Using public demand to drive innovation

Our studies on demand-side innovation have contributed to substantial change in direction for innovation policy in the UK, at EU level and in other OECD countries, particularly regarding the use of large-scale procurement budgets.

Our research has supported policy reform and the introduction of new policy instruments to strengthen industrial competitiveness, especially in Europe.

Our key research staff, Professor Luke Georghiou and Professor Jakob Edler, have briefed UK and EU ministers and high level officials; they have also informed policy development through their membership and chairing of advisory boards.

The European Lead Market Initiative is explicitly based on our research. This novel policy is designed to drive innovation through the use of public procurement, a mechanism with significant potential as the procurement of goods and services accounts for 16-19% of GDP.

Our work has also contributed to:

  • The Glover Committee recommendations on access to procurement for SMEs, in particular through the exclusive use of electronic portal and documentation for tenders, the use of Innovation Procurement Plans (IPPs) and of outcome based specifications
  • Innovation Nation recommendations on ‘intelligent customers’ and IPPs
  • New Pre-Commercial Procurement (PCP) models within the EU Horizon 2020 R&D programme, which aims to create procurement markets worth EUR 10 billion a year
  • The requirement for PCP within the area of ‘smart specialisation’ as part of the EU’s EUR 100 billion Structural Funds

We have also influenced:

  • The High Tech Strategy and Procurement Strategy of the German Ministries for Research and Education and the Ministry of Economics
  • Demand-side policy instruments in Malta, Estonia and Iceland
  • A new Swedish law on innovation procurement, enacted in February 2010
  • A report by the Department for Communities and Local Government (DCLG) on ‘Innovative Procurement’

Our research

Our work studied the ways in which public procurement incentivises innovation innovative behaviour in firms. We explored how large public procurement budgets would be used to drive innovation and how support policies and strategic guidance could make the public sector more prone to ask for and adopt innovation.
Our research was based on:

  • A large body of systematic case-study evidence
  • The first large-scale survey of government suppliers (800 responses) specifically exploring innovation issues
  • A systematic exploration of innovation procurement in a local/regional government context