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Public procurement is increasingly seen as an important potential instrument of innovation policy. However, policy design has been underpinned largely by anecdotal evidence and without a clear theoretical or empirical basis for understanding how supplying to the public sector actually influences a firm's innovation capabilities and performance and in what ways desirable behaviour and outcomes can be promoted. This paper seeks to address the basis of innovation procurement policy. It establishes a broad taxonomy of procurement policies and instruments that have emerged in OECD countries in response to perceived deficiencies and then compares these with the perceptions of firms using an analysis of a dedicated survey of 800 public sector suppliers in the UK.

It is observed that policy measures include the creation of framework conditions, establishing organisational frameworks and developing capabilities …