TECHNOLOGICAL CHANGE AND INSTITUTIONS: THE ROLE OF PUBLIC SECTOR PROCUREMENT

As technologies become increasingly costly, complex and dynamic the traditional roles of public sector procurement agencies are being challenged. It is important to develop an understanding of the impact that such agencies can have on innovation and technological change and how they can address the changing nature of future technologies. Many studies of innovation management focus on the customer/supplier interface of firms within the private sector, particularly on reduction of cost and the delivery of value. In doing so, they often overlook the non-profit activities of public sector agencies and how these may differ from private sector firms’ incentives to innovate. The public sector affects innovation and technological change through its sheer size. In areas such as environmental protection and medical equipment, it accounts for a major share of the total market. The public sector can promote or hinder, and influence the direction of, technological change. The scale of demand will clearly influence decision-making within supplier firms, particularly with respect to investment in R&D since in many markets the public sector is often the ----------------- *