Public procurement of innovations, diffusion and endogenous institutions

Purpose – Public procurement has been increasingly seen as an important innovation policy tool. One neglected aspect of the public procurement of innovation is, however, diffusion. The purpose of this paper is to counter this neglect by exploring how institutional coordination may affect the diffusion of innovations procured by a public agency. Design/methodology/approach – A case study including semi‐structured interviews and the consulting of different documents were used to study how institutions and institutional coordination affect the adoption and diffusion of innovation. Findings – Several endogenous institutions were identified that act as barriers to the diffusion of innovation throughout an organisation. Attempts to re‐design and negate these barriers were also identified. Research limitations/implications – Institutional analysis of innovation has a tendency to be limited to formal and exogenous institutions. The paper underscores the importance of taking into account the endogenous institutional set‐up. The results are drawn on a single case study. Practical implications – The understanding of public procurement of innovation needs to be expanded beyond the formal procurement process. Special attention needs to be given to diffusion processes where institutional coordination and re‐design should be considered an important component. Originality/value – The paper considers diffusion as an important component of public procurement of innovation, and emphasises the importance of the endogenous institutional level both for understanding and for coordinating diffusion, which are two aspects commonly neglected in the literature.