The role of intermediaries in supporting innovation within Finnish public procurement

Abstract

In the public sector, there is an increasing interest in enhancing the effectiveness of public procurement by leveraging intermediaries to drive innovation. One approach to address this interest is to integrate intermediaries more strategically within procurement practices, enabling a focus on achieving long-term and short-term goals rather than solely minimizing costs. This master's thesis explores the key activities that facilitate the broader use of intermediaries to facilitate innovation across the three main phases of procurement. It investigates how intermediaries drive innovation. The thesis aims to demonstrate how intermediaries support innovation by connecting stakeholders, addressing gaps, and strengthening policies within the public sector. To deepen the understanding of this phenomenon, the study is conducted as a qualitative case based research, where a framework developed through an in-depth literature review is applied to case studies for practical implementation.

First, the literature review examines previous academic research on innovative procurement, intermediary roles and analysing the innovative value through intermediary activities. Second, the empirical study involves applying the developed framework to secondary data from case studies of procurement practices in public organizations. Later, a synthesis between theory and empirical evidence provides new insights into the phenomenon. According to the designed framework, the framework consolidates the several phases of public procurement pre-tender, tender, and posttender alongside the functions of intermediaries, emphasizing their impact on various forms of innovation.

Different forms of innovation are matched to intermediary roles under each activity. The framework makes a distinction between radical and incremental innovation, which helps to make clear how intermediaries support various innovation objectives throughout the course of the procurement lifecycle. Furthermore, the key findings highlight core intermediary functions: bridging, facilitating, coordinating, and expert opinions that support innovation in public procurement such as improved public services, innovation stimulation, cost efficiency, risk management and Improved Service Quality. Moreover, this study indicates that the strategic utilization of intermediaries in Finnish public procurement, that can substantially improve public value realization, sustainability and agility in the face of wicked social problems.