Thank you for sharing! Unravelling the perceived usefulness of word of mouth in public procurement for small and medium enterprises

Abstract

PurposeOver time, the concept of word of mouth (WOM) has spread beyond marketing into other disciplines. This is because WOM is important in decision-making at both the individual and organisational levels. Also, people are more likely to trust recommendations from their peers than those from companies. Therefore, the purpose of this study is to investigate the perceived usefulness of WOM messages for small and medium-sized enterprise (SME) suppliers in participating in Tanzanian public procurement opportunities.Design/methodology/approachThe study collected cross-sectional data from 214 SME suppliers who supply common use items to public procuring organisations in Dodoma City, Tanzania. Structural equation modelling was used to test the direct relationships between study variables, and Hayes' PROCESS macro was used to test for the indirect effect of WOM message delivery on WOM attributes and the perceived usefulness of WOM.FindingsWOM attributes that include expertise differential, perceptual homophily, and trustworthiness are related to the perceived usefulness of WOM. Also, WOM message delivery mediates the relationship between the WOM attributes and the perceived usefulness of WOM in enhancing public procurement participation. Therefore, the study's findings revealed that WOM is applicable in the public procurement context, under which public buyers act as senders and suppliers act as receivers. The latter finds out about public procurement opportunities and responds to them, while the former gives suppliers whatever information they need to respond to public procurement tenders that have been advertised.Research limitations/implicationsBecause the study was cross-sectional, it was difficult to determine whether the opinions gathered over time remained consistent. Furthermore, only suppliers who are parties to framework contracts under Government Procurement Services Agency were included in the study. Therefore, the sample was limited to only suppliers supplying common use items to various public organisations in Dodoma City, Tanzania.Originality/valueThis paper integrates the concept of WOM from the marketing discipline and public procurement. As a result, the study adds to the understanding of the use of information transmission in terms of the contribution of WOM messages from public buyers to suppliers to enhance small and medium enterprises' participation in public procurement opportunities.