Procurement Relationships Research Articles

Green public procurement and corporate environmental performance: An empirical analysis based on data from green procurement contracts

Green public procurement (GPP) is regarded as a vital tool for achieving energy conservation and emission reduction. This policy aims to guide enterprises towards cleaner production by creating market demand for green products on the demand side. However, it remains unclear whether GPP can genuinely improve corporate environmental performance. This study reviews relevant policy documents and constructs a wordlist of “green procurement contract" using the Word2vec model. By employing text analysis, we identify public procurement contracts that meet green standards. Subsequently, we match these contracts with data from China's A-share-listed companies to empirically test the impact of GPP contracts on corporate environmental performance. The findings reveal that GPP significantly enhances corporate environmental performance, primarily through conceptual governance effects, source governance effects, terminal governance effects, and supervision governance effects. Heterogeneity analysis indicates that this environmental incentive effect is particularly significant among non-state-owned enterprises and small and medium-sized enterprises. Additionally, the effect is more pronounced in regions with high government environmental awareness and moderate environmental enforcement intensity. Further analysis shows that GPP also improves corporate social responsibility performance and promotes corporate ESG performance, thereby fostering sustainable development. Moreover, the study points out that increasing the transparency of information disclosure, enhancing procurement efficiency, and maintaining the stability of procurement relationships all contribute to strengthening the environmental performance incentive effect of GPP. This article helps to deepen the understanding of the “proactive government” promoting the development of green economy and also provides theoretical reference for the breakthrough of corporate green transformation under the target of “dual carbon.”

Does history really repeat itself? An empirical investigation of recurring misconduct violations in public procurement

Public procurement of goods and services accounts for a significant portion of government budgets. Among contracts awarded annually by the United States federal government, a disproportionate amount of total spend is given to a relatively small number of contractor firms, many of whom have committed government contract misconduct in the past. We leverage insights from the contracting literature and organizational learning theory to understand the relationship between past contract misconduct and the likelihood of a subsequent contract misconduct violation, along with contextual factors that could influence this relationship. Using composite misconduct data captured from a longitudinal dataset of United States Department of Justice (DOJ) public procurement, a probit regression analysis reveals that firms with a history of government contract misconduct violations are increasingly likely to commit a subsequent violation, yet this relationship is not linear. Further empirical analysis reveals characteristics of contracting firms and purchasing relationships which moderate this phenomenon. Our findings contribute to the literature by providing empirical support regarding the relationship between past and future contract misconduct violations within public procurement relationships. We also offer several implications to practitioners and policymakers to support the identification and management of repeat contract misconduct violators.

The role of reputation in cross-regional buyer-supplier cooperation in public procurement

Relevance. The relevance of this study is determined by the growing trend of implementing approaches from the private sector in managing public procurement, such as suppliers’ reputation assessment. Although the suppliers’ reputation factor is a topic of current interest, both in research and in public procurement practice, there are ongoing discussions on the effects of the reputation criterion usage in public procurement, and some aspects have been insufficiently studied. Purpose of the study. This study examines the role of suppliers’ reputation factor in terms of interregional cooperation between public buyers and suppliers at the micro and regional levels. Data and methods. The analysis is based on a survey of public buyers in Russia, revealing procurers’ orientation on suppliers’ reputation factor and their involvement in cross-regional cooperation for micro-level analysis. With the help of open data on public procurement contracts, a grouping of Russian regions by the share of suppliers from other regions is proposed. The combination of open data analysis and survey results is then used to explore the role of reputation in terms of interregional cooperation. Results. The analysis shows that a suppliers’ reputation factor is of particular importance when more than half of a buyers’ suppliers are from other regions. Also, suppliers’ reputation is of major significance for public buyers in regions that are more involved in contracting with suppliers from other regions. Thus, the importance of the suppliers’ reputation factor, in terms of interregional cooperation, is confirmed both at the micro level of procurers’ purchases and at the regional level. Conclusion. For effective management of contractual relationships in public procurement, it is important to understand the effects and the role of considering the reputation of suppliers. The study focused on one of the insufficiently explored aspects of suppliers’ reputation in public procurement. The results may be of interest both to regulators and direct procurement participants – public buyers and suppliers.

