Implementing Government Policy in Supply Chains: An International Coproduction Study of Public Procurement

Published date01 April 2019
DOIhttp://doi.org/10.1111/jscm.12197
Date01 April 2019
IMPLEMENTING GOVERNMENT POLICY IN SUPPLY
CHAINS: AN INTERNATIONAL COPRODUCTION STUDY
OF PUBLIC PROCUREMENT
CHRISTINE HARLAND
Politecnico di Milano
JAN TELGEN
University of Twente
GUY CALLENDER
University of Curtin
RICK GRIMM
National Institute for Governmental Purchasing (NIGP)
ANDREA PATRUCCO
Penn State University
Public procurement is the commercial arm of governments, contracting
for goods, and services to feed public sector service provision. However,
mainstream operations and supply chain management journals have pub-
lished little on supply chains to governments, public procurement, and
the significance of engaging small businesses in government supply
chains. Policy feedback theory and thirteen coproduced international case
studies of public procurement and small business agency dyadic relation-
ships are used to explore this space. The research highlights the impor-
tance of both public procurement and small business as areas of policy
and supply chain management research. Policy feedback theory is intro-
duced as a means to understand relationships and is applied to a copro-
duction study to understand how supply chain management research can
both explore and change policy.
Keywords: contracting; procurement processes; case studies; engaged methods
INTRODUCTION
Despite public sector spending representing up to
57 percent of nations’ GDPs (OECD 2017), there has
been little research attention paid to the economic
importance of supply chains to governments. There is
research evidence of how, in the private sector, pur-
chasing can influence supply chain behavior to deliver
firms’ policies, notably relating to environmental sus-
tainability policies (Hafezalkotob, 2015; Hall &
Matos, 2010; Klassen & Vachon, 2003; Rao, 2002; Sar-
kis, 2012; Walker & Jones, 2012). But far less is pub-
lished in operations and supply chain management
journals about public sector suppliers and their associ-
ated government policies (Amann, Roehrich, Eßig &
Harland, 2014).
Small businesses are important to economies, soci-
ety, and larger businesses globally. For instance,
according to reports published by the US Small Busi-
ness Administration they represent 99.7 percent of all
employer firms, employ over half of all private sector
employees, pay 44 percent of the total US private pay-
roll, have generated 64 percent of net new jobs over
the past 15 years, create more than half of non-agri-
cultural GDP, hire 40 percent of high tech workers,
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Journal of Supply Chain Management
2019, 55(2), 6–25
©2019 Wiley Periodicals, Inc.
make up 97.3 percent of exporters producing 30.2
percent of export value and produce 13 times more
patents per employee than large patenting firms (SBA,
2017). Supply chain management research has recog-
nized the importance of maintaining small businesses
in supply markets (Maloni & Benton, 2000), high-
lighting that small businesses are disadvantaged rela-
tive to larger organizations in relational exchange and
electronic communication, both important features of
supplier relationships (Larson, Carr & Dhariwal,
2005). Larger organizations struggle to align with
small businesses in buyersupplier relationships
because of the difference between their sizes (Morya
& Dwivedi, 2009). In the public sector, there is
increasing concern about market dominance of larger
firms over government contracts (Caldwell et al.,
2005); to counteract this, most governments wish to
develop small businesses through improved engage-
ment with public sector contracts, but there is vari-
ability in their performance.
Private sector supply chain management research
tells us that firms should develop their purchasing
and supply chain management capability internally to
leverage suppliers’ resources to generate sustainable
competitive advantage (Barney, 2012; Hitt, 2011;
Paulraj, 2011). However, despite policies, legislation,
regulation, and government-driven initiatives, govern-
ments are challenged to leverage supplier resources for
the public good. In private sector supply chains,
research evidence shows that integrated behavior,
cooperation, and mutual sharing of information are
important aspects of SCM to be effective in a competi-
tive environment (Mentzer et al., 2001); building rela-
tional capital (Cousins, Handfield, Lawson &
Petersen, 2006; Cousins, Lawson & Squire, 2006) and
trust (Zhang, Viswanathan & Henke, 2011) are impor-
tant for improved supply chain relationships But
public procurement regulations constrain public sector
buying organizations from developing closer, longer
term relationships with suppliers.
Given that governments are large, powerful spending
organizations that want to maintain and develop a
thriving small business sector, this research examines
the role of public procurement as a lever of govern-
ment policy implementation. The manuscript makes
multiple contributions. First, a review of literature finds
the potential for public procurement as a strategic lever
of supply chain reform to achieve broader government
policy objectives to be underexploited. Second, small
businesses as suppliers are examined both on their
own and via engagement with public procurement
contracts, suggesting many reasons for developing
small business contributions to government supply
chains, but challenges to secure those contributions.
Engaging small business in public procurement is
critical, difficult, and understudied. This manuscript
takes a first step to address this gap by using a frame-
work based on policy feedback theory in a coproduc-
tion study. Data from 13 coproduced case studies
representing 13 countries captured the perceptions of
public procurement practitioners and small business
associations of the effectiveness of different mecha-
nisms used by government procurement to encourage
and engage small businesses in supply chains. The
mechanisms governments use to try to engage small
businesses in supply chains supplying the public sec-
tor, and small business’ interpretations of those,
impact on their motivation to bid. Perceptions of
effectiveness of mechanisms are explored; govern-
ments need to understand whether their chosen
mechanisms impact small business capacity or predis-
position to bid for contracts and engage in supply
chains to the public sector. As small businesses repre-
sent such a substantial sector of economy and society
in terms of employment, their satisfaction or dissatis-
faction with government policy and its implementa-
tion should be important to governments. In private
sector supply chains, it is understood how dedicated
investments build trust and commitment in supply
chain relationships (Nyaga, Whipple & Lynch, 2010).
Governments need to understand how they can do
more to develop small businesses (Zeng, Xie & Tam,
2010) by dedicating investments to engage them in
public contracts (Preuss, 2011).
By applying policy feedback theory, this copro-
duced research provided insights to improve policy
and public procurement in 13 countries, while
addressing a gap in the literature on the empirical
understanding of the types of mechanisms used by
governments, and perceptions of governments and
small businesses of the effectiveness of different
mechanisms. It is found that type of mechanism
used is important; governments are wasting invest-
ments in information and advice mechanisms, web-
sites, and education, as small businesses perceive
more value in direct and indirect financial support
mechanisms that improve their resource capacity to
engage with public contracts. It is also found that
gaps in perceptions exist between policymakers,
implementers, and targets of policy. The paper high-
lights the importance of public procurement and
small businesses as understudied areas of supply
chain management. It also introduces policy feed-
back theory and coproduction research methods to
the discipline and then shows how they can be
used to engage in policy research.
THEORETICAL BACKGROUND
Policy Feedback Theory
Original research on policy feedback analysis
(Pierson, 1993) highlighted that policymakers sought
April 2019
Public Procurement and Government Policy
7

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