Dyadic capabilities in implementing performance-based public procurement

Abstract

Purpose: This study aims to provide new understanding on operational and dynamic capabilities supportive to the implementation of performance-based public procurement by focusing on dyadic capabilities of a supplier and a buyer. Design/methodology/approach: The study is based on the qualitative analysis of 20 interviews with informants representing Finnish public organizations and their private sector suppliers. The analysis is aligned with a theoretical framework connecting the phases of procurement and the capability types studied. Findings: The findings of the study present the role of operational and dynamic capabilities of a buyer and a supplier in the implementation of performance-based procurement at public procurement phases. Preprocurement phase is found to greatly benefit from all three dynamic capabilities, while operational capabilities suffice in the contracting phase. Social implications: Increased understanding on capabilities needed in performance-based procurement can increase the chances of success in reaching better value for money of public services and developing supplier markets. Originality/value: The study contributes to the literature on performance-based public procurement and value-based selling by taking a dyadic approach to the operational and dynamic capabilities needed in business with an emphasis on performance. As the focus in public procurement shifts increasingly from resources to performance, involving a joint effort between buyer and supplier, the study provides insights into role of dyadic capabilities and explains how dynamic and operational capabilities together support the phases of performance-based procurement implementation in the public sector.