Additional award criteria in public procurement: Tenders and firms' innovation performance heterogeneity

Bastian Krieger, Malte Prüfer and Linus Strecke

No 26-018, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Public procurement is widely regarded as an important instrument to foster innovation. We examine how additional award criteria beyond price relate to firms' realized innovation performance by combining representative firm-level data from the German Innovation Survey with official tender-level data from Tenders Electronic Daily and estimating two-way fixed effects models. The results suggest that winning price-based tenders is associated with lower product and service innovation and higher turnover from established products and services, while criteria-based procurement shows an inverse U-shaped relationship between the average length of criteria lists in won tenders and firms' innovation outcomes. Overall, the findings indicate that the innovation effects of public procurement depend not only on whether additional award criteria are used, but also on how extensively they are applied.

Keywords: Public procurement; Firm innovation; Demand side (search for similar items in EconPapers)
JEL-codes: H57 O31 O32 O38 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:341408

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