Fostering innovation in public procurement through public private partnerships

Abstract

Purpose The prevailing view in the studies on Public Private Partnerships (PPPs) is that PPPs can improve the quality and efficiency of infrastructure services and facilitates innovation in infrastructure developments. Although researchers highlight the potentiality of PPP models for stimulating innovation, they do not prove whether and in which conditions the PPP model is capable of developing innovative solutions. This paper aims to provide answers to the following key research questions: Which are the PPP features that favor innovation? How properly structure a PPP to foster innovation? Design/methodology/approach With this aim, drawing upon the main streams of studies on innovation, the authors develop a conceptual framework that identifies the PPP features that can influence the innovativeness. Second, they define how these PPP features have to be structured to foster innovation. Finding The authors find that a wider involvement of the private sector will increase the level of innovation. The industry structure exerts opposite forces on innovation: the dominance of large-sized firms is positively related to innovative output, whereas the market concentration negatively affects innovation. Performance-based contracts should be used in the context of PPP instead of traditional contracts. Finally, the authors find that, to fully exploit the networking effects on innovation, cooperation and trusting among partners involved in PPPs should be enhanced. Originality/value The developed framework identifies the relations existing between each PPP feature and the level of innovation and allows to define how these PPP features have to be structured to foster innovation. The authors contribute to fill the gap in the academic literature on PPP and innovation by proving whether and in which conditions the PPP model is capable of developing innovative solutions. Furthermore, they provide meaningful guidelines to those called to structure the PPP arrangements.