Edited by Charles Edquist, Nicholas S Vonortas, Jon M Zabala-Iturriagagoitia and Jakob Edler
Chapter 3: Building capability for public procurement of innovation
As governments are adopting public procurement for innovation as a focal instrument in their toolboxes for demand-driven innovation policies, public sector organizations are faced with a need to develop capability to manage new organizational processes. Public procurement for innovation (PPI) is a policy instrument which requires adopting novel skills and management practices. Innovation policy-related efforts to use public procurement to promote supplier innovation will encounter intersecting goals at the level of public agencies, and are not likely to be translated into effective implementation without building required capabilities. Indeed, recent research has indicated that insufficient management skills have accounted for failures in PPI projects (for example, Rolfstam, 2007). Many of these capabilities are not part of regular procurement competencies. General management also needs to adjust practices to reap the full benefits of the novel approach, and new organizational practices extending beyond the procurement function may need to be established. Market-based governance models and increased use of outsourcing and contracting out service production have transformed many public agencies from service production organizations to procurement organizations. Purchasing and contracting have become core functions in many public agencies. This development, together with the increasing complexity of various technical systems, has led public agencies to purchase larger and more complex objects. The emphasis has shifted from procurement of goods to service contracting and purchase of complex service–product combinations (Schapper et al., 2006; Caldwell and Howard, 2011). As digitalization of government activities advances, various types of integration issues also emerge.
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