The role of public private partnerships in fostering innovation

Abstract

Despite the prevailing view in the studies on public private partnerships (PPPs) on the potentiality of PPP models for stimulating innovation, existing studies fail to provide a full understating of the relationship between PPP characteristics and innovation, namely they do not explain whether and to what extent some characteristics of PPP are more likely to foster innovation rather than others. This paper aims at providing answers to the following key research questions: Which are the PPP features that favour innovation? How should a PPP be properly structured in order to foster innovation? With this aim, drawing upon the main streams of studies on innovation, we develop a conceptual framework on the relationship between PPP and innovation and formulate the research hypotheses. An econometric analysis is then applied to empirically test the hypotheses using a dataset of 290 PPP projects spanning different countries and sectors, extracted by the World Bank PPI Database. Findings reveal that the arrangement of PPP projects; the market, contract and network structure, as well as government supports, may affect innovation. These results provide foundations to elaborate managerial implications for the future implementation of PPP projects, showing how PPP features have to be structured in order to foster innovation.

Keywords:

• Public private partnerships
• public procurement
• innovation
• public infrastructure

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

Notes

1 Notice that gathering the value of the dependent variable (patent) in the PPP project operation phase, which is naturally lagged respect to period in which the values of explanatory variables are gathered, namely the development phase, excludes endogeneity problems.

2 In Public Auctions bidders are evaluated price-based criteria and their proposals have to comply the technical requirements established in the procurement documents by the contracting authority.

3 Competitive negotiation consists of two phases. Phase 1-Negotiation: the public authority discusses the terms of the project, namely the scope, specifications, and conditions, with the private party, thus enhancing the contribution of the private sector in the project development and promoting the development of innovative solutions. The negotiation terminates with the selection of the proposal with higher quality. Phase 2-Auction: the process concludes with the award of contract to the bidder who offers most advantageous price and service combination, thus improving the level of innovation through the competition.