Impact of public procurement for innovation on firm productivity

ABSTRACT

Recently, many governments have been trying to utilize public procurement for innovation as a measure of demand-side innovation policy, considering the limitation of supply-side innovation policy and an emphasis on the effective use of government budget. Some studies have assessed the impact of public procurement for innovation recently; however, no research has attempted to analyse the impact on productivity, which is one of the main policy targets of innovation policy. This study investigates the productivity enhancement effect of public procurement for innovation, using the propensity score matching methodology with differenced outcome variables. Results show that public procurement for innovation plays a positive role in the growth of value-added of the firm contracted, and that it is led by the positive connection between public procurement for innovation and total factor productivity.

KEYWORDS:

• Public procurement for innovation
• total factor productivity
• policy impact
• innovation

Acknowledgments

The institute of Engineering Research at Seoul National University provided research facilities for this work.

Disclosure statement

There is no known competing financial interests or personal relationship that could have appeared to influence the work.

Data availability statement

The data that support the findings of this study are available from KIS-Value and PPS. Restrictions appliy to the availability of the KIS-Value data, which were used under license. KIS-Value data are available from https://www.kisvalue.com/web/index.jsp with permission. Data from PPS were derived from the follwing resources available in the public domain: https://data.g2b.go.kr:1443/pt/main/index.do.

Data deposition

There is no depository for the data which this article used.

Notes

¹ This study uses kmatch command in STATA and the command uses a algorithm of pair-matching similar with Huber, Lechner, and Wunsch (2013); (2015) by setting the bandwidth to 1.5 times the 90% quantile of the distribution in pair matching with replacement.