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Stimulating innovation and creating new markets – The potential of circular public procurement

Joel Ntsondé, Franck Aggeri

(Abstract) Public procurement has been studied by numerous researchers and is considered to be an effective instrument for leading public and private actors to implement more sustainable practices. For researchers, public procurement can be leveraged to develop innovative practices oriented towards sustainability and create new markets for eco- friendly products. However, there is still a paucity of empirical evidence on the mechanisms by which public procurement can effectively stimulate sustainable innovation and foster the development of greener markets in relation to circular economy. To shed light on the emerging issue of circular public procurement, we use a qualitative method relying on an empirical case relating to a public tender in Denmark. Our research shows that public procurement can be studied as a design activity and clarifies the mechanisms by which public procure- ment can stimulate sustainable innovation in organizations, creating opportunities for collective innovative practices. Furthermore, we shed light on the process through which circular public procurement can create green markets, defining the qualities of the goods to be exchanged.

1. Introduction

Even though the literature on public procurement still needs to be expanded (Preuss, 2009), a significant part of it has already analyzed the potential impact of public procurement on sustainability. Indeed, several researchers have highlighted the role of public procurement in fostering sustainability (Aldenius & Khan, 2017; Grandia, et al. 2015). This literature usually approaches the issue through the concept of sustainable public procurement (Brammer & Walker, 2011), green public procurement (Testa et al., 2012) or, more recently, circular public procurement (Sönnichsen & Clement, 2019).

However, this literature does not provide much empirical evidence or details regarding the mechanisms through which public procurement can help foster the transition towards sustainability (Cheng et al., 2018). This research often mentions the opportunities offered by public procurement to stimulate the development of innovative and sustainable solutions (Alvarez & Rubio, 2015; Brammer & Walker, 2011) or underline the ability of public procurement to bring about the conditions needed to create or enlarge greener markets (Testa et al., 2016; Li & Geiser, 2005). So far, however, discrepancies remain with regard to the potential role of public procurement in green innovation and markets. As far as we are concerned, the term ‘sustainable innovation’ refers to new products, services or processes designed to reduce the impact of human activities on the environment and society while taking into account their whole lifecycle. The term ‘green market,’ also referred to as a ‘circular market’, represents markets in which entrance conditions for sustainable innovations or products/services from the circular economy are easier than in regular competitive markets.

Therefore, the question we raise in this paper is how public procurement can affect innovation and markets in order to foster the development of greener products and foster the 5 transition towards sustainability. As the circular economy is now gaining momentum in academic literature and is increasingly considered an effective approach for contributing to sustainability (Geissdoerfer et al., 2017), we have chosen to more specifically focus on the case of circular public procurement.

In order to get empirical data to tackle this question, we have chosen to carry out a single case study focusing on a public tender in Denmark that tried to reach a high level of circularity (won the 2017 Best Public Market Award of Denmark). In this paper we first present our literature review highlighting the main approaches employed to study the impact of public procurement on sustainability, markets and innovation, then we present the methodology we implemented, and finally we present our results to clarify the potential impact of public procurement on sustainable innovation and green market creation.

2. Literature review

The academic literature about public procurement and sustainability is being developed around several concepts such as green public pro- curement, sustainable public procurement and, more recently, circular public procurement. As a result, the first part of our literature review will clarify the differences between these concepts. Next, we will discuss what this literature tells us about the potential effects of circular public procurement on innovation and green market creation.

2.1. From sustainable and green to circular public procurement

Public procurement (PP) can be defined as “the acquisition of goods and services by government or public sector organizations” (Uyarra and Flanagan, 2010) and includes generally four stages: preparation, speci- fication, negotiation and utilization (Fig. 1). PP is leveraged by public actors to acquire education, leisure, and social services (Walker and Preuss, 2008). In management literature, the terms “sustainable public procurement” (SPP) and “green public procurement” (GPP) have been used to point out how PP can be used as a policy instrument for reaching environmental quality objectives (Aldenius and Khan, 2017). Some scholars have defined SPP as the act of integrating a concern for broader social and environmental impacts within PP (Brammer and Walker, 2011), and reckon that SPP has a broader scope than GPP as it takes into account the economic, social, and environmental pillars of sustainability (Aldenius and Khan, 2017), whereas GPP focuses mainly on environ- mental benefits (Testa et al., 2012).

