A transaction cost approach for public procurement

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aksel I. Rokkan ◽  
Sven A. Haugland
Keyword(s):  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Public Procurement ◽  
Theoretical Perspective ◽  
Public Agencies ◽  
Private Companies ◽  
Supplier Relationships ◽  
Content Type ◽  
The Public ◽  
Market Governance

Purpose This paper aims to develop a theoretical framework based on transaction cost economics that identifies key factors shaping public agencies’ governance of supplier relationships and related performance implications. Design/methodology/approach The paper presents an extended transaction cost framework for research on public procurement (PP) with a corresponding set of propositions. Transaction cost theory and specific features of and challenges to the PP function identified in extant literature constitute the main elements of the framework. Findings This conceptual paper makes three sets of proposals. First, public agencies tend to rely on market governance of supplier relationships and when PP deploys non-market governance, such governance tends to be of a unilateral (vs bilateral) kind. Second, increases in purchasing competence and autonomy of PP and particularly if implemented in tandem, will reduce PP’s overreliance on market governance and increase PP’s use of non-market governance. Third, PP should perform better for less complex transactions – and when contracting complexity relates to safeguarding of specific assets rather than when complexity relates to environmental and behavioral uncertainty. Increases in competence and autonomy should increase PP’s performance, particularly for complex transactions. Practical implications Public agencies may be in a better position to align governance solutions with transaction complexities by developing their procurement competence, decentralizing procurement decisions and increasing the flexibility of national and international procurement regulations. Private companies selling to public agencies need to be aware of and able to adapt to PP practices such as extensive use of market governance and unilateral governance as the primary form of non-market governance. Social implications The paper discusses how public agencies can improve procurement performance through better alignment of governance of supplier relationships with transaction attributes and thereby increase the quality of public services. Originality/value The paper relies on a well-established theoretical perspective, enabling identification (and, potentially, correction) of governance misalignment in the public sector.

scholarly journals Early contractor involvement approaches in public project procurement

2018 ◽  
Vol 18 (4) ◽  
pp. 355-378 ◽  
Author(s):  
Paulos Abebe Wondimu ◽  
Ali Hosseini ◽  
Jadar Lohne ◽  
Ola Laedre
Keyword(s):  
Success Factors ◽  
Public Procurement ◽  
Business Practices ◽  
Public Project ◽  
Content Type ◽  
The Public ◽  
Treat All ◽  
First Time ◽  
Project Procurement ◽  
Depth Interviews

Purpose Early contractor involvement (ECI) faces many barriers when it is implemented in public procurement, given that it is different from traditional business practices. Primarily, public owners face a major challenge, as they should treat all bidders equally. The purpose of this paper is to explore suitable ECI approaches that public owners could use. Design/methodology/approach In addition to a literature and document study, 14 semi-structured in-depth interviews with key personnel from 11 cases selected from Norwegian public bridge projects were carried out. Findings In all, 23 unique approaches of ECI were identified during this research (16 from literature and 7 new from case projects). The findings provide a new direction to ECI through introducing new approaches of ECI from the case projects. Originality/value This paper for the first time presents several alternatives of ECI approaches for public owners with the intention of illustrating ECI is actually possible in the public project procurement. Furthermore, it presents for the first time success factors of ECI with the intention of increasing the understanding of ECI concept from a public procurement perspective.

scholarly journals Business founding in biotech industry: process and features

2020 ◽  
Vol 43 (10) ◽  
pp. 1183-1219
Author(s):  
Biagio Ciao
Keyword(s):  
Knowledge Sharing ◽  
Risk Perceptions ◽  
Process Model ◽  
Inductive Method ◽  
Resource Analysis ◽  
Private Companies ◽  
Content Type ◽  
The Public ◽  
Biotech Industry ◽  
Financial Impacts

Purpose This paper aims to construct a process model of business founding in the biotech industry. Design/methodology/approach An inductive method is used, and five case studies analyzed. Data are coded by applying Gioia’s method. Findings Aspirant entrepreneurs conduct resource analysis and industry analysis to formulate research and development targets. They perform transactions and networks because they require resources, and they then deploy and coordinate these resources. Such coordination generates activities with social and financial impacts. Research limitations/implications The results are specific to the biotech industry. A future study could examine business founding processes in other industries (e.g. entertainment, fashion, public utilities and sport). Additionally, the paper argues that during the founding process entrepreneurs show little concern for knowledge-sharing risk, as they want to collaborate to implement their ideas. Quantitative papers could test the consequences of such behavior. Practical implications The process model provides insights into aspirant founders on how to start a business in the biotech industry. Originality/value The paper shows: the differences between the founding process in the biotech industry versus other industries; and the shape of the Bower–Burgelman model in the context of biotech business founding. The paper delineates how private companies discover competencies in the public sector; a model of technology transfer from public to private sector; entrepreneurs’ absence of risk perceptions regarding knowledge-sharing during founding; and how conferences can serve as vehicles for benchmarking in networking.

