Performance of minority firms providing construction management services in the US transportation sector

Ahim Kim and David Arditi

Construction Management and Economics, 2010, vol. 28, issue 8, 839-851

Abstract: The preferential selection of minority firms in federally assisted contracts, state contracts and large metropolitan contracts has been in effect in the US for the purpose of meeting affirmative action goals, but this practice has also raised questions about the quality of contract performance. A survey of 93 firms was conducted for a comparative investigation of the performance of minority vs. non-minority construction management (CM) firms. Minority CM firms include firms owned by ethnic minorities, disabled persons and women. An assessment model was developed following an extensive literature review on contemporary performance measurement tools. The model was converted into a survey that was administered to prequalified minority and non-minority firms that provided CM services in the transportation sector in the US. When a Mann-Whitney test was administered to the collected data regardless of firm size and age, it was found that non-minority CM firms outperformed minority CM firms. However, it was also found that minority CM firms were smaller and younger than non-minority CM firms. When 'large and old' minority and non-minority CM firms were compared, no significant differences were found in performance. But when 'small and young' minority and non-minority CM firms were compared, it was found that minority firms were outperformed by non-minority firms financially. It is concluded that 'small and young' minority firms particularly suffer from the liability created by smallness and newness.

Keywords: Construction management services; minority firms; women-owned firms; equal opportunity; diversity; firm performance (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1080/01446193.2010.483331

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