ZEW Discussion Papers
Innovation on Demand - Can Public Procurement Drive Market Success of Innovations
Aschhoff, Birgit and Wolfgang Sofka (2008), Innovation on Demand - Can Public Procurement Drive Market Success of Innovations, ZEW Discussion Paper No. 08-052, Mannheim. Download
Public procurement has been at the centre of recent discussions on
innovation policy on both European and national levels (e.g., Aho-Report,
Barcelona Strategy). It has a large potential to stimulate innovation since it
accounts for 16% of combined EU-15 GDP. We embed public procurement
for innovation into the broader framework of public policies to stimulate
innovation: regulations, R&D subsidies and knowledge infrastructure (i.e.
basic research at universities). We synthesize the characteristics of all four
instruments based on existing literature and quantitatively compare their
effects on innovation success. Our empirical investigation rests upon a
survey of more than 1,100 innovative firms in Germany. Our survey puts us
in the position to trace all sources of valuable innovation impulses, namely
public customers, law and regulations, universities and public funding for
R&D. We relate these sources back to innovation success. We find that
(non-defense related) public procurement and knowledge spillovers from
universities propel innovation success equally. In a second step, we explore
whether these effects vary across firms (e.g. size, location, industry). The
benefits of university knowledge apply uniformly to all firms. However,
public procurement is especially effective for smaller firms in regions under
economic stress as well as in distributive and technological services. Based
on these findings targeted policy recommendations can be developed.
Keywords: Innovation policy, public procurement, comparison of instruments, innovation success
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