Discretion, Discrimination, and Oversight in Federal Contracting: Examining New Theory and Evidence
Date:
Abstract: In 2017, the U.S. federal government awarded over $100 billion in procurement contracts to small businesses, including firms owned by members of under-represented groups (minorities, women, and service-disabled veterans) or located in economically distressed areas. Although the vast scale and scope of public procurement has the potential to advance inclusiveness, there is little empirical research on how the actual inclusiveness of federal agencies affects organizational decision-making regarding the awarding of contracts to socioeconomically disadvantaged small business owners. We explore organizational inclusiveness in the federal government along three key dimensions: administrative discretion, workplace discrimination, and legislative oversight. We empirically analyze the annual small business procurement activities of 41 unique federal agencies, large and small, from 2002-2011. We find economically significant effects for administrative discretion, workplace discrimination, and legislative oversight on the share of a federal agency’s contracts awarded to small disadvantaged businesses. We discuss the implications for scholars, managers, and policymakers.
Keywords: globalization, exporting by SMEs, internationalization process, ethnic minorities, diaspora