Professor Barbara Orser and a research team from the Telfer School of Management at the University of Ottawa have examined diversity in small and medium enterprise (SME) suppliers to the Government of Canada. Conducted in collaboration with Public Services and Procurement Canada, the report, Benchmarking SMEs as Suppliers to the Government of Canada: Inclusion, Innovation and International Trade, provides the federal government with a roadmap to increase diversity in SME suppliers.
“This is the first study to simultaneously examine gender of firm ownership, breadth and types of innovation, and federal SME suppliers,” said Orser. “While majority women-owned businesses are underrepresented as SME suppliers in some sectors, this was not the case in all sectors. Compared to SME non-suppliers, SME suppliers to the Government of Canada are significantly more likely to be innovators,” she added.
The study addressed three critical questions identified in previous Telfer research.
- To what extent is the gender of firm owners associated with the propensity to contract with the Canadian federal government?
- To what extent is being a supplier to the federal government associated with SME performance, in terms of the likelihood of innovation, exporting and growth?
- What are the primary obstacles associated with contracting with the Canadian federal government, as perceived by different categories of SME suppliers?
The report found that majority women-owned SMEs are less likely to contract with the Government of Canada, accounting for 10% of SME suppliers. However, the gender gap varies by sector. In some, there is no gender gap.
To increase the overall representation of women-owned firms as federal contractors, the research proposes 10 action-oriented strategies.
One recommendation is to develop sector-specific strategies to help meet the federal government’s commitment to increasing the participation of women business owners in federal contracting from 10% to 15%. Other recommendations include reviewing the eligibility criteria for federal innovation support programs and introducing “set-asides” for majority women-owned SME suppliers.
The report also recommends that the federal government define women-owned businesses by adopting the criteria advanced by the United Nations (UN). Definitional criteria are necessary to establish program eligibility, construct comparable reporting metrics, and to reduce the likelihood of “storefront” agreements, tokenism, fraud, market confusion and the “façade" of inclusion and diversity.
The report highlights the need for the federal government to introduce gender-sensitive procurement training targeted to procurement officers and advisers within federally funded innovation and business support services. Training development and delivery should be undertaken in collaboration with organizations such as the Canadian Aboriginal and Minority Supplier Council (CAMSC) and Women’s Enterprise Organizations of Canada (WEOC).
Gender differences in type of innovation by sector were found. Compared to men-owned enterprises, majority women-owned SMEs were less likely to introduce innovation within the government’s professional, scientific and technical services sectors. Programs to support marketing, process and organizational innovations in the services sectors are needed to complement existing military-related and product/technology-oriented innovation programs.
Finally, the study shows the need for the federal government to support advanced procurement analytics to further inform policymakers about the trade-offs between contracting efficiency and the federal mandate to increase the diversity of SME suppliers. Procurement analytics will also help to ensure that Canadian SMEs benefit from contracting with the Government of Canada.
“Public Services and Procurement Canada is pleased to have collaborated on this study with the University of Ottawa’s Telfer School of Management. As one of the largest buyers of goods and services in Canada, we are always looking for ways to increase the participation and diversity of small and medium enterprises in the federal government procurement. This study provides valuable insights and recommendations to consider,” said Arianne Reza, Assistant Deputy Minister for Procurement Public Services and Procurement Canada.
The next research phase will focus on strategies to enhance further the entrepreneurial ecosystems for Canadian SMEs, such as women- and Indigenous-owned businesses. This includes the role of the Canadian government as an enabling factor in supporting innovation and enterprise growth.
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University of Ottawa