Over the past years, an increasing number of researchers have been studying the barriers and drivers of SPP and GPP emphasizing factors such as a lack of financial or human resources (Grandia et al., 2015), inadequate expertise (Brammer and Walker, 2011), or policy issues such as insufficient support or clarity (Melissen and Reinders, 2012). Other researchers pinpoint the importance of active top management (politi- cians and high-level staff) in integrating SPP and GPP in planning stra- tegies (Brammer and Walker, 2011).

As for the literature about PP and the circular economy, it is still recent and emerging. For instance, Witjes and Lozano (2016) have studied the links between the circular economy, PP and supply practices. They propose a framework which can lead to better collaboration and conflict resolution between public actors and suppliers. They explain that this framework can be used to design PP processes which contribute to the circular economy, closing loops and reducing both waste pro- duction and the amount of raw materials needed.

Morerecently, Sönnichsen and Clement (2019) carried out an extensive literature review on circular public procurement (CPP) and highlighted the main barriers encountered by local public authorities at organizational, individual and operational levels. Their paper first scrutinizes the literature on GPP and SPP and introduces the term ‘cir- cular public procurement’ (CPP). According to these authors, the concept of CPP is advantageous when wishing to take into account the new methods, tools and practices ushered in by the circular economy. As the concepts of GPP, SPP and CPP have many similarities, for semantic simplification, they propose using the term CPP when referring simul- taneously to GPP, SPP, and CPP.

However, other scholars underline the differences between CPP, SPP, and GPP, and set forth a specific definition for CPP. Indeed, in their recent paper, Alhola et al. (2019) acknowledge that even though the SPP and GPP literature is closely linked to the circular economy, it does not fully address the concept of a circular lifecycle approach. They furthermore claim that SPP and GPP are more product- and technology-oriented, while CPP aims to include complex networks and ecosystems. In the following, we have chosen to use the definition of CPP proposed by these authors, i.e. “a procurement of competitively priced products, services, or systems that lead to extended life spans, value retention, and/or remarkably improved and non-risky cycling of biological or technical materials, making use of and supporting the circular business models and related networks” (Alhola et al., 2019, p. 105)

2.2. Circular public procurement, innovation, and markets

Some authors consider that CPP can be a major stimulus for ecological and environmental innovation (Brammer and Walker, 2011; Testa et al., 2012), claiming for instance that including the carbon footprint as an evaluation criterion in CPP can generate a market signal and stimulate eco-innovation (Alvarez and Rubio, 2015). Some scholars furthermore claim that CPP can be used as an effective policy tool or instrument to overcome the current lack of support for innovation by public and private actors (So ̈nnichsen and Clement, 2019).

Some researchers address both innovation and market stimulation, arguing about the potential positive effects of CPP on fostering sus- tainable innovation and green markets, and underlining the major stakes involved in conducting research on this potential (Testa et al., 2016). According to Li and Geiser (2005), CPP can be an effective instrument for creating or enlarging markets for green products as long as public authorities have substantial purchasing strength, while Cheng et al. (2018) emphasize that when they are powerful enough, these public actors could also trigger innovation investment and competition.

However, there are still discrepancies in the literature regarding the strength of CPP’s impact on sustainable innovation and green market creation. Some research indicates how difficult it can be for local au- thorities to support innovation practices in the private sector through CPP. In fact, Aldenius and Khan (2017) highlight the difficulties faced by local authorities willing to increase innovation in specific technologies when they do not have specific, detailed functional requirements available. Other scholars even claim that CPP is not really effective in creating more sustainable markets (Lundberg et al., 2015). According to them, even if CPP can lead public actors to increase their consumption of green products and services, eventually, it will have counterproductive environmental effects on private companies who will not make the effort to change their practices and will just develop niche products for public markets.

Consequently, the conclusion of the literature review carried out on CPP by Cheng et al. (2018) is that there is little evidence on the potential impact of CPP on innovation and markets because so far, there has been little empirical research on this topic. Nevertheless, a recent empirical study analyzed 18 cases and showed that CPP can provide favorable conditions for the development of innovative solutions and create new markets for these products (Alhola et al., 2019). This study hints at the relevant tools able to achieve CPP implementation (criteria supporting circularity, new business models), and highlights the potential role of cities and municipalities in offering a platform for innovative pilot projects and experiments.

