Innovation and standardization as drivers of companies' success in public procurement: an empirical analysis

There is a significant potential to improve the benefits from public procurement through a better understanding of drivers in company success at the micro-level, an area that has received little study to date. To increase these impacts on innovation and markets, policy makers have opened procurement to innovation, including the strategic incorporation of formal standards in calls for tenders. Consequently, companies offering innovative solutions should have higher chances to be successful in public tenders. In addition, companies who engage in standardization activities at standards development organizations may have a competitive advantage in submitting tenders. Examining the case of Germany, this paper empirically investigates the effects of German manufacturing companies' innovation activities and their engagement in national standardization on the receipt of contracts within domestic procurement competitions. The results of our empirical analyses based on German companies surveyed within the framework of the Community Innovation Survey show that being successful in product innovation and being engaged in standardization are significant positive predictors of companies' success in public procurement. With implications for policy-makers and practitioners, this shows that public procurement is indeed open for solutions from companies active in innovation and standardization.