A quasi-experimental design to assess the innovative impact of public procurement: An application to the Italian space industry

A growing number of empirical studies have shown that public procurement can be a relevant demand-side innovation policy. We assess the impact of public procurement on firms' innovation in the space industry. This is an important field of application because it widely uses public procurement and the procuring space agencies have distinctive characteristics, namely innovation-oriented mandate, relevant internal competences and professional skills. Specifically, we focus on the procurement activity of the Italian Space Agency over a 15-years period. We assess the causal impact of public procurement on suppliers’ patenting activity by implementing a novel quasi-experimental design. Our approach allows addressing the endogeneity issues and potential estimation biases stemming from both the procurement selection process and its time heterogeneity. By combining matching techniques with a staggered diff-in-diff approach, we find that, after the beginning of the procurement collaboration, the supplier firms have increased on average their patent applications by roughly 10% compared to the control group. Such effect is increasing in time and persists for several years after the beginning of the procurement relationship.

Technology transfer from procurement relationships in big science contexts

Big Science is a fertile learning environment for the transfer of knowledge and technology to suppliers since it boosts economic performance, innovation and reputation. However, despite the growing importance of this topic in the literature, empirical evidence is still limited. This paper investigates technology transfer from Big Science through procurement relationships related to the need to develop front-end technologies for Big Science research infrastructures. The results show that the benefits generated for companies include intangible dimensions, such as the acquisition of technical knowledge and improved reputation. In addition, this procurement relationship leads to organizational changes such as the introduction of new specific organizational units and improved investment in R&D. In turn companies are able enter new markets thanks to the newly acquired competencies.

Trust and Trustworthiness in Procurement Contracts with Retainage

In complex procurement projects, it is difficult to write enforceable contracts that condition price upon quality. Supplier nonperformance becomes an acute risk, particularly when there is intense competition for the contract. An established incentive mechanism used to mitigate the problem of supplier nonperformance is retainage, in which the buyer sets aside a portion of the purchase price. After project completion, the buyer determines the amount of retainage that is released to the seller, considering any defects that arise. Although generally a feasible contract form to implement, the practical difficulties in assessing completion introduce a moral hazard for the buyer. We develop a structurally new game and experimental design to offer managerial insights on how retainage principles mediate trust and trustworthiness in competitive procurement settings with moral hazard. The experimental results suggest that if trust in the procurement relationship is strong enough, then retainage can mitigate the seller-side moral hazard problem and substitute for reputation in a fragmented supply chain at the cost of inflated tender prices. In high retainage structures, there is a tradeoff between trade efficiency and supplier participation in request for bids. We further develop a model of fair payment norms and offer managerial insights on how to design the retainage mechanism, conditional on prevailing levels of trust and beliefs about fairness. This paper was accepted by Vishal Gaur, operations management. Funding: This work was supported by the Economic and Social Research Council [Grant ES/R500963/1]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2022.4516 .

Covid-19 in America: Global supply chain reconsidered.

This research asks: To what extent has America's reliance on the global supply network aggravated the country's public health and economic crisis; and how did the American government respond to supply chain weaknesses during the early years of the Covid‐19 pandemic? This study first assesses important conceptual considerations that explain the expansion of global value chains and the growth of trade interdependencies among nations. Next, an analytical case study observes (1) America's supply chain vulnerability through three major waves of infection, (2) the difficulty to mend weaknesses in the supply linkages once the novel coronavirus spread globally and (3) American government's failures to both anticipate and respond to supply shortages, especially in the health sector. Trump administration's policies failed to ensure a reliable supply of simple personal protective equipment (PPE) for healthcare professionals and hospitals throughout the first three waves of infection. Moreover, state and federal governments' substantial reliance on large manufacturers who have established procurement relationship with government led to continuous nationwide supply shortages throughout 2020. The federal government's inability to engage small and medium manufacturers in the production of critical supplies of PPE and diagnostic tests deepened and prolonged the devastating impacts of the pandemic. Our case study demonstrates that the American government needs to rethink the country's substantial reliance on the global supply chain, and the specific requirements to boost domestic manufacturing capacity. The revitalisation of America's manufacturing ability and the local supply networks will boost the productive power of the nation, strengthen resiliency, reduce vulnerability in disruptive times and prepare the nation for future crises.

