2002. "Restricted access to markets characterizes women-owned businesses," Journal of Business Venturing, Elsevier, vol. 17(4), pages 313-324, July.

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