Evaluating Small Businesses' Performance in Public e-Procurement: Evidence from the Italian Government's e-Marketplace

e-Procurement is widely advocated as an effective tool to promote the participation of small and medium enterprises (SMEs) as well as micro enterprises in the public procurement market. However, little evidence exists as to what factors may influence the allocation of contracts to differently sized suppliers. We address this issue by analyzing a rather rich and unique data set, namely the “direct award” (low-value) transactions that took place on the Italian e-marketplace during the period 2005–2010. In this paper, we exploit data from low-value transactions to test the impact of different structural dimensions of the national public e-marketplace on the probability that firms of different size are awarded public contracts, particularly focusing on micro and small firms. We find that both the nature of the public buyer and the characteristics of the traded goods/services do have an impact on different firms' ability to be awarded public contracts. We also test to what extent the geographical distance between public buyers and private suppliers explains the propensity of different size class of firms to be awarded public contracts, proving, at least to some extent, that some features of “physical” procurement markets are mirrored in the “virtual” market.