DP13777 Buyers' Role in Innovation Procurement

Author(s): Gaétan De Rassenfosse, Francesco Decarolis, Leonardo Maria Giuffrida, Elisabetta Iossa, Vincenzo Mollisi, Emilio Raiteri, Giancarlo Spagnolo
Publication Date: June 2019
Date Revised: October 2019
Keyword(s): Buyers, Innovation, Management Practices, patents, Procurement, R&D Procurement
JEL(s): H11, H57, O31, O32, O38
Programme Areas: Public Economics, Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13777

What is the impact of buyers on the performance of innovation procurement? In which phase of the procurement process are buyers most crucial and why? We address these questions by exploiting a novel dataset that links U.S. federal R&D contracts to their follow-on patents, citations and claims. Using the deaths of managers in the offices close to where contracts are performed as shocks to the functioning of these offices, we measure a positive and sizable effect of public buyers on all three outcome measures. The buyer's role is stronger in the pre-award, tender-design phase, where cooperation between different specialists is essential, than in the following contract-management phase typically performed by individual officers. Consistently, bureaus where employees perceive high level of cooperation within the office are associated with better R&D outcomes.