Public Procurement as Policy Instrument for Innovation

42 Pages Posted: 23 Jan 2018

See all articles by Dirk Czarnitzki

Dirk Czarnitzki

KU Leuven - Department of Managerial Economics, Strategy, and Innovation; Centre for European Economic Research (ZEW)

Paul Hünermund

ZEW – Leibniz Centre for European Economic Research - Industrial Economics and International Management Research; KU Leuven - Department of Managerial Economics, Strategy, and Innovation

Nima Moshgbar

Heinrich Heine University Dusseldorf

Multiple version iconThere are 2 versions of this paper

Date Written: 2018

Abstract

The use of public procurement to promote private innovation activities has attracted increasing attention recently. Germany implemented a legal change in its procurement framework in 2009, which allowed government agencies to specify innovative aspects of procured products as selection criteria in tender calls. We analyze a representative sample of German firms to investigate whether this reform stimulated innovation in the business sector. Across a wide set of specifications — OLS, nearest-neighbor matching, IV regressions and difference-in-differences — we find a robust and significant effect of innovation directed public procurement on turnover from new products and services. However, our results show that the effect is largely attributable to innovations of more incremental nature rather than market novelties.

Keywords: Public Procurement of Innovation, Public Procurement with Contracted Innovation, Technical Change, Research and Development, Econometric Policy Evaluation

JEL Classification: H57, O38

Suggested Citation

Czarnitzki, Dirk and Hünermund, Paul and Moshgbar, Nima, Public Procurement as Policy Instrument for Innovation (2018). ZEW - Centre for European Economic Research Discussion Paper No. 18-001, Available at SSRN: https://ssrn.com/abstract=3106609 or http://dx.doi.org/10.2139/ssrn.3106609

Dirk Czarnitzki (Contact Author)

KU Leuven - Department of Managerial Economics, Strategy, and Innovation ( email )

Naamsestraat 69 bus 3500
Leuven, 3000
Belgium

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
Mannheim, 68034
Germany

Paul Hünermund

ZEW – Leibniz Centre for European Economic Research - Industrial Economics and International Management Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

KU Leuven - Department of Managerial Economics, Strategy, and Innovation ( email )

Naamsestraat 69 bus 3500
Leuven, 3000
Belgium

Nima Moshgbar

Heinrich Heine University Dusseldorf ( email )

Universitätsstrasse 1
Duesseldorf, DE NRW 40225
Germany

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