WP3 Develop Procurement Tools for Fast-Growing / Frontier Firms in NZ.

In three earlier blogs, we discussed plans to develop procurement tools for SMEs in New Zealand. These will help NZ companies (often < 20 or 50 staff) to improve on their sustainable & innovation procurement. NZ has its share of companies with growth ambitions.

Our 4th blog discusses developing procurement tools for these so-called frontier firms. Such firms with rapid growth are also known as scale-ups, gazelles, unicorns, or born-globals.

 According to OECD (2015), these firms are typically more productive & profitable, younger and more likely to be innovative. In NZ, frontier firms are relatively small with 55 staff. According to a Draft Report by the NZ Productivity Commission (2020), they stimulate the New Zealand economy. They create jobs, bring us the new ideas and innovations we need, and have great export potential. We agree with many of the Commission’s recommendations. Moreover, we wrote a submission to the Commission on the need for NZ frontier firms to manage relations with their innovative supply chain. (DR 066).

 We found only limited research on procurement in SME frontier firms. At the same time, supply chains are crucial for fast-growing firms.). Large leading firms source 65% of their innovations externally; 3 times as often as weak innovators (Volmer, 2021; BCG, 2017). Between 30-60% of economic value is created in supply chains (Johnsen, 2019). Whether we call this partnering, franchising, open inbound innovation, sourcing or just procurement: we know how to kickstart or improve innovation procurement in large firms.

 However, A small firm is not a little big firm. (I like that Harvard quote by Welsh & White). We don’t know enough about procurement in SMEs. Research indicates that SME procurement is different (Ramsay, 2008; Ellegaard, 2006, 2009; Morrissey & Knight, 2011; James ea, 2012; Paik 2009, 2011; Adams, 2016). Similarly, we lack knowledge on inbound (open) innovation in such SMEs (Spithoven ea 2013; Inauen & Schenker, 2012; Som & Kirner, 2013; Brunswicker& Vanhaverbeke, 2015).

 Fast-growing firms differ from more traditional firms (Mazzarol ea, 2011). They have different supplier relationships & are loyal to well-performing key suppliers or partners (Beekman & Robinson, 2004). Fast growing firms use more external resources (Furlan ea, 2012), and spend much effort in selecting and collaborating with partners. Yunus (2017) found that collaboration with suppliers results in radical innovations.  Their formalised procurement could lead to better open innovation (Gentile, 2019). They will not only differ in size, but more importantly in their contexts and industries, and also in their strategies, organisational structure, decision making, and in their performance. (Meijaard ea, 2005; Davidson ea, 2010; Keijzers, 2007; Torres & Julien, 2005; Julien, 1996; Reboud, 2014).

These aspects can all impact procurement in frontier firms.

 Tools will help frontier firms on their bottom line & top line: realise cost-savings, improve supplier quality, reduce supply chain risks, and sell innovative and products & services to customers. We will develop procurement maturity assessment tools that enable frontier firms to assess and improve their business models with innovative suppliers.

 We have applied for MBIE Smart Ideas funding. Our project is a collaboration between Dr Barbara Allen (Victoria University, NZ), Prof. Margreet Boersma (Hanze University, NL), Prof. Nic Naismith & Dr Anne Staal (both AUT, NZ). 

Experts from Grant Thornton play an important role in validating the tools with industry.

 More info to follow!

 Please contact us if you want more info or want to participate in this research! Contact: Dr Anne Staal, Auckland University of Technology ([email protected]).