Preferential purchasing policies and SME participation in public procurement markets: do technological capabilities matter?

This article examines how preferential purchasing policies influence small and medium-sized enterprise (SME) participation in public procurement markets, with particular attention to the moderating role of technological capabilities. The study adopted a cross-sectional research design and utilised a structured questionnaire to collect data from 283 randomly selected SMEs in Tanzania. The collected data was subsequently analysed using the Hayes PROCESS macro to test the proposed hypotheses. The findings revealed significant direct effects of preferential purchasing policies and technological capabilities on SME participation in public procurement markets. Surprisingly, technological capabilities exhibited insignificant positive moderating effect on the relationship between preferential purchasing policies and SME participation in public procurement markets. The study concludes that preferential purchasing policies can autonomously legitimise SME participation in public procurement markets, irrespective of technological capabilities. However, its positive coefficient signifies the potential of technological capabilities in strengthening the effect of preferential purchasing policies on SME participation in public procurement markets. The study recommends that policymakers, oversight authorities and support institutions streamline preferential purchasing policies within the public e-procurement system and provide training and mentorship programmes aimed at strengthening SMEs’ technological capabilities and engagement in procurement markets. For SME managers, the study suggests investing in basic digital infrastructure (e.g. standard ICT tools and internet access), developing e-procurement-related skills and system integration. The study makes novel contribution to literature on SME-supporting policies and competitiveness in public procurement markets. It integrates insights from regulatory frameworks and firm-level technological capabilities to explain SMEs’ participation in public procurement markets, an interplay which has been underexplored in existing literature.