Public procurement as an attractive customer: a supplier perspective

PurposeBuyer–supplier relationships in public procurement have garnered increasing attention in research, yet studies on the perspective of suppliers on public procurement have remained limited. This research takes the perspective of suppliers and aims to investigate the innovativeness of suppliers and the impact of supply chain ambidexterity strategies on their perceptions about public procurement in terms of innovation enablers and customer attractiveness.Design/methodology/approachThis research draws from a survey of 137 suppliers to the public sector in Finland and applies PLS-path modeling to test its hypotheses.FindingsThe findings reveal that the ambidexterity strategy of suppliers in the supply chain influences how they perceive the innovation enablers and customer attractiveness of public organizations since processes of public procurement do not support these strategies fully. Supplier innovativeness has an influence on the perceived innovation enablers of public procurement, which, in turn, influences customer attractiveness.Practical implicationsThe innovativeness and strategies of suppliers for the supply chain have an impact on how attractive they perceive public procurement. The findings of this research provide insights on why the customer attractiveness of public procurement may not be high enough to secure the competition in their bidding processes.Originality/valueThe study’s contribution adds to the field of buyer–supplier relationships and customer attractiveness in public procurement by showing the importance of innovation enablers and highlighting the impact of supplier's ambidexterity in the supply chain on their perceptions about public procurement.

Investment Strategies for Sourcing a New Technology in the Presence of a Mature Technology

To stay competitive, high-technology manufacturers not only frequently source new technologies from their suppliers, but also financially support the development of these new technologies into component products or production tools. We consider a manufacturer that can either source a new but immature technology from a financially constrained supplier, or source a mature technology from an existing supplier if and only if the development of the new technology fails. To support the new technology, the manufacturer can choose to inject capital in the form of an equity or loan. The investment strategy not only affects the new supplier’s development effort and the probability of technical success (PTS), but also affects the existing supplier’s effort to improve the mature technology, which presents the manufacturer with a trade-off. Following the debt financing literature, we find that a loan contract is associated with a cost-shifting effect and often leads to a higher PTS. However, because the manufacturer not only maintains an investment but also a procurement relationship with the new supplier, we find a profit-sharing effect associated with an equity investment, which does not exist in the traditional equity issuance literature. In particular, we show that the profit-sharing effect can dominate the cost-shifting effect and lead to a higher PTS when the new supplier’s technological capability is sufficiently high. Nonetheless, we also show that the strategy that derives a higher PTS does not necessarily generate a higher payoff for the manufacturer. On the one hand, a loan can be preferred even when it leads to a lower PTS because the cost-shifting effect allows the manufacturer to offer a sufficiently low procurement payment while maintaining a sufficiently high PTS. On the other hand, when the existing supplier is very capable of reducing its costs, a loan can over-incentivize the new supplier to exert excessive effort and backfire. This paper was accepted by Charles Corbett, operations management.

Big science and innovation: gestation lag from procurement to patents for CERN suppliers

CERN, the European Organization for Nuclear Research, is the most important laboratory for particle physics in the world. It requires cutting edge technologies to deliver scientific discoveries. This paper investigates the time span needed for technology suppliers of CERN to absorb the knowledge acquired during the procurement relation and develop it into a patent. We estimate count data models relying on a sample of CERN suppliers for the Large Hadron Collider (LHC), a particle accelerator. Firms in our sample received their first LHC-related order over a long-time span (1995–2008). This fact is exploited to estimate the time lag that separates the beginning of the procurement relationship and the filing date of patents. Becoming a supplier of CERN is associated with a statistically significant increase in the number of patent applications by firms. Moreover, such an effect requires a relatively long gestation lag in the range of five to eight years.

Relationship quality and supplier performance in food supply chains

The importance of procurement relationships in food supply chains is increasing in importance due to issues of food safety, food security, changing consumer preferences, ethical concerns and greater awareness of the environmental impact of food production. Despite the considerable research on buyer-seller relationships in the marketing and management literature, only a small proportion of this has focused on procurement relationships between producers and buyers in food supply chains. Hence, this paper specifically focuses on examining the impact of relationship quality on supplier performance in the context of food supply chains. The theoretical framework is derived from the tenets of the resource-based view and the relational view of firms. Using this framework, the definition, measurement and structural dimensions of relationship quality is established in the context of food producers and buyers. This construct is then tested in relationship to supplier performance. Utilizing data from a mail survey of 954 red meat producers in New Zealand, the model of supplier-buyer relationship quality and its effects on supplier performance is tested using structural equation modelling. The results demonstrate that relationship quality is an essential factor in procurement relationships with suppliers in food supply chains and shows that, as hypothesized, higher quality relationships lead to positive performance outcomes. The results support the theoretical framework indicating that relationship quality, conceptualized and defined in this context, is indeed a valuable relational resource due to its impact on supplier performance. Managerially, this resource can be manipulated to improve supplier performance, and hence potentially provide firms with competitive advantage that has high replication barriers.