scholarly journals Public engagement and dialogic accounting through social media during COVID-19 crisis: a missed opportunity?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Stefano Landi ◽  
Antonio Costantini ◽  
Marco Fasan ◽  
Michele Bonazzi
Keyword(s):  
Public Health ◽  
Social Media ◽  
New Zealand ◽  
Public Engagement ◽  
Fake News ◽  
Public Agencies ◽  
Content Type ◽  
Public Health Agencies ◽  
The Public ◽  
Health Agencies

PurposeThe purpose of this exploratory study is to investigate why and how public health agencies employed social media during coronavirus disease 2019 (COVID-19) outbreak to foster public engagement and dialogic accounting.Design/methodology/approachThe authors analysed the official Facebook pages of the leading public agencies for health crisis in Italy, United Kingdom and New Zealand and they collected data on the number of posts, popularity, commitment and followers before and during the outbreak. The authors also performed a content analysis to identify the topics covered by the posts.FindingsEmpirical results suggest that social media has been extensively used as a public engagement tool in all three countries under analysis but – because of legitimacy threats and resource scarcity – it has also been used as a dialogic accounting tool only in New Zealand. Findings suggest that fake news developed more extensively in contexts where the public body did not foster dialogic accounting.Practical implicationsPublic agencies may be interested in knowing the pros and cons of using social media as a public engagement and dialogic accounting tool. They may also leverage on dialogic accounting to limit fake news.Originality/valueThis study is one of the first to look at the nature and role of social media as an accountability tool during public health crises. In many contexts, COVID-19 forced for the first time public health agencies to heavily engage with the public and to develop new skills, so this study paves the way for numerous future research ideas.

Unpacking the framework of unsolicited proposal for public private partnership projects – the Indian case

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Varaprasad Mallisetti ◽  
Tharun Dolla ◽  
Boeing Laishram
Keyword(s):  
Design Methodology ◽  
Public Procurement ◽  
Time Frame ◽  
Public Private Partnership ◽  
Successful Implementation ◽  
Implementation Framework ◽  
Private Partnership ◽  
Content Type ◽  
The Public ◽  
Private And Public

Purpose The most recent advent of the unsolicited proposal in the public private partnership mode of infrastructure procurement has changed the duties and roles of private and public sector agencies. Also, they have increased the practitioners' difficulties to work out strategic mechanisms and methods to manage these unsolicited proposals (USP) effectively. So, this study aims to understand how well equipped are the Indian USP guidelines for managing procurement. Design/methodology/approach Content analysis with coding procedures was carried to understand the regulations of USP frameworks of India over the four stages of USP procurement. Findings The findings show that there are severe flaws in various states' frameworks. The states have flaws in their policies in implementation features across the stages of USP such as defined objectives, the absence of fees and review timeframes in the submission, time frame and guidance on benchmarking and market testing in evaluation and development, time frame for bidding and access to information in procurement stages. Originality/value The USP implementation framework developed as part of this study can direct the policymakers and practitioners to improve public procurement regulations and the necessary changes for the successful implementation of USPs. In doing this, the private sector is enabled to develop more competitive and innovative proposals.

Repeated selection of supplier, factors and results: the Czech Republic

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Michal Plaček ◽  
Martin Schmidt ◽  
František Ochrana ◽  
Gabriela Vaceková ◽  
Jana Soukopová
Keyword(s):  
Recurrent Selection ◽  
Public Procurement ◽  
Ordinary Least Squares ◽  
Group Method ◽  
Strong Impact ◽  
Least Squares Regression ◽  
Content Type ◽  
The Public ◽  
Logistic Regression Method ◽  
Selection Of

