Contracting In: How a Business Intermediary Sought to Create Supplier Networks and Jobs in the Inner City

Rachel Weber and Susanne Schnell

Economic Development Quarterly, 2003, vol. 17, issue 2, 148-164

Abstract: This article evaluates a unique economic development program that sought to help small suppliers in high-poverty neighborhoods increase their sales and create jobs for local residents. The Civic Committee of the Commercial Club of Chicago introduced these firms to the large corporate customers that constitute its membership. After 2 years, member corporations had signed about $6.6 million in new contracts with the small firms, but few jobs had materialized. Analysis reveals that customers were going through a period of significant retrenchment: reducing their supply base, consolidating their purchasing departments, and using advanced technologies to create a smaller yet more dispersed pool of “preferred†vendors. Moreover, small suppliers were unwilling to make necessary capital investments without assurances from their customers that they would survive the supply chain consolidation. Such trends were not conducive to the establishment of procurement relationships, and the excess capacity of the suppliers diminished the job creation impact of additional sales.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ecdequ:v:17:y:2003:i:2:p:148-164

DOI: 10.1177/0891242403017002003

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