An interdisciplinary perspective of conflict and relationships in construction procurement and logistics

Due to the construction industry’s eagerness tolifting adversarial trends and realising the benefits of good relationships, the current research intends to investigate the construct of relationship quality in construction projects; especially in the eventof a conflict. An interdisciplinary construct is derived using a three step methodology and wide range of theories from a comprehensive literature review. These theories range from relational marketing to relational contracting and construction project management. A conflict process model is used to outline the association of conflict and relationship quality in construction projects. Concepts such as psychological meaningfulness, psychological availability, resource availability, aligned-commitment, teamwork, performance satisfaction and trust are attributed to relationship quality. An interdisciplinary construct with antecedents, core attributes and outcomes are achieved. Conflict is demonstrated as a potential antecedent of relationship quality. Finally, moderating factors such as actions and strategies, some of which could be used in conflict management are identified as moderators of relationship quality. By identifying and mapping all the possible components in relationship quality, its different constructs and potential interactions can be recognised. This is extremely important in future investigations of relationship quality in relation to construction project issues and trainingproject teams. The choices of components for the construct are extracted from existing literature; however other components may be of effect which are not included and explored in the future. The model can be used to achieve project integration goals and joint problem solving strategies.

The role of trust in project negotiation: A case study

Most projects include procurement processes which may consist of tendering, negotiation or a combination of the two. It has been found that if the procurement relationships in a project are healthy, then it has a significant influence on the success of the project. This may be because team performance in a project environment is influenced, amongst others, by the extent to which the contracting parties trust each other. However, most of these studies have been conducted in Europe, America, and Asia and in large international construction projects where tendering is the usual method of contract award. Few studies have investigated the role and types of trust during project initiation, specifically during project negotiation.

Supply chain networks in the Armenian agribusiness: Setting a benchmark

Several studies on the effects of foreign direct investments (fdi) in Central and Eastern European Countries show that foreign investors are working hard to raise the level of quality of their suppliers to meet the global quality requirements. In this context, management concepts have been developed to optimize inter-firm relationships. Thus, nowadays, not only intra-firm but also inter-firm processes are developed. By verticalization, we understand the tightening of the procurement relationships leading to the development of vertically integrated firms or vertically cooperating hybrids. In this paper, we take a closer look at vertically cooperating chain systems or networks. The aim of the article is to give an overview of the general mechanisms of chain management in the context of cooperation and coordination issues and then focus on vertical coordination in transition economies. Vertical coordination will be the theoretical basis to analyze a case study of Yerevan Brandy Company (ybc), which serves as a success story and a role model for the building of a supply chain network for other transition economies. This case study is based on an interview with ybc’s heads of grape purchasing and quality control, two of their agronomists working with the farmers, as well as the director of the Vine and Wine Foundation of Armenia, who represents all grape growers and processors. The case study shows tangibly how an international company manages to integrate local smalland medium-sized farmers (grape growers) into its domestic and international value chains by means of cooperation and coordination in the form of contracting.

Analysis of incentive structures at producer–processor interface of beef supply chain in Brazil

PurposeWith recent shifts in market forces driven by food safety and quality concerns, managers in the Brazilian beef processing industry are forced to reevaluate their procurement arrangements with cattle producers. The purpose of this paper is to provide insight on the effect of live-weight (LW) and dead-weight (DW) procurement arrangements on farmers’ incentives to invest in cattle quality.Design/methodology/approachThe research methods involve a conceptual model based on principal-agent framework and data from targeted interviews of cattle farmers and slaughterhouse managers in the Western Region of São Paulo state of Brazil.FindingsFindings highlight the potential for adverse selection of low-quality cattle producers under LW arrangement and misaligned incentives for quality improvement, they also illustrate incentive compatibility of DW arrangement when the carcass yield is verifiable by producers. The evidence from field data was largely consistent with the predictions of the model and highlighted the important role of trust for a lasting procurement relationship under DW arrangement.Research limitations/implicationsDue to the lack of publicly available data and the challenges associated with the collection of primary field data, the sample is limited to 30 cattle producers and 5 processing firms.Originality/valueThis paper provides a theoretical and empirical platform for developing further research on coordination at the producer–processor interface of beef supply chain in Brazil and other countries with similar transaction characteristics. The findings will assist in designing more incentive compatible and self-enforcing arrangements between cattle farmers and slaughterhouses to enhance the product quality and the overall efficiency of the supply chain.

