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

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.