Fig. 1. Public procurement process – source: adapted from Witjes and Lozano (2016)

3. Research methodology

In order to expand the emerging literature on CPP and clarify its impact on innovation and markets, the inductive approach (Eisenhardt et al., 2016) has emerged as the most suitable for obtaining empirical data and shedding light on the mechanisms by which CPP can foster innovation and sustainable markets. The objective of this study was to gather and analyze empirical data in order to contribute to the nascent literature about CPP (Cheng et al., 2018; So ̈nnichsen and Clement, 2019) and bring empirical evidence with regard to the way CPP could create the conditions for sustainable innovation and greener markets.

We thus chose to use a single case study approach appropriate for addressing ‘how’ and ‘why’ questions (Eisenhardt, 1989) focusing on a case that is particularly advanced in terms of sustainability. The initia- tive we studied was implemented in the municipality of Aalborg in North Jutland, the northernmost region of Denmark. With a population of more than 200,000 inhabitants, Aalborg is the third largest urban area in Denmark. The call for tender initiated by the city of Aalborg and won by the Højer Møbler furniture company has been identified as an exemplary initiative by the European Commission, which has included it in the list of the best green tenders in the furniture category (European Commission, 2018). In Denmark, too, this initiative is considered pio- neering and effective, since in 2017 it won the Best Public Market Award, an annual prize awarded by the Danish Association for Public Procurement (IKA).

Data were collected via semi-directive interviews conducted with the main stakeholders in this call for tender. In order to understand the unfolding process leading to the conclusion of this circular public ten- der, we chose to focus our interviews on the three main actors involved in this tender: the Aalborg municipality (2 interviews) that initiated the public tender, Højer Møbler (4 interviews) that won the contract, and Aalborg university (3 interviews) that provided expertise regarding the circular economy. The first two, with managers of Højer Møbler, took place in October 2018 and March 2019 in Paris, while the other were held in Aalborg in April 2019. We applied an interview guide following the funnel model (Voss et al., 2002), starting with broad, open-ended questions such as the original context and motivations that led to the implementation of this call for tender, and continuing with more specific ones like the processes, methods and tools applied to manage and materialize the public procurement of furniture using a circular economy approach (Appendix B).

In addition, we completed three other interviews with the Sustain- able Business Network (2 interviews) and the Green Agent Network (1 interview). These interviews were conducted with an exploratory approach to verify whether these networks played a role and helped create favorable conditions for the launch of the public tender. The Sustainable Business Network was created by the Aalborg municipality and Aalborg university roughly ten years ago to develop cooperation between public and private organizations in the North Jutland region. The Green Agent Network is an NGO that has been working closely with the Aalborg municipality over the past five years to strengthen its local sustainability policy. The main questions that these two organizations were asked were quite general, and mostly concerned the emergence and development of sustainability and the circular economy as key is- sues in the local area.

Overall, we carried out 12 semi-directive interviews (Table 1), gathered complementary sources of evidence such as files related to the call for tender (requirements, criteria, workshops documents, calendar, final contract) and reports/documents from the EU and the Aalborg municipality. The data gathered in the case study were first organized, sorted and decontextualized to prepare the analysis phase in order to highlight similarities and differences between the data from the in- terviews. Next, we applied thematic coding (Fereday and Muir-Cochrane, 2006) empirical data out of this process: transition, waste and resources, innovation, business model, tools and methods, sustainable value, and public policy (Appendix A).

Table 1: List of interviews conducted – source: authors

4. Main results

Data analysis provided our main insights into the organizational process that allowed the Aalborg municipality to implement its call for tender for ‘circular’ furniture. Our analysis also enabled us to clarify the mechanisms by which public procurement can stimulate sustainable innovation and create greener markets.

4.1. Case of the aalborg municipality

Several insights came out of the Aalborg case study and were particularly helpful for conceptualizing the influence that CPP can exert on innovation and markets. In this section, we present the most signif- icant reasons why this public call for tender allowed the Aalborg mu- nicipality to foster a transition toward sustainability.

4.1.1. Principal outcome of an award-winning public call for tender

The objective of the call for tender was to select a supplier from whom the 54 schools attached to the city of Aalborg would obtain new furniture for the next three years. The innovative nature of this pro- curement initiative lies in two main opportunities: first, the possibility for schools to acquire new furniture from the circular economy; and second, the possibility of using this new furniture to instigate a new type of pedagogy known as active learning, which values teacher-student interaction, movement, and active student participation.

