Innovation-oriented Public Procurement: An Important Instrument of Demand Side Innovation Policy

The significant amount of annual public procurements in countries led the policymakers to the use of public procurements as the leverage power to stimulate the innovation. In fact the public procurement is a demand for products, services and systems in market and this demand with using new procurement methods can lead to formation of effective demand for innovations which is essential for fostering innovations. The aim of this article is to explain innovation-oriented methods in public procurement. Therefore, a library research was conducted on the role of demand in innovation and policy capacity of public procurement. Then, public procurements for innovation will be defined and distinguished from conventional public procurement. Subsequently, the possibility of applying innovation-oriented public procurement as an instrument of demand side innovation policy will be discussed. The taxonomy of innovation-oriented public procurement and obstacles for this method of procurement will be explained. Finally the conclusion is provided in which it is emphasized on the necessity of paying attention to the capacity of the public procurement in simulation of innovation in our country.