This study examined the effect of collaboration, procurement strategy, and procurement competence on public procurement innovation and effectiveness in Finland. The researchers hypothesized that collaboration, strategic procurement, and procurement competence would positively impact both procurement innovation and effectiveness. Based on a survey of 58 public organizations, the results found that strategic procurement had the strongest positive influence on effectiveness. Collaboration and competence positively influenced innovation, while innovation also positively impacted effectiveness. The study provides implications for emphasizing strategic planning, collaboration, and continuous training to improve procurement innovation and effectiveness.

2. Daniela Grunschi,
Sanna Sintonen, Jukka Hallikas, Timo
Kivistö
Lappeenranta University of Technology,
FINLAND
The effect of collaboration,
procurement strategy, and
procurement competence on
public procurement innovation
and effectiveness

3. Content
 Background of the study
 Motivation for the study
 Objectives of the study
 Benefits of the study
 Methods and sample
 Conceptual model and hypothesis
 Results
 Discussions and conclusions
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4. Background of the study
 Public procurement of health and social services has emerged in
recent years in Finland.
 In Finland the public sector is responsible for providing health and
social services.
 From public expenses, health and social services covered
approximately 57% in 2011.
 At the annual level, the health and social service procurement is
worth of 2 billion Euros and it covers more than 90% of public
service procurement.
 The present study is part of a bigger research project which aims to
increase the customer value through innovative public services
contracts in the social and health care domain.
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5. Motivation for the study
 Public procurement (PP) has a great impact on the economy
 rate is between 10%-30% from GNP
 PP is also an important tool for achieving economic and social objectives
 It faces, generally, a lot of challenges (depending on the economic, social, cultural
and political environment)
 Although new solutions to improve the public procurement process have been
searched continuously, public procurement efficiency still remains a big challenge
for public sector.
 New innovative solutions are needed to improve the effectiveness( solutions
that are based on collaborative relationships with suppliers should be found
continuously).
 There is little or no prior research which investigates factors that affect
innovativeness and effectiveness of public procurement.
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6. Objective of the study
 The study approaches the most important factors that affect the
innovativeness and effectiveness of public procurement.
 Additionally, it investigates what is the effect of innovative procurement on
procurement effectiveness.
 More specifically, three research questions are addressed in this study:
 Q1: What is the effect of collaborative relationships, procurement competence and
procurement strategy on public procurement innovation?
 Q2: What is the effect of collaborative relationships, procurement competence and
procurement strategy on procurement effectiveness?
 Q3: What is the impact of public procurement innovation on procurement
effectiveness?
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7. Benefits of the study
 The results of the study have implications on the
management of public service procurement.
 The study shows what are the most important factors
which must be addressed when the aim is to enhance
the effectiveness of pp and to promote the
innovations.
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8. Method and sample
 Survey
 Sample size: 216 public organizations
 58 responses (after three rounds of remind)
 response rate 26,7%
 analysis method: PLS (partial least squares structural ): is
appropriate method for small samples.
 seven-point Likert scale (1=strongly disagree…7= strongly agree)
 Proc.managers were asked about their perceptions relating public
procurement process.
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9. Conceptual model
and hypothesis
H1: Good collaborative relationships with suppliers and customers have a positive effect on public
procurement innovations.
H2: Good collaborative relationships with suppliers and customers have a positive effect on public
procurement effectiveness.
H3: Strategic development of public procurement has a positive effect on public procurement innovation.
H4: Strategic development of public procurement has a positive effect on public procurement effectiveness.
H5: Procurement competence of public procurers influences positively the innovation in public procurement.
H6: Procurement competence of public procurers influences positively the public procurement effectiveness.
H7: Innovations in public procurement have a positive effect on public procurement effectiveness.
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Collaborative
relationships
Procurement
effectiveness
Procurement
innovation
Strategic
procurement
Procurement
competence
H1
H2
H3
H6
H5
H4
H7

10. Results of the PLS path modeling
Independent
Dependent
Path
coefficie
nt p
Hypothesis
Collab.relationships→ Proc.innovation 0,410 ** H1: accepted
Collab.relationships→ Proc.effectiveness 0,007 ns H2: rejected
Strategic proc. → Proc.innovation -0,172 ns H3: rejected
Strategic proc. → Proc.effectiveness 0,528 *** H4: accepted
Proc.competence→ Proc.innovation 0,447 ** H5: accepted
Proc.competence→ Proc.effectiveness -0,175 ns H6: rejected
Proc.innovation→
Proc.effectiveness
0,298 *
H7: accepted
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** p < .001, *p < .01, ns = not significant

11. Results of the study
The study was in line with the previous literature only on
some degree.
Strategic proc. -> Effectiveness
 Proc.competence -> Innovation
 Collaboration -> Innovation
 Innovation -> Effectiveness
 Collaboration -/> Effectiveness
 Strategic proc. -/> Innovation
 Proc.competence -/>Effectiveness
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12. Discusions
 This study was based on a national survey ->the results could vary in different
contexts.
 Strategic procurement showed the strongest positive influence on
procurement effectiveness
 Much more attention should be given to procurement strategy
 This imply long term objectives
 Currently procuremet specifications focus mainly on criteria based on lowest cost; in the
future procurement should focus on long term objectives, especialy on the impact of pp.
 Study suggests that procurement competence is strongly related to
procurement strategy competence.
 procurement competence, as a stand alone factor, has not much influence on
proc.effectiveness, but just in connection with proc.strategic planning.
 Continous education and training of proc.managers is required
 Similarly, study suggests that collab.relationships , as a stand alone factor,
has no significant influence on procurement effectiveness, but just in
connection with strategic procurement.
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13. Theorethical implications
 Study strengths the definition of effectiveness, in the
context of public procurement. Effectiveness definition
sufestes that only strategic objectives are important for
effectiveness.
 Regarding the definintion of innovation: multidisciplinariy
def.of innovation sugests that factors influencing innovation
are: collaboration, competenece and strategy. This study
didn’t found any statistical signification on procurement
strategy. It can be concluded, that in the case of publ.proc.
Only collaboration and competence have influence on
innovation. However, replication of the study is required in
order to validate the findings of this study.
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14. Managerial implications
 Public procurement managers can understand which issues must
be emphasized when the aim is to get more innovations and make
proceurement process more effective.
 Strategic plannig of procurement playes the most important
role on procurement effectiveness; this may have implications in
organizations of the hole procurement process.
 Collaboration and competence have crucial roles in
proc.innovations. Based on these findings public managers can
understand gthe emerging need to move to a more collaborative
procurement. The time of competitive procurement has rich its
limits. Collaboration has to take the place of competition.
 Continuous education and training of proc.managers is required.
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15. Limitations and future research
 Small amount of available data
 However the validation of measurement was rather convincing; central concepts
were measured with indicators used in previous research.
 Further research with higher statistical power is recommended.
 Area of researh could be more widely, not only the national level.
 In Finland innovation and collaboration are usualy parts of strategic
plannig in most organizations
 Future research is nedeed in other countries where innovation doesn’t play an
important role in strategic planning
 This study indicates that innovations have a positive effect on
proc.effectiveness, but the effect is not very strong.
 More study is required to investigate what kinds of innovations have a stronger
effect on proc.effectiveness.
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16. THANK YOU!
daniela.grudinschi@lut.fi
jukka.hallikas@lut.fi
sanna.sintonen@lut.fi
timo.kivisto@lut.fi
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