Purpose The paper aims to deal with the analysis of the factor leading to the repeated selection of the specific supplier and the effect of this recurrent selection on overpricing of public contracts. Design/methodology/approach A mix of quantitative and qualitative methods is used to achieve this goal. To analyze the chances of obtaining repeated contracts, the logistic regression method is used. To analyze the factor of overpriced contracts, the classic ordinary least squares regression model is used. The focus group method is then used to explain the factors acting on the part of the contracting authorities. Findings The results show that the prior procurement of a given contracting authority, or work for the public sector in general, has a statistically significant effect on the conclusion of contracts. The use of less-transparent forms of input has a strong impact. The non-transparent selection of suppliers rather than repetition of contracts generally results in the over-pricing of contracts. The IT sector is an exception. Social implications This research is also essential for real public policy. Given the amount of GDP allocated to the public procurement market, it makes sense to continually seek room for improvement. Here is an attempt to find this by examining the contracting authorities’ behavior when awarding repeated contracts. Originality/value This research is original because it looks at the problem of the contracting authority in the wider context and optics of the path dependency theory, which has not yet been applied to the public procurement environment. The focus is also on IT procurement, which according to this study has not been empirically investigated in this way, is also innovative.

Behind the length of contract during market transitions

2020 ◽  
Vol 35 (11) ◽  
pp. 1801-1815
Author(s):  
Xin Chen ◽  
En Xie ◽  
Mike W. Peng ◽  
Brian C. Pinkham
Keyword(s):  
Emerging Economies ◽  
Transaction Cost Economics ◽  
Institutional Environment ◽  
Research Question ◽  
Empirical Method ◽  
Supplier Relationships ◽  
Content Type ◽  
Specific Investments ◽  
Market Transitions ◽  
Practical Implications

Purpose The purpose of this paper is to examine an important yet underexplored research question in the literature: What determines the length of contract governing buyer–supplier relationships during market transitions? The length of contract is a solid indicator of the comprehensiveness of a contract. By integrating transaction costs economics, the embeddedness perspective and the institution-based view, the paper develops a model that incorporates specific investments and perceived opportunism, strategies to select suppliers and buyer firms’ confidence in the institutional environment. It further posits how buyer firms’ dependence on suppliers moderates these relationships. Design/methodology/approach Data were collected nationwide via face-to-face interviews with 328 executives in 164 Chinese firms who shared information pertaining to 774 buyer–supplier contracts. A fine-grained mixed-empirical method was designed to test the proposed hypotheses, to confirm the reliability and to generalize the research findings. Findings All the proposed factors significantly influence the length of the contract. Results obtained through a moderated mediating model suggest that buyers with supplier-specific investments and that choose market-based selection relative to a relationship-based tend to perceive more opportunism in buyer–supplier relationships, which will lead to shortening the length of the contract. However, the buyer’s perception of opportunism will decrease when buyers perceive higher levels of confidence in their legal institutions. Practical implications The study discusses several practical implications for B2B managers who typically involve in interfirm exchanges as well as for emerging economies’ institutions. Originality/value Leveraging theoretical insights from transaction cost economics, the institution-based view and buyer–supplier relationships literature, this empirical study adds unique contributions to B2B research in general and emerging economies’ institutional literature in particular.

Getting innovations out of interactions in the public procurement context

2020 ◽  
Vol 35 (12) ◽  
pp. 2051-2065 ◽  
Author(s):  
Lisa Melander ◽  
Ala Pazirandeh Arvidsson
Keyword(s):  
Public Sector ◽  
Business Model ◽  
Design Methodology ◽  
Public Procurement ◽  
Business Model Innovation ◽  
Structured Interviews ◽  
Demand And Supply ◽  
Content Type ◽  
The Public ◽  
Product Service

Purpose The purpose of this paper is to discuss how a seller can use interactions to respond to public procurement needs for innovation when the buying side is restricted by public procurement regulations. Design/methodology/approach The authors collected data using qualitative semi-structured interviews of different empirical examples, in which private–public interactions of four different high-technological products are studied. Two products belong to the defence industry and two to the civil industry. Findings The findings point to three types of innovations in public procurement: product, service and business model. The empirical examples further indicate, as suggested in previous studies, that innovation is hindered by regulations that limit interaction between suppliers and the public. In addition, the empirical examples indicate that firms mobilize actors in their network when the buyer is restricted in regard to interaction. The findings also add to the IMP literature by comparing interactions in the three types of innovations in the public procurement context. Originality/value Public procurement is an area where innovations are lagging behind, compared with private procurement. Research points to limited interaction between actors as an obstacle to innovation in public sector collaborations. This paper extends the literature on how organizations interact in the setting of public procurement. The authors identify demand and supply triggers for three types of innovations: product, service and business model innovation.

