The participation of young firms in public procurement

Abstract

"Public procurement makes up 16% of GDP in the EU and provides sizeable market opportunities for young firms. But what drives them to apply, and what makes them win? It depends on whether tenders solely focus on the price as a criterion, or not. We use data from 4260 young German firms to see which ones apply for public contracts and which ones are selected. Most notably, we find that more innovative firms and founder teams apply more often and are more often selected as awardees in tenders with additional criteria next to the price. However, when it comes to being selected, proven innovation—such as the successful introduction of market novelties—seems to be more importantthan internal innovation efforts. Tenders awarded solely on price are not positively associated with innovation. Thus, to encourage participation from innovative young firms, public procurers should include additional award criteria, while young firms should ensure their innovations are verifiable in their bids to increase their chances of being selected as an awardee." (Author's abstract, IAB-Doku) ((en))

Cite article

Krieger, B., Füner, L. & Prüfer, M. (2026): The participation of young firms in public procurement. In: Small business economics, Vol. 67, No. 1, p. 461-492. DOI:10.1007/s11187-026-01183-x