Revitalizing the Concept of Public Procurement for Innovation (PPI) from a Systemic Perspective: Objectives, Policy Types, and Impact Mechanisms

Abstract

Recently, demand-side innovation policies for securing new driving-force for economic growth centered on developed countries, especially on the importance of public procurement for innovation, (PPI) are emphasized. Although the previous studies on PPI have presented various innovations and economic effects of PPI, they are still focused on specific case-based analysis, failing to provide implications for policy decision-making. Therefore, this study aims to investigate the economy-wide effects of PPI within the innovation system in generalized terms including technology, market, institution-related elements. To be specific, this study reveals direct and indirect impact channels within the innovation system incorporating demand-pull and technology-push effects. In addition, we propose four different types of PPI in terms of the policy impact channels and analyze electric vehicle (EV) PPI case in Korea using this proposed taxonomy. This study has contributions both on academic research and policy decision-making dimensions, by stressing out the systemic perspective to understand the potential impact mechanisms across the innovation system induced by the implementation of PPI.

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Change history

  • 24 July 2019

    The presentation of figures in the manuscript in the online version has some errors. Figures were mixed-up.

Notes

  1. 1.

    In recent years, public procurement (the purchase by governments and state-owned enterprises of goods, services and public works) accounts for a very significant percentage of GDP in many countries. OECD member countries are found to spend about 12% of their GDP on public procurement (OECD 2015).

  2. 2.

    For example, Hyundai IONIQ Electric from Hyundai Motors has 124 miles of driving range on a single charge and 28 kWh of battery storage. In contrast, Tesla Model S (P100DL) from Tesla Motors has 315 miles of driving range on a single charge and 100 kWh of battery storage. The driving range of Hyundai IONIQ Electric is not as long as half of that of Tesla Model S (P100DL), and the battery storage is even about quarter.

  3. 3.

    Korean EV market share was 0.2% in 2016 and the total EV supplying equipment (charging station) stock was 113 per 1 million habitants in 2016.

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Acknowledgements

This work was supported by the National Research Foundation of Korea (NRF) grant funded by the Korean government (MSIP) (No. NRF-2016K2A9A1A01952079).

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Correspondence to Yeongjun Yeo.

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The original version of this article was revised: Figure 2 is incorrect, as this should be Fig 3 and the current Fig 3 is a duplicate of Fig 4.

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Shin, K., Yeo, Y. & Lee, J. Revitalizing the Concept of Public Procurement for Innovation (PPI) from a Systemic Perspective: Objectives, Policy Types, and Impact Mechanisms. Syst Pract Action Res 33, 187–211 (2020). https://doi.org/10.1007/s11213-019-09488-7

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Keywords

  • Demand-side innovation policy
  • Public procurement for innovation
  • Innovation system
  • Taxonomy
  • Policy impact
  • Causal loop diagram