Patterns in sustainable relationships between buyers and suppliers: evidence from the food and beverage industry

Although research on sustainable procurement is increasing, little empirical research has been done on how sustainable procurement is established between companies. Therefore, drawing on supply chain management and purchasing management literature, this study explores how food industries manage sustainable supplier relationships. Through the identification of company clusters with typical sustainable procurement approaches, the paper contributes to the supply chain management literature. A questionnaire is applied to gather data amongst Dutch Food and Beverage companies from which 62 could be used for the analyses (effective response rate 28.9%). Cluster analysis revealed four types of companies with distinctive sustainable procurement relationships: market relationships (arms-length), sustainability leader, one-sided sustainability (interested supplier but less interested buyer), and inconclusive sustainability (buyer and suppliers only made a start). As the implementation of sustainable procurement remains low in practice, insights from this study are important for managers.

Green Procurement Relationships Development under Carbon Emissions Regulations: A Bi-Level Programming Approach.

A multi-period Stackelberg game is adopted to study a green procurement relationship between manufacturers and suppliers in a supply chain. The manufacturers are considered as leaders, while the suppliers are modelled as followers in this Stackelberg game. Accordingly, a mixed binary linear bi-level programming model is developed to elaborate the game in consideration of carbon tax scheme. The upper level (the leader) aims at selecting a proper number of suitable suppliers to provide heterogeneous raw materials at the lowest operational cost. The objective of the lower level (the follower) is to find optimal purchasing quantities of raw materials. In addition, two lemmas are introduced to transform the mixed linear bi-level programming model into a single level linear programming model. The numerical example illustrates that: (1) the manufacturer prefers to adopt the multiple sourcing strategy due to the flexibility; (2) keeping stable supplies and large order volumes could effectively reduce carbon emissions for the suppliers and make the supply chain greener.

TTIP Negotiations and Public Procurement: Internal Federalist Tensions and External Risks of Marginalisation

Abstract Government procurement is perhaps one of the most underexplored areas in the recent academic literature on transatlantic economic relations, yet it was also one of the most protected economic sectors addressed in the now derailed Transatlantic Trade and Investment Partnership (TTIP) negotiations. Even though the European Union (EU) and the United States have undertaken extensive reciprocal procurement commitments under the World Trade Organization’s Agreement on Government Procurement (GPA), as well as in their respective preferential trade agreements (PTAs), the liberalisation and harmonisation of the transatlantic procurement market could not be more ambiguous or controversial. This article aims to deepen our understanding of crucial aspects of the contemporary EU–United States procurement relationship. To this end, the article explores the TTIP negotiations as well as similar PTAs and underlines the potential implications in terms of the fragmentation of the international discipline of procurement regulation.

The critical factors in managing relationships in international engineering, procurement, and construction (IEPC) projects of Chinese organizations

In International Engineering, Procurement, and Construction (IEPC) projects the main contractor carries out the work at distant sites for the project owner with support from multiple suppliers and/or subcontractors. Managing relationships with suppliers and/or subcontractors in such projects is even more critical due to additional dependency on them to complete the job. Yet it is not clear which factors influence such relationships in IEPC projects. This study intends to close this gap in the extant literature. Data has been collected from professionals involved in IEPC projects and it has been investigated how various aspects of relationship with suppliers and/or subcontractors may influence project outcomes. Logistic regression and neural networks have been used to analyze the data and subsequently identify four critical factors: service provided by suppliers and/or subcontractors, continuous improvement, supplier and/or subcontractor delivery reliability, and effective problem solving, which impact IEPC project success to the greatest extent. The findings suggest that the main contractors should pay particular attention to these aspects of relationship management.

TTIP Negotiations and Public Procurement: A Federalist Approach

Government procurement is perhaps one of the most under-explored areas in the recent academic literature on transatlantic economic relations and yet it is also one of the most protected economic sectors addressed in the Transatlantic Trade and Investment Partnership (TTIP) negotiations. Even though the EU and the US have undertaken extensive reciprocal procurement commitments under the WTO’s Agreement on Government Procurement, as well as in their respective preferential trade agreements (PTAs), the liberalisation and harmonisation of the transatlantic procurement market could not be more ambiguous or controversial. This paper aims to deepen our understanding of crucial aspects of the current EU–US procurement relationship. To this end, the paper explores the TTIP negotiations as well as similar PTAs and underlines the potential implications in terms of the fragmentation of the international discipline of procurement regulation.