The principles of a circular economy were considered throughout the furniture’s lifecycle, from the production of raw materials (wood, plas- tic) to the end of the furniture’s life. Concerning the supply of raw materials, the furniture proposed by the contract winner, Højer Møbler, is made out of wood from sustainably managed forests (FSC label), but also from recycled wood and plastic. Moreover, Højer Møbler undertook to reuse more than 20% of the furniture already present in schools (Table 2). The description of these ‘circularity’ criteria and their related weight are summarized in the Table 2.

The call to tender included specific clauses to ensure the longest possible period of use, in particular by requiring the provision of easy-to- use maintenance guides and spare parts, and the possibility of disman- tling the furniture and replacing one or more parts. With regard to lre- pairs, social clauses were also integrated in the call for tender since local socially-oriented organizations were to handle repairs. Finally, the procurement conditions also stipulated that all furniture reaching the end of its life, i.e. which could not be reused or refurbished, must be fully recycled.

In the evaluation grid for applicants, the weight of the score attrib- uted to the circular economy was 40%, which is not in line with the usual practices of public procurers, and was a determining factor. This is explained by the CEO of Højer Møbler: “It is not often that I see a criterion of sustainable development [actually, it was a circular economy criterion] in a public market. And in general, when there is one, its weight represents half of what there was in this market where it was 40%” [R6, Table 1]. The city of Aalborg was satisfied by this first initiative and then decided to launch similar projects for its ICT and school playground equipment. From an economic point of view, despite the specific efforts made for this project, the municipal teams have estimated that it will not be more expensive than a conventional call for tender. However, given that this is still a very recent project (initiated in October 2018), they do not have all the economic indicators to prove it.

This call for tender is already a political success for the city of Aal- borg because it is part of the strategy that has been followed for the past ten years to become an attractive territory from an economic and environmental point of view. Although furniture is not necessarily a key sector for the Aalborg municipality, the issuing of such a call sends a strong signal showing that this type of procurement is feasible, and not only on a small scale. Thus, from January 2019, the city launched a project designed to make its region the first ‘circular’ region in Denmark (Aalborg University, 2019).

Table 2: Main criteria of the Aalborg public call for tender for ‘circular’ furniture – source: authors

4.1.2. Achieving a circular public call for tender

Successfully implementing such an innovative market required of Aalborg procurement officials a long and very unusual preparation. It took the municipality’s teams a total of a year and half to finalize their call for tender, a period which can be divided into three main stages: market preparation, pre-qualification and final negotiations. For the preparation phase, the main difficulty encountered by the project manager was to define what comprised ‘circular’ furniture. To move forward on this subject, the municipality therefore sought the help of several partners who played a major role in the procedure.

Given that the municipality’s teams had no skills in the circular economy, they contacted researchers and students at the University of Aalborg who provided them with their expertise to define a concrete offer for ‘circular’ furniture. A consulting firm was also asked to support the preparation phase, which was carried out before the public pro- cedure was launched. Several meetings were thus organized between the municipality’s teams and potential suppliers. The aim of these meetings was to get to know their offers better and above all to assess their ability to respond to a call for tender with high ambitions linked to the circular economy. These meetings confirmed both the skills and the interest of companies in terms of ‘circular’ furniture.

The city of Aalborg therefore issued its call for tender in April 2017, with a first pre-qualification phase to which eight companies responded. The pre-qualification phase aimed to better characterize the offer of companies on several aspects such as the ability to integrate circular economy principles in product design, offer innovative interior layouts, ensure furniture maintenance, install new furniture or involve social workers in repair activities. The municipal teams then selected five companies from the eight applicants and asked them to formulate a bid for ‘circular’ furniture corresponding to four different school cases, including a description of the classes, the constraints to be considered and the existing furniture. In the end, three of these five companies chose to formulate a response for June 2017.

The last stage of the procedure therefore consisted in a negotiation phase between the city of Aalborg and the final three applicants to determine the best offer. These negotiations lasted until September 2017. It was ultimately Højer Møbler that won this contract and consequently signed a 3-year contract in October 2017, with an optional additional year.

4.2. Advancing the transition towards sustainability with circular public procurement

Being one of the first local authorities in Europe to issue a circular public call for tender so far, the city of Aalborg has laid the foundation of what can, and perhaps will be in the future an effective circular public procurement that will help foster local sustainable transitions. As mentioned previously, this call for tender is not only a prize-winner in Denmark, but has also been hailed in Europe by the European com- mission as one of the most exemplary circular public calls for tender (European Commission, 2018). The case of Aalborg reveals the potential of circular public procurement for supporting innovation and creating new markets.

