Positioning public procurement as a procedural tool for innovation: an empirical study

ABSTRACT

Procurement has received scholarly attention as a valuable policy tool to reach desired outcomes in society, such as innovation. While interest has grown in analyzing the impact of the ‘substantive’ function of procurement (purchasing of goods and services), procurement is much more than purchases, and most public buyers’ activities are ‘procedural’, as they are aimed at improving the many internal stages of the procurement process. This study explains how procurement can be both a substantive and procedural tool, particularly in terms of innovation. Using the 2010 Innobarometer dataset that consist of 4,063 public organizations from 29 European countries, this study answers how public procurement, as a procedural policy tool, affects the implementation of public sector innovations. We find that procurement activities are positively related to innovation within public organizations. In particular, procurement as R&D for new technologies and services has an important and meaningful effect. We discuss implications for policy tools and public sector innovation literature, and we suggest that policy makers make use of more procedural tools such as procurement to increase innovation within public organizations.

KEYWORDS:

• Policy tools
• procedural tools
• public procurement
• public sector innovation

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ https://www.oecd.org/gov/public-procurement/

² https://ec.europa.eu/growth/single-market/public-procurement_en

³ Recent Innobarometer surveys do not have questionnaires measuring public sector innovations.

⁴ The following link shows a report that demonstrate details about the data and sample: http://ec.europa.eu/commfrontoffice/publicopinion/flash/fl_305_en.pdf

⁵ We use robust standard errors to deal with heteroscedasticity (Verbeek, 2008). Finally, to test whether multicollinearity exists, we run variance inflation factor (VIF) scores. As none of the VIF scores are higher than 5 (the highest VIF is 3.29 in the first model and 1.56 in the second model), multicollinearity is not a problem in this study (Neter, Kutner, Nachtsheim, & Wasserman, 1996).

Additional information

Funding

This study is funded by the National University of Singapore (Start-Up Grant, Tier 1). Grant No: R-603-000-270-133.

Notes on contributors

Mehmet Akif Demircioglu

Mehmet Akif Demircioglu is an Assistant Professor at the Lee Kuan Yew School of Public Policy, National University of Singapore, Singapore, and  a research fellow at the Arizona State University and Indiana University-Bloomington. His work has been published in Research Policy, Governance, Public Management Review, Journal of Technology Transfer, Small Business Economics, The American Review of Public Administration, Government Information Quarterly, Public Performance & Management Review, and Industrial and Corporate Change, among others.

Roberto Vivona

Roberto Vivona is a research assistant at the Lee Kuan Yew School of Public Policy, National University of Singapore. He holds a MSc degree in Economics and Management of Government and International Organizations from Bocconi University. His research interests and current projects relate to innovation and entrepreneurship in the public sector and to public procurement reforms.