The innovation impacts of public procurement offices: The case of healthcare procurement

Abstract

Interest in public procurement's role in innovation has been reinforced by the directional turn in innovation policy, which highlights the social purpose of innovation. Procurement-induced innovation may often be a by-product of the pursuit of other policy goals, especially in sectors that are highly dependent on innovation, such as healthcare. Yet the tendency of innovation scholarship to focus at macro-levels, and on R&D-intensive innovation, means that the ways in which procurement routinely affects innovation – whether positively or negatively – are not fully understood. A particular scholarly lacuna relates to the role of the procurement office, which is often characterized as a more-or-less effective conduit for the knowledge and imperatives of others, notably users and vendors. Literature from innovation policy studies, which highlights the importance of implementation and administration for realizing innovation policy aims, alongside the burgeoning field of valuation studies, suggests that these offices may have a more substantive effect.We explored the role of the procurement office in innovation in the healthcare sector, which is highly dependent on innovation but retains the delivery of a high quality public service as its primary goal. We used an embedded case study design across four provinces in Canada, involving document review, ethnographic observation and key informant interviews (n=32). We first review how procurement offices engage and shape markets, then turn to the critical ways in which this market-shaping capacity is enabled through demand shaping activities that are negotiated within health systems.We argue that procurement offices act as professional intermediaries wielding calculative devices to set up the parameters of purchasing situations and to render certain measures of worth calculable through purchasing specifications. In doing so, they configure demand, conjure supply, and shape markets over time. Thus, they have a systemic impact on innovation. Yet while always present, the strength of the procurement office's impact is not unlimited, being constrained by powerful constituencies within health systems and cost-cutting pressures placed on public sector procurement more generally. We suggest that acknowledging the substantive importance of procurement offices in innovation may be an important first step in unleashing their capacity to support it.