Transformative public procurement for innovation: ordinary, dynamic and functional capabilities

ABSTRACT

Public Procurement for Innovation (PPI) requires multiple roles from the public administration according to the problem-solution space, delineated by the level of consensus around the definition of the needs of the contracting authority and the potential solutions to address them. Each role involves a distinct mix of capabilities, which we categorize as ordinary (i.e. doing things right), dynamic (i.e. doing the right things) and functional (i.e. addressing functional challenges). Following a Mutual Learning Exercise with procurement officials of 15 European countries, we identify 45 capabilities for contracting authorities to embrace the different facets of PPI as a transformative policy instrument.

KEYWORDS:

• Public procurement for innovation
• problem-solution space
• capabilities
• functional procurement
• transformative effects

Acknowledgments

The authors are grateful to the editors and the four anonymous reviewers for their invaluable comments that have helped shape the contribution of the paper and its alignment with the special issue. The authors are indebted to the European Commission and to all the policymakers that participated in the Mutual Learning Exercise on innovation-enhancing procurement between 2017 and 2018. This paper received the Babbage Industrial Innovation Policy Award by the University of Cambridge Industrial Innovation Policy forum at the University of Cambridge (UK) in 2021. A preliminary version of this paper was presented at the 5^th International Conference on Public Policy, organized by International Public Policy Association in Barcelona (Spain), between the 6-8 of July 2021, the Summer School on Advancing Mission-Oriented Innovation Policy, organized by Utrecht University (the Netherlands), between the 25-27 August 2021, and the EU-SPRI International Conference, held in Utrecht (the Netherlands) between the 1-3 June 2022. Stephanie Francis Grimbert acknowledges the financial support from the University of Deusto research training grant programme. The authors also acknowledge financial support from the Basque Government Department of Education, Language Policy and Culture (IT 1429-22).

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. As Mazzucato (2017, p. 18) argues ‘innovation is extremely uncertain, [hence] the ability to experiment and explore is key for a successful entrepreneurial state. Therefore, a crucial element in organizing the state for its entrepreneurial role is absorptive capacity or institutional learning’.

2. See Edquist and Zabala-Iturriagagoitia (2021) for an extensive discussion on product procurement and functional procurement.

3. As defined by Piening (2013, 216) ‘evolutionary fitness measures how well a dynamic capability enables an organization to make a living by creating or modifying its operational capabilities’.

4. The topics to be discussed in the focus groups were suggested by participants prior to each session, enabling participating countries to pre-identify topics of interest for mutual learning. The European Commission compiled these proposed topics and formulated session agendas, disseminating them to participants in advance, allowing for potential revisions if necessary.

5. Appendix 1 details the topics discussed during the interviews and the interviewees. Each interview lasted on average 20’.

Additional information

Funding

The work was supported by the Stephanie Francis Grimbert: University of Deusto research training grant program. All authors: Hezkuntza, Hizkuntza Politika Eta Kultura Saila, Eusko Jaurlaritza [IT 1429-22].