Minority Business Access to Mainstream Markets

As minority-owned firms have penetrated the broader national marketplace—selling goods and services to corporate as well as government clients—the issue of capacity has surfaced. Particularly in government markets, one claim is that minority business enterprises (MBEs) are smaller, younger firms than nonminorities, and hence they often lack the capacity to compete effectively for government contracts. Affirmative action procurement programs, in this view, provide preferential treatment for less qualified businesses, generating reverse discrimination against the dominant, typically white-male group of business owners. A counterclaim, put forth by proponents of preferential procurement programs, is that discriminatory barriers such as entrenched old-boy networks impede MBE expansion into mainstream markets. Do the entrenched networks really thwart MBEs, or do they simply lack the capacity to compete? Empirical findings of this study support the discriminatory barrier explanation.