Transactional Talk: Public Procurement Can Hinder Innovation

Public procurement accounts for 15 to 20 percent of global GDP and is considered an effective innovation policy. However, the negative effects of price-based public procurement – public procurement tenders awarded solely based on their price – on firm innovations have not been investigated, even though it represents the majority of all tenders. Bastian Krieger is a postdoctoral researcher at ZEW Mannheim and studies these possible effects. 

The research group at ZEW contributes by:

• Developing a detailed theory on the effects of winning price-based public procurement tenders as a firm.
• Empirically testing our theory by combining representative German data with two-way fixed effect difference-in-differences estimations.

In total, the estimations demonstrate that winning price-based public procurement reduces firms’ product and process innovations on the one hand and increases firms’ focus on their established products and services on the other. These results confirm our theory and empirically hold at the level of the individual firm and the German enterprise sector. Read the discussion paper about the research here: Public Procurement Can Hinder Innovation by Bastian Krieger, Malte Prüfer, Linus Strecke.

About Bastian Krieger

Bastian Krieger is a postdoctoral researcher at ZEW Mannheim and head of the Junior Research Group “Co-Creation” in ZEW’s Research Unit “Economics of Innovation and Industrial Dynamics”. Moreover, he is the contact person for the research area “Industry-Science Linkages and Technology Transfer”. His work focuses on the quantitative analysis of companies’ collaboration with public authorities, research institutes, industrial partners, and customers. His current projects combine different firm-level databases with detailed information on firms’ public procurement awards, service trades, local universities, and scientific publications to tackle a variety of research questions. He published in Research Policy, Scientometrics, and the Energy Journal.

Registration 

To register for this Transactional Talk you can send an email to j.m.berkhout@uu.nl.