Tarmo Kalvet

Urban Competitiveness and Public Procurement for Innovation

Public procurement for innovation represents one of the least studied demand-side innovation policy tools that can be used to increase urban competitiveness. Evidence suggests that local and regional governments are becoming more involved in procuring innovative solutions, but overall knowledge remains limited regarding how they get involved and what effects this involvement has had. Based on a study of Nordic–Baltic Sea cities, the current study reveals that public procurement for innovative solutions has a positive impact on the providers and that urban authorities can act as market creators. The study also demonstrates that public procurement is not seen as an inherent part of innovation policy. A lack of awareness exists among city officials about the connection between procurement and innovation, and local authorities tend not to be willing to take risks when promoting innovation through public procurement. Due to the positive effects, however, further development of related policies is recommended.

Catching up, forging ahead or falling behind? Central and Eastern European development in 1990–2005

This paper aims to assess the economic development and development policies in the Central and Eastern European (CEE) countries in 1990–2005, from the collapse of the USSR to the enlargement of the European Union. A great number of authors have generally seen the transition as a very positive process. They have concluded that the reform policies focusing on macroeconomic and price stability have been the key to success for CEE economies. A reliable economic environment is, of course, instrumental for longer-term economic success, as exemplified by the prolonged crisis in most of the former Soviet Union. Our analysis of the economic development and competitive advantages in the region, however, leads to the conclusion that the specific approach to transition that the Central and Eastern European countries followed came at a rather high cost. Comparative neglect and weakness of a set of policies crucial for longer-term development, such as science, technology and innovation policies, has led to deterioration in the last decade rather than the strengthening of the competitive advantages of Central and Eastern European economies. Furthermore, we argue that, in most cases, CEE countries have unfortunately overlooked or misjudged a number of development challenges, and have thus implemented policies that have generated growth at the cost of rapidly increasing risks. This is how the financial fragility of several Central and Eastern European countries has recently increased drastically, and the region seems to have virtually arrived at the brink of economic collapse. Since the CEE countries joined the European Union, the CEE governments have gradually moved towards acquiring a more active role in economic development. These policies need, however, to be strengthened considerably and reinforced by macroeconomic policies that curb current excessive dependence on foreign-financed growth.

Exploring a theoretical framework to structure the public policy implications of open innovation

Open innovation is increasingly popular among practitioners and scholars, but its implications for public policy making have not yet been analysed in detail. This paper explores a theoretical framework to structure the debate about public policy making that facilitates open innovation. We first define open innovation in terms of firms’ open innovation practices and external conditions that encourage enterprises to practice open innovation. We show that policies for open innovation are legitimate as traditional arguments like market and system failures continue to apply. Next, we identify several guidelines for policymaking. Rather than just offering R&D and interaction-oriented policies, we conclude that open innovation warrants attention in a broader range of policy areas, including entrepreneurship, education, science, labour markets and competition. Developing truly horizontal policies is a major challenge to facilitate open innovation in developed economies.

Innovation: a factor explaining e-government success in Estonia

Estonia is seen as a remarkable success story in the context of e-government. Several studies that have mapped the major factors affecting the evolution of e-government in Estonia are mainly grounded in information systems theory; even if public-private partnerships are examined, their treatment remains too general. The current article argues for the importance of public procurement for innovation. Several risks were avoided due to the high competencies of local suppliers, a lack of legacy infrastructure, and a supportive environment for ‘ethical hackers’. The importance of the framework and the success factors is illustrated by a case study on e-voting.

Risk management in public procurement for innovation: the case of Nordic–Baltic Sea cities

State support for innovation in enterprises has been long-standing. One of the specific support measures is public procurement for innovation, which has only recently re-emerged in academic discussion as well as in the European policy discourse. While the spillovers from this type of innovation policy measure may be substantial, the complex processes underlying the support for innovation through public procurement are associated with high risks. We take an exploratory approach to determine the state of practice of risk management in public procurement for innovation at the local level. Five case studies, which were selected as representative cases of the Nordic–Baltic Sea region in Europe, were analyzed. We found that the cities were, for the most part, actively involved in risk identification; the risks are primarily being met with mixed contracting strategies rather than comprehensive risk management tools.

Europeanization and De-Europeanization of Estonian Regional Policy

Abstract Over the last two decades, the role of the EU can be considered highly important in advancing institutional reforms and overall development in Estonia. The article focuses on Estonian regional policy (RP) and analyses whether it has gone through Europeanization (i.e. convergence with EU regulations and values, or followed its own development path). The institutional cycle model of territorial governance is used for establishing the analytical framework. The research was largely carried out as a second-person action research and used interviews over the period of 1990–2011. The article concludes that Estonian RP shows considerable dynamics as public and political support to RP, administrative structures and policy tools have changed. Europeanization of Estonian RP was most visible in 1994–1998, when an institutional framework was created, in parallel with intensive learning from the West. Overall, in 1999–2004 the application of EU cohesion policy tools took place with significant convergence. After joining the EU in 2004, national RP programmes were reduced, the institutional framework was frozen and a selective application of EU rules and the use of EU cohesion policy measures for achieving some personal political agendas started, driving Estonian RP away from common European values.

Management of Technology: The Case of e-Voting in Estonia

Effective and efficient management of technology is indispensable to the implementation of software projects in the public sector. E-voting – which involves technological, institutional (legal and political), and societal risks – demands complicated risk management and can, as such, be considered one of the most, if not the most, ambitious field of application. Estonia has successfully implemented e-voting as remote Internet-based voting in several nationwide elections since 2005. Estonia’s e-voting success story lies in the country’s explicit and effective risk management and in addressing all expected risks by enhancing the capacities of the procurer, carrying out in-depth risk analyses, and endeavoring to generate trust through consistent dialogue and openness. In the case of radically new solutions, it is highly important to address societal risks by increasing absorptive capacities and generating public acceptance.

Quo vadis public procurement of innovation

Governments are actively looking for ways to use public procurement so that it would become more effective in facilitating innovation across public and private sectors. However, a shift towards public procurement of innovation (PPI) has proven to be difficult. Whereas the contemporary debate has mostly focused on how to reduce the barriers of PPI through re-conceptualizing the procurement process, there is a need to take into account also wider strategic factors through which governments create capacity to undertake PPI. By revisiting historic and contemporary policy initiatives, four strategies for the future can be envisioned: PPI as experimental innovation policy, from fiscal policy under austerity to PPI, mission-oriented PPI and shifts in administrative culture towards PPI. Each of the strategies demands different capacities from the entrepreneurial sector, as well as state, policy and administrative capacities from the public sector. These issues should be an inherent part of future policy-making and offer new avenues for PPI-related policy analysis and academic research.

How Governments Support Innovation through Public Procurement. Comparing Evidence from 11 Countries

This paper summarizes the main findings from the 11 country chapters presented in our forthcoming edited volume, Public Procurement, Innovation and Policy: International Perspectives(Springer, 2013); the paper appears in the book as the concluding chapter. We categorize the current public procurement of innovation (PPI) policy practices and explore the factors behind policy developments. Although countries have followed rather different paths in PPI policy-making, we detect a certain general PPI trajectory over the past three decades . while during the industrial policy era up until the 1980s public procurement was mostly used to induce new technologies and entire industries via direct public technology procurement programs as well as R&D procurement, the emerging policy consensus puts an emphasis on more holistic ideas and sees public procurement as a more generic tool in promoting innovation. We conclude, however, that today there is no single dominant policy approach governments follow and that the actual PPI policy measures implemented are still cautious and indirect rather than substantial and direct, and that the very process of public procurement plays a far more modest role in the actual implementation of PPI policies than expected.

Public Procurement and Innovation: Theory and Practice

This chapter provides a preliminary framework for understanding innovation-oriented public-procurement policy. The first part will give a short overview of how innovation-oriented public procurement is defined in the literature and summarizes today’s main theoretical debates. In the second part, by distilling from international policy practices, past and present, and theoretical debates, four different policy modes in which innovation-oriented public procurement can be applied are presented: innovation-oriented public procurement as technology- and industry-development policy, as R&D policy, as generic policy and as “no policy” policy. Using these four policy modes as a starting point helps to explore the evolution and development of innovation-relevant public-procurement policies in different country settings and in wider institutional contexts.