One of the levers that has been proven and practiced overseas, that has had significant impact for indigenous and minority groups, is the intentional and deliberate act of engaging with diverse businesses – supplier diversity. The ability for indigenous and/or minority businesses to bid, win and be awarded contracts has had transformational impact on these economies.
Here in Aotearoa, we are barely at the starting line of implementing supplier diversity and we are already seeing the social impact of spending with Māori and Pasifika-owned businesses.
However, with Labour Government’s announcement of a 5% target for Māori businesses in December 2020, supplier diversity now has a platform on which to grow.
Amotai is Aotearoa's supplier diversity intermediary tasked with connecting Māori and Pasifika-owned businesses with buyers wanting to purchase goods, services and works. In our role as a connector between buyers (e.g. government agencies, NFPs, Iwi and corporates) and suppliers (i.e. Māori and Pasifika owned businesses), we have gathered incredible insights into the value and impact that can be created through intentional buying from Māori and Pasifika-owned businesses.
In addition, Amotai is connected to Supplier Diversity Intermediaries globally and are exposed to lots of the international research, evidence, and learnings of our sister organisations, of which we provide 5 top reasons supplier diversity is critical to removing disparities and inequities for Māori and Pasifika.
Top 5 reasons to procure from Māori and Pasifika businesses
We have collated the top 5 reasons (in no particular order) why you should look to buy services, goods and works from Māori and Pasifika businesses, backed by New Zealand and international research.
1. Closing the wealth gap in Aotearoa
Research shows that diverse businesses play a critical role in closing the racial wealth gap in areas of disadvantage (CAMSC; 2016).Here in Aotearoa, our experience is that Māori and Pasifika businesses are the untapped change agents in creating a more inclusive, and more sustainable, New Zealand economy.
Entrepreneurship is one of the main ways Māori and Pasifika can build wealth for their families and communities. It is well documented that Māori businesses don’t just focus on the bottom line, they serve multiple bottom lines (such as commercial, environmental, social, and cultural objectives)(Mill & Mill; 2021). This means that the generation of profit is not always the sole driver for Māori going into business. This is supported by Australian research, which shows that for every dollar of revenue, Indigenous businesses create A$4.41 of economic and social value (Burton and Tomkinson; 2016).
2. Higher employment rates for Māori and Pasifika
Unemployment rates for Māori and Pasifika are higher compared to other ethnicities. However, the 2019 Te Matapaeroa report published by Te Puni Kōkiri showed that Māori businesses have, on average, 43% Māori employees, which is three times the national average. This is consistent with international studies that show that indigenous businesses are more likely to create jobs in their local communities compared to other businesses. Therefore, by supporting the growth of Māori and Pasifika businesses you are supporting the employment growth of Māori and Pasifika.
3. Māori and Pasifika businesses create role models and culturally safe spaces
Māori cultural values such as manaakitanga (respect and generosity), kaitiakitanga (guardianship), and whanaungatanga (relationships) have shaped Māori economic relationships for generations, which are increasingly being reflected in business. Values are intrinsically embedded and entwined in our day-to-day lives and creates an environment to operate safely as a commercial and cultural entity.
Māori and Pasifika business owners are role models in their communities for whānau, community and employees. The latest research from the NZ Productivity Commission showed that the success of Māori businesses helps light the path for other Māori businesses in their wake (Mill & Mill; 2021). A 2014 study of 324 indigenous entrepreneurs found that nine out of ten minority suppliers also acted as positive role models for young people in their communities (Cit. Hudson, R; 2016). International studies have also found that indigenous-owned businesses are more likely to strengthen the connection of indigenous employees to their culture. They provide safe and welcoming spaces in which people can connect with each other and their culture(Burton and Tomkinson; 2016).
The He Manukura - Insights from Māori frontier firms report shows that Māori authorities and SMEs are more likely to export and have higher rates of innovation and R&D, than other New Zealand firms. The focus on the multiple bottom line coupled with their long-term view can spur innovation and experimentation (Mill & Mill; 2021).
International indigenous and minority owned research is consistent with these findings:
Many minority businesses are also small enterprises that tend to be nimbler and more innovative than larger suppliers (Katz, J; 2011). Tapping into diverse perspectives can stimulate new approaches and solutions, breakthrough technology and bring disruptive businesses/ products to market (MSDUK; 2018). Rather than relying on one-dimensional insights from less-diverse supply chains, working with a variety of suppliers opens the door to fresh and innovative insights (Supplier Diversity; 2016).
5. Competitive advantage
Successful supplier diversity programmes can create competitive advantages and provide significant financial benefits to companies. We are increasingly seeing supplier diversity stated as a requirement of contractors, particularly in public sector purchasing. Companies that build long lasting, quality relationships with Māori and Pasifika businesses will position themselves at the front of the pack for these contracts. In the US, where supplier diversity has been embedded for over 50 years, The Hackett Group research found that up to 10 per cent of sales in the U.S. come with supplier diversity requirements (Cit. Lazarus, S; 2017). Failing to implement a supplier diversity programme could mean losing a bid, losing potential new business or losing existing business relationships that contribute to business revenue (Agee, E; 2011).
If that’s not enough, research also shows that diversifying your supply chain can support access to new revenue opportunities, creation of new markets, improved access to, and understanding of an increasingly diverse customer bases, development of robust, competitive, and dynamic supply chains, positive corporate image and brand development and it can be a drawcard for socially conscious employees, investors, and consumers.
So, the question should not be “Why?”, it’s “Why not?”