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The Impact of State Affirmative Procurement Policies on Minority- and Women- Owned Businesses in Five States

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Publication Date: October 2007

Publisher(s): Insight Center for Community Economic Development

Author(s): Tim Lohrentz

Funder(s): Ford Foundation

Funder(s): Ford Foundation

Topic: Business (Business and business enterprises)

Type: Report

Coverage: Washington Oregon Maryland Florida California

Abstract:

This study analyses the impact of state affirmative procurement policies on the performance of minority- and women-owned businesses. By examining business outcomes in five states – California, Florida, Maryland, Oregon, and Washington – this study concludes that state procurement policies do have an impact on businesses owned by women and businesses owned by persons of color. This impact may extend beyond those firms that do business directly with states or local governments.

This study presents evidence that affirmative procurement policies, such as those in Maryland, do help minority business enterprises (MBEs) and women business enterprises (WBEs) to grow. Business growth is defined as the change in the number of employees over time. The benefit of these policies appears to be cumulative and long-lasting, as well-established MBEs and WBEs in Maryland are larger than similar businesses in other states. Affirmative procurement can begin to reduce the disparity in the availability and capacity of MBEs and WBEs, compared to white-, male-owned firms. Thus, affirmative procurement policies do serve a public good.