4.2.1. Stimulating cooperation, innovation and exploration

Public procurement is acknowledged by scholars as a linear and highly standardized process whose effects on innovation are still disputed (Cheng et al., 2018). However, the case of the Aalborg municipality exposed here reveals that public procurement can be leveraged to create appropriate conditions for collective innovation. Previous research has already emphasized that developing cooperation between purchasers and suppliers is necessary in order to foster innovation and set up more sustainable public procurement (Witjes and Lozano, 2016). Sönnichsen and Clement (2019), for instance, claim that pre-market procedures and negotiations have significant benefits because they allow procurers and suppliers to share risk and consequently, foster creativity in public procurement. Other scholars add that public authorities often lack cognitive and technological skills to deal with innovative procurement practices and need to get external expertise to address these challenges (Lember et al., 2015; Caravella and Crespi, 2020).

However, these previous studies do not provide details on how public and private actors can achieve cooperative practices. Some researchers have focused on specific tools such as competitive dialog (Uttam & Le Lann Roos, 2015) without clarifying the required organizational mechanisms.

The case of Aalborg shows that a paradigm shift is required to reach ambitious targets in terms of sustainable or circular public procurement. Themes such as innovation, business model, and transition, which all came out of our coding process (Appendix B) led us to believe that public procurement can be considered as a design activity (Le Masson et al., 2010). Such an approach is relevant for shedding light on the trans- formation processes that allowed the Aalborg municipality to implement circular public procurement. Indeed, public procurement can be considered as a design task whose objective is to design the character- istics of a contract, the conditions of the selection process and the execution conditions of the contract between a public and a private organization. As a repeated and routinized design activity, public pro- curement is traditionally structured around rule-based design, i.e. a dominant design consisting in a set of design rules (Le Masson et al., 2010).

By dominant design, we mean that the identity of the object to be designed is stable, its specifications and value criteria are known, as are the rules and business expertise required to complete the tendering process. Considering public procurement, the dominant design is mainly structured by the EU’s legal framework and its transposition at national scale. It relies on European directives that have been defining the rules for public procurement in Europe since 1971 (Helfrich and Romestant, 2015). For instance, directive 2014/24/EU contains 94 articles estab- lishing rules regarding a public call for tender, such as the thresholds corresponding to the different kinds of procedures, the use of framework agreements or award allocation principles. This directive has been transposed into the legal framework of EU members, and defines mandatory rules that public procurers have to follow in order to design the procurement process from the formulation of a need to the utiliza- tion stage (Fig. 1).

On the other hand, innovative design (Le Masson et al., 2010) consists in designing a product, service or process in a situation where its identity is still unknown and not yet stabilized. In this case, the usage, perfor- mance and technical requirements of this product or process remain open questions. Innovative design often manifests itself in collective exploration activities, where the unknown and a lack of stabilized knowledge imply constructing the value of the product or process to be designed (Hatchuel and Weil, 2009) during the process itself. With re- gard to Aalborg, the municipality was able to create space for innovative design and exploration within a specific call for tender, which has fostered the emergence of innovation in terms of a circular approach to furniture procurement.

Through a competitive dialog procedure, the Aalborg municipality was able to organize cooperation between heterogeneous actors such as Aalborg University, the Travel team for green procurement (partnership between the Danish Environmental Protection and the Danish Stan- dardization Body), an external consulting firm and the suppliers, to engage in an innovative design process which questioned the object or subject matter of the contract, enriched the functional definition of the object and allowed the municipality to apply a major ‘circular’ compo- nent to the furniture’s lifecycle.

The subject matter of a dominant design type of call for tender would usually be related to the purchase of school furniture, but this time, the co-design process initiated during the seven meetings that took place with the suppliers allowed the municipality to redefine a new subject matter relating to the purchase of a “sustainable learning environment”, which enriched the functional definition of the product or service, opening new paths for innovation. This subject matter, for instance, has led the actors to include in the call for tender both specifications and criteria related to learning efficiency in terms of the spatial layout of classrooms with the new furniture. In other words, the actors have been able to move from a product procurement approach consisting in describing the product to a functional procurement focusing on the problems to be solved or function to be fulfilled, which is the most effective one to achieve more innovations (Edquist and Zabala-Iturriagagoitia, 2020).

