Small But Not Too Much! Evaluating Small and Medium Enterprises’ Performance on the Italian Government’s E-Marketplace

Abstract

E-procurement is widely advocated as an effective tool to promote the participation of small and medium enterprises (SMEs) as well as micro enterprises in the public procurement market. However, little evidence exists as to what factors may influence the allocation of contracts to differently sized suppliers in the same class of micro, small and medium firms. We address this issue by analyzing a rather rich and unique data set, namely the 'direct award' (low-value) transactions that took place on the Italian e-marketplace during the period 2005-2010. Although micro suppliers are the most represented group of firms in the e-marketplace, evidence suggests that medium-sized firms (the largest in the reference group) display the highest success rates in getting public contracts, especially when contract values are sufficiently high. Degree of loyalty with buyers and geographical location of both buyers and suppliers also emerge as relevant factors of success in the e-procurement market, proving, at least to some extent, that some features of “physical” procurement markets are mirrored in the 'virtual' markets.