Out of sight, out of mind? Supplier spatial proximity in French public procurement

2014 ◽  
Vol 27 (6) ◽  
pp. 486-500 ◽  
Author(s):  
Olivier Mamavi ◽  
Haithem Nagati ◽  
Frederick T. Wehrle ◽  
Gilles Pache
Keyword(s):  
Public Procurement ◽  
Spatial Proximity ◽  
Management Competencies ◽  
Content Type ◽  
The Public ◽  
Feature Evaluation ◽  
Negative Effect ◽  
New Type ◽  
The Difference ◽  
The Impact

Purpose – The purpose of this paper is to study the impact of spatial proximity on supplier selection in the French public sector. While French public procurement legislation forbids consideration of supplier location in the procurement process, public contractors may still rely on spatial proximity for complex transactions necessitating mutual adjustments with suppliers. Design/methodology/approach – Using French Official Journals (BOAMP), the authors compiled 565,557 transactions completed on three public procurement markets between 6,182 contractors and 26,570 suppliers, over a period of six years (between 2006 and 2011). The authors conducted a two-level hierarchical linear auto-regression analysis and a feature evaluation analysis for all transactions. Findings – The paper finds significant variation between the transactions on different markets: a negative effect of spatial proximity on the number of contract notices in the public market and a positive effect of spatial proximity on the number of notices in the services and supplies markets. The difference lies in the levels of mutual adjustment required to optimally manage the relationship between public contractor and supplier. Research limitations/implications – The research is based on an econometric analysis conducted uniquely in the French context, which calls into question the external validity of the results obtained. The study also rests on segmentation into three aggregate markets, which might be considered too general. Originality/value – Rather than analyze public contractors’ perceptions of the importance of the criterion of spatial proximity, the paper examines 565,557 actual transactions. The results point to the emergence of a new type of relationship with certain suppliers, which should lead public contractors to integrate relationship management competencies, in addition to legal and economic competencies, in the organization of calls for tenders.

Unravelling SMEs’ participation and success in public procurement

2020 ◽  
Vol 20 (4) ◽  
pp. 377-401 ◽  
Author(s):  
Carmela Di Mauro ◽  
Alessandro Ancarani ◽  
Tara Hartley
Keyword(s):  
Small And Medium Enterprises ◽  
Public Procurement ◽  
Sample Selection ◽  
Cross Sectional ◽  
Content Type ◽  
Factors Affecting ◽  
The Public ◽  
Ex Post ◽  
Medium Enterprises

Purpose This paper aims to investigate the role of micro, small and medium enterprises (MSMEs) within the Canadian public procurement, by seeking to identify barriers and supporting factors of MSMEs’ participation and success in public tenders. Design/methodology/approach The empirical analysis builds on a unique survey run by the Canadian federal government, which addressed firms either participating or not participating in public tenders. Model estimation on the survey data relies on sample selection methodologies, which allow separating determinants of MSMEs’ decision to participate from determinants of success. Findings Results provide evidence that costs stemming from asset specificity and uncertainty (e.g. costs of bidding, requirements for participation, bundling of contracts and award rules based on minimum price) affect participation in public procurement. Within MSMEs, micro-firms are the most discouraged from participating. However, after controlling for factors affecting participation, micro-firms emerge as having a higher success rate, possibly because of high specialization and joint participation with larger firms. Research limitations/implications Because of the cross-sectional nature of the data used for hypotheses testing, endogeneity may arise if ex post variables affect ex ante decisions. This may apply if participation in procurement feeds on success in past tenders. Social implications Findings may inform policies for the inclusion of smaller firms in the public marketplace. Originality/value To the best of the authors’ knowledge, this study is the first attempting to disentangle determinants of participation in public tenders from determinants of success. Separating the two aspects helps fine-tune SME-friendly public procurement policies, by identifying actions that effectively facilitate success of MSMEs in public tenders.

Risk managing contractual routes to effective innovation procurement

2019 ◽  
Vol 35 (10) ◽  
pp. 18-20
Keyword(s):  
Risk Management ◽  
Design Methodology ◽  
Reading Time ◽  
Public Procurement ◽  
Public Organization ◽  
Content Type ◽  
The Public ◽  
Pertinent Information ◽  
Practical Implications ◽  
The Eu

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings This research paper concentrates on the public procurement of innovations (PPI) within the EU as a mechanism for stimulating private sector R&D efforts that solve public organization-identified problems. The authors encourage less risk aversion and greater risk management to encourage the increased use of cost-plus contracts to spread some risk between the procurer and supplier, which should in turn attract more innovative companies to participate in PPI exercises. Originality/value The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Sign in / Sign up

Export Citation Format

Share Document