New Entrants and Small Business Graduation in the Market for Federal Contracts

Abstract

This paper garners information crucial to understanding business growth for new entrants and small businesses who contract with the federal government. This information is then used to evaluate entrances, exits, and status changes among commercial and federal vendors with the purpose of comparing challenges faced by small businesses with those of larger ones. Measuring market trends over time and in multiple sectors shows how the challenges facing small businesses, such as market barriers to entry and imperfect competition, keep them from growing. The final results compare the survival rates between small and medium or large new entrants contracting with the federal government and analyzes the graduation rates for those small new entrants who grew in size during the observation period.