Additionally, one of the main reasons why this call for tender was able to integrate such a major ‘circular’ component is the time and re- sources that were specifically allocated to it by the municipality. As explained here by the project manager, most calls for tender using the dominant design approach are carried out on a short schedule and mainly reuse previous calls, while an innovative design approach needs more time and resources: “When you are going to issue a call for tender, you have something in your drawer, you can just take it out and update it, it does not take very long. But when you issue a call for circular tender, you have to rethink everything, and it takes longer” [R12, Table 1]. The Municipality’s top management agreed to let its teams spend more time and effort on this circular call for tender and even organized internal cooperation via the close teamwork fostered between procurement and sustainability departments.

We can observe then that the specific conditions set up by the Aal- borg municipality allowed both internal and external participants to create a particular space for innovative design that contributed to developing an outstanding public call for tender in terms of its circular approach. However, in spite of the positive outcome of the school furniture bid, it has been difficult for the sustainability department to convince the procurement department to replicate the experimentation for other markets. Even if the Aalborg municipality eventually decided to launch new projects for ICT and school playground equipment, the project manager was surprised by the persistent resistance within the public organization: “It was not easy to convince the head of the procure- ment department that we needed to do another call for tender — another pilot project — because it takes longer [] and the extra cost involved is borne by the procurement department” [R12, Table 1].

The new public calls to tender, especially the one related to ICT equipment, have required much time to set up. With the support of a PhD student, the project manager took a long time analyzing how the municipality’s seven departments managed their pool of computers, printers and phones, before bringing them together to encourage ideas about ways to harmonize their practices and reduce their waste. This specific work of collective innovation appears to be powerful in terms of transformation potential, especially for local authorities who often lack the required expertise to address new topics, but it is also time consuming and costly for them. Therefore, although innovative design is an effective approach for fostering the development of new circular economy practices, products and services for both public and private actors, it implies many constraints and cannot be easily systematized on a regular basis. As a result, the key point might be to generate new knowledge from this kind of experiment in order to change the dominant design approach and integrate new design rules derived from a circular economy approach.

4.2.2. Framing new markets to achieve sustainability

Developing innovation, cooperation and knowledge through inno- vative design and experimentation is an effective approach for enhancing the circular component in public calls for tender but is not sufficient to bring sustainability to a local area, city or region. The case of Aalborg shows that, thanks to innovation, circular public procure- ment has an important role in sustainable transition because it can create new markets through valuation processes.

Previous research has shown that markets do not correspond only to supply meeting demand, but result from the construction, trans- formation and reconstruction of arrangements representing the assem- bly of various elements such as intellectual property rights, regulatory instruments, the definition and framing of contracts, and calculating activities (Callon and Muniesa, 2005). Further research has shown that market value is the result of an ongoing valuation process (Çaliskan and Callon, 2009). In other words, market value results from “any social practice where the value or values of something are established, assessed, negotiated, provoked, maintained, constructed and/or contested” (Doga-nova et al., 2014, p 87).

With regard to the case of Aalborg, this refers to all the work completed during the tender procedure, which consisted in building and then qualifying the economic, environmental and social value of a ‘cir- cular’ furniture solution. This explains why the themes “public policy”, “tools and methods” and “sustainable value” emerged from our coding work (Appendix B). In the call for tender, economic value was defined by the price; social value was defined by the quality of interior design that is supposed to improve the effectiveness of the learning environment, and the employment of socially-assisted workers for refurbishment activ- ities; and environmental value corresponded to the furniture’s extended lifetime through reuse, refurbishment and recycling activities.

Additionally, while usually restricted to economic profitability, this time the Aalborg municipality chose to define indicators for monitoring environmental and social performance. They determined five criteria which are monitored on an annual basis: the quantity of furniture actually reused, the quantity of furniture repaired or refurbished, the quantity of new furniture used, the volume of social employment used, and the methods used to manage the waste produced. This monitoring activity will allow the municipality to gain experience and enhance the ‘circular’ performance of its future calls for tender, whether for furniture or other products or services.

The Aalborg municipality’s valuation work is not limited to envi- ronmental and social dimensions but also questions the economic dimension, enriching the potential value of ‘circular’ products and ser- vices. For example, with the support of the Travel Team for Green Procurement, the municipality’s teams have worked on the Total Cost of Ownership (sum of purchase cost, usