Exploration and exploitation in public procurement : a case study on ICT public procurements in Norway

Abstract

Public procurement for innovation is known as a powerful demandside instrument to be employed in addressing pertinent challenges. The Traditional procurement process is outdated and insufficient to stimulate the production of innovative results. However, while the Public Procurement of Innovation (PPI) approach addresses barriers of the Traditional procurement procedures regarding innovation, it also presents several barriers of its own. This thesis focuses on the particular case of PPI in Norway, where the account of the current state and usage of the PPI approach are described. Findings indicate a dominance of the traditional approaches in the current state of public procurement practices in Norway, with tendency towards exploitation rather than exploration, despite the country’s political ambitions. Several causes, other than the nature of “normal” routine purchases, seek to influence the procurer’s avoidance of more complex innovation-oriented tendering procedures. This study aims to explain this, and concludes with a discussion of potential improvements to stimulate the procurement of innovative products and services in Norway, based on the practical case of ICT procurements. Keywords: Public Procurement for Innovation; PPI; innovation policy; innovation elements; interactive learning; cooperation; competition.