Association for Public Policy Analysis & Management

Purchasing governments around the globe have proliferated set-aside programs to diversify their supplier base.  These programs generally establish a percentage target of public purchasing for categories of firms that are disadvantaged in the public sector procurement marketplace (e.g., small-, minority-, female-, veteran-, disabled-owned firms).  By setting-aside a portion of procurement spending, targeted categories of firms are sheltered from competing with firms that have incumbent advantages.  A complementary purpose of set-aside programs is to create conditions for disadvantaged firms to eventually “graduate” from preferential treatment and successfully compete in open competitions. The track-record of set-aside programs is mixed.  Some governments have succeeded in meeting percentage goals and graduating targeted categories of firms, but many have not (Barrett, Jones & McEvoy, 1996; LaNoue, 1994; Zehrt, 2009).  This paper examines minority business enterprise (MBE) set-aside programs as they represent the largest category of such programs in the public and private sectors (Adobar and McMullen, 2006).  Specifically, the paper focuses on the performance of an MBE set-aside program in a large U.S. state to assess the impact of factors likely to inhibit or promote success. 

In 2008, the Governor of the State of Ohio, Democrat Ted Strickland, promulgated an executive order to increase the percentage of state purchasing devoted to MBEs across all state agencies.  While state agencies failed to meet percentage targets under Governor Strickland’s leadership, most agencies have achieved the targets under his successor, Republican John Kasich.  This paper compares changes in the program and the implementation context between the two administrations to identify factors which promote and inhibit success.  Multivariate empirical and in-depth qualitative analyses provide evidence that operational strategy changes in program implementation drove the success of the program under the Kasich administration in comparison to the Strickland administration.  The analysis presented in the paper assesses the impact of program strategy relative to other potentially influential factors including: leadership diversity, organizational size, MBE supply, organizational structure, and organizational culture and history.  The findings have implications for the design and implementation of set-aside programs in other states and other levels of government.