From whence the knowledge came: Heterogeneity of innovation procurement across Europe

Publication Date01 March 2016
Date01 March 2016
AuthorAnne Rainville
SubjectPublic policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue
Anne Rainville*
ABSTRACT. To induce innovation in the public sector, Directive 2014/24/EU
encourages internal and external consultation during the procurement
process. However, little is known regarding the prominence of these
practices. Determining the extent of knowledge sourcing in innovation
procurement across 28 European c ountries, this paper presents an
institutional cluster analysis, examining heterogeneity across knowledge
sourcing activities, procurement areas, and tender innovation outcomes for
1,505 public procurers from 2008-2010. Building upon existing taxonomies,
three types of procuring agencies are identified: Large collaborative agenci es
practicing public procurement of innovation (31%); s upplier-focused pre-
commercial procurers (20%); and direct procurers at the municipal level
(49%). Validation supports this heterogeneity, using innovation outcomes
and policy drivers. At the country l evel, Spain, the United Kingdom, Italy,
Germany and Poland are most represented in respective clusters. Findings
enable p redictions regarding impacts on agencies and innovation from the
new public procurement directive’s translation into national law by Member
Directive 2014/24/EU encourages public procurers to induce
innovation in government services and private firms, supporting
efficiency in public spending and societal goals (European
Commission {EC], 2014, p. 65). Changes in the new directive promote
interactions with other governments, potential suppliers, and users
* Anne Rainville, MA, is a Research Fellow and Doctor al Ca ndidate at the
Chair of Innovation Economics, Institute for Technology and Management,
Technical University Berli n. Her research interests are in how to leverage
government-industry interactions in public procurement toward greater
sustainability impacts.
Copyright © 2016 by PrAcademics Press
that can be achieved by using innovation procurement: an approach
to improve purchasing through process management, which may
“help the market uptake of innovative products and services”
(European Research Area and Innovation Committee [ERAC], 2015, p.
As used here, innovation procurement consists of public
procurement of innovation (PPI), pre-commercial procurement (PCP)
and innovation partnerships. Innovation procurement has received
only limited study (e.g., Edler and Yeow, 2016; Uyarra et al., 2014),
with many more studies instead concentrating on innovative criteria
(EC, 2013; Nissinen, Parikka-Alhola, & Rita, 2009; Wegweiser et al.,
2009). Although public purchasing across Europe amounts to 19% of
GDP (ERAC, 2015), innovation procurement remains uncommon
(Uyarra et al., 2014) and varies across institutions and countries
(ERAC, 2015). The potential of innovation procurement to improve
public services has not yet been realized (EC, 2013), and little is
known regarding differences in practices.
A critical component of consultation in innovation procurement is
knowledge sourcing: drawing upon the “expertise, experience, advice,
and opinions” of others to “supplement” (Gray & Meister, 2006,
p.142) the expertise of a public purchaser such as on technology or
market trends and supplier capability (EC, 2005, p. 27). Examples of
knowledge that can be gathered in procurement consultation are
market information from potential suppliers, requests from users,
learnings or tools from other procurers, and special advice from
experts. Knowledge sourcing is an example of an instrument “to
embed innovation procurement” in organizations, which can increase
awareness of organizational innovation potential, strategy, and
procurer skill (Georghiou, Edler, Uyarra, & Yeow, 2014). The
organizational learning resulting from knowledge sourcing activities
supports professionalization of public procurement, where better
knowledge on behalf of procuring agencies increases efficiency (EC,
2014, p. 88). Knowledge sourcing can also affect product or service
and market evolution when information shared is embedded into
tenders that drive innovation. As such, gathering information through
consultation supports a number of innovation procurement
measures, including tender openness, more innovative demands, and
procurer capability (Uyarra et al., 2014). Wider demand-side influence
of public procurement, such as market signaling (Rolfstam, 2014),
can also be leveraged through enhanced market dialogue coinciding
with consultation activities. Given this, there exists ample opportunity
for a better understanding of knowledge sourcing within procurement
to support innovation procurement.
Taxonomies can provide a platform from which to study these
consultations in innovation procurement with respect to interactions
at the 1) organizational and 2) product or service and market level1
(Aschhoff & Sofka, 2009; Edquist & Hommen, 2000; Hommen &
Rolfstam, 2009). Hommen and Rolfstam (2009) refer to these
classifications as “learning” and “evolution”, respectively. However,
these concepts have not been tested using empirical data at the
European level (i.e., beyond case studies and national surveys), and
their applicability is limited in the face of novel policy distinctions
between certain innovation procurement mechanisms. Most notably,
Hommen and Rolfstam (2009) provide a taxonomy relevant to
discussions of consultation, including “modes of interaction.” With
the exception of Edquist and Zabala-Iturriagagoitia (2015), no
academic efforts have differentiated between emerging concepts of
public procurement of innovation (PPI), pre-commercial procurement
(PCP), and innovation partnerships, which are distinct in terms of
learning and evolution. As such, there is a need for empirical study of
consultation practices in innovation procurement processes to test
and improve taxonomies.
In addressing this research gap, this paper presents the first
European-wide, survey-based analysis of the extent to which different
innovation procurement mechanisms are practiced according to
knowledge sourcing activities at the agency level. To uncover the
prominence of these practices, this paper tests innovation
procurement taxonomies by conducting a cluster analysis at the
organizational level. Cluster analyses can be used as a tool to classify
organizations into groups according to degrees of similarity across
variables. Here, cluster analysis identifies h eterogeneity across
knowledge sourcing practices (consultation of potential suppliers,
users, other procurers, and experts), procurement areas (purchasing
innovations or R&D services), and organizational characteristics of
public agencies. Clusters are validated using tender innovation
outcomes (service innovation or reduced service costs), national
policy frameworks, and countries.

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