Minority Purchasing Programs: A Review and Prognosis for the Future

By Swearingen, Jenny J.; Plank, Richard E. | Academy of Entrepreneurship Journal, July 1997 | Go to article overview

Minority Purchasing Programs: A Review and Prognosis for the Future


Swearingen, Jenny J., Plank, Richard E., Academy of Entrepreneurship Journal


INTRODUCTION

The purpose of this literature review is to suggest relevant parameters for discussing the future of minority business programs. The current legisistive and court climate is suggesting possible changes which may impact significantly on the way that minority programs in general are developed and supported, both in the public and private purchasing sectors. A synthesis of the literature will examine pertinent constructs to measure these programs. In addition to the literature review, a historical review will also be presented for background purposes.

OVERVIEW OF MINORITY OWNED ENTERPRISES

The survey of Minority Owned Enterprises conducted in 1987 showed minority firms in the United States grew from 741,640 in 1982 to 1,213,750 in 1987. The majority of growth was seen in the Asian, Pacific islanders and the Hispanic communities. African American firms grew to 424,165 in 1987. Gross receipts of all minority firms totaled $77.84 billion. All business firms in the United States had receipts totaling $1.99 trillion. Minority firms contributed 3.9 percent of the national total.

In 1987, 93 percent of the minority-owned firms were classified as sole proprietorships. An examination of the statistical data revealed approximately 80 percent of these firms had no paid employees and 79 percent had gross receipts under $50,000 (Final Report 1992).

STATE OF MINORITY-OWNED BUSINESSES

Minority businesses are currently under siege by Congress. There are groups demanding affirmative action because of a protected status. Other groups oppose affirmative action because they feel it results in reverse discrimination (Robinson, Allen & Abraham, 1992). Some individuals feel affirmative action has evolved into a long-term social engineering program of goals, timetables, quotas, set-asides and other forms of preferential treatment (Fixing Affirmative Action, 1995).

The question remains, should government or corporate America give minorities a competitive edge in the bidding process and/or should they go to special lengths to develop and support minority suppliers? Further, should set-asides be available to minorities? These questions were answered in the affirmative during the 1970s and 1980s. However, in the 1990s, the same questions are once again resurfacing (Lowrey, 1995).

In 1988, President George Bush commissioned a study of all federal programs which fostered growth and development of minority business. The Commission's recommendations to the President and Congress included training programs in the Small Business Administration's regulations and procedures, a national investment strategy providing access to capital and credit for minorities, a standard certification process, mentorship programs by prime contractors, and data collection on U.S. export activities. Finally, the Commission recommended that an independent body be established to monitor and review federal and private programs used to promote and develop underutilized businesses (Final Report, 1992).

Congress went on to pass Public Law 103-355 which provided support to minority-owned businesses in contracting with the government (H. 4263, 1994). However, the Republican Congress is presently waging an all-out assault on affirmative action programs. There are some who believe if minority businesses are going to be competitive, the playing field must be level for everyone. Supporters and critics alike believe some changes need to be made in the existing programs. However, these change can be accomplished without the complete dismantlement of all minority programs (Whigham-Desir, 1995).

THE MINORITY BUSINESS LEGISLATION

Sweeping changes in the purchasing process have created challenges for the 1990s. Both public and private purchasing departments may be responsible for the success or failure of a minority business program, depending on how they approach and define the problem and how well it is supported. …

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