Do innovations and external collaboration influence public procurement contracts' success? evidence from catching-up Visegrad Group economies

Abstract

In recent times, the attention given to innovations and informal competitions and their ability to stimulate demand-side policies such as public procurement contracts have mounted among policymakers and researchers. However, fewer studies have focused on analysing these relationships, especially in catching-up countries. This paper, therefore, aims to investigate whether innovations and, its related activities, and informal competitions play important roles in influencing firms' decisions to secure public procurement contracts. We employed the logistic and treatment effect regression models using pooled cross-sectional data from the 2019 World Bank Enterprise Survey to test these relationships. The results, based on a cross-sectional sample of 2,606 firms, revealed that product innovation and informal competitions positively influence firms' abilities or willingness to secure public procurement contracts. On the contrary, we find that process innovation does not influence firms' ability to obtain public procurement contracts. The results also demonstrate that patents and external collaboration significantly influence firms' abilities to successfully secure public procurement contracts. The main practical implication of the research is that firm managers in catching-up economies such as the Visegrad Group aiming to be successful in the tendering process should consider engaging in innovation and collaborative bidding to stand a better chance of securing these competitive government contracts.