Public Procurement for Innovation

Public Procurement for Innovation

Eu-SPRI Forum on Science, Technology and Innovation Policy series

Edited by Charles Edquist, Nicholas S Vonortas, Jon M Zabala-Iturriagagoitia and Jakob Edler

This book focuses on Public Procurement for Innovation. Public Procurement for Innovation is a specific demand-side innovation policy instrument. It occurs when a public organization places an order for a new or improved product to fulfill certain needs that cannot be met at the moment of the order. The book provides evidence of the potential benefits to public and private actors from the selective use of this policy instrument and illustrates the requirements and constraints for its operationalization. The book intends to significantly improve the understanding of key determinants of effective public procurement aiming to promote innovative capabilities in the supplying sectors and beyond. It provides both case studies and conceptual contributions that help extend the frontier of our understanding in areas where there are still significant gaps.

Chapter 2: The meaning and limitations of public procurement for innovation: a supplier’s experience

Jakob Edler, Luke Georghiou, Elvira Uyarra and Jillian Yeow

Subjects: economics and finance, economics of innovation, innovation and technology, economics of innovation, innovation policy, politics and public policy, public administration and management


Across the Organisation for Economic Co-operation and Development (OECD) world, public procurement of innovation is becoming an essential element of innovation policy. In turn, this reflects a move towards more demand-based innovation policy to tackle the grand challenges being faced by societies all over the globe (OECD, 2011; Izsak and Edler, 2011). While the economic downturn and the focus on efficiency gains in public expenditure have changed the nature of the debate somewhat, the OECD-wide trend in policy development continues in this direction. It is manifested in specific schemes to push procurement for innovation, and in attempts to improve procurement capabilities and regulations more generally. However, despite a high level of political intent, there is still a general perception that public procurement has not realized, by far, its potential as an engine for innovation. On the surface, the political climate changed during the economic crisis, and recent years have seen a turn towards more austere public budgets, and with it a shift of the debate on public spending from long-term societal benefit and innovation to reducing costs and securing national supplier benefits. Below that surface there is a range of more basic institutional and procedural reasons for slow progress. Case studies and qualitative analyses cast some light on the range of these reasons. The multilevel nature of public procurement processes in public organizations results in a disconnection between those responsible for concrete procurement and those designing policies mobilizing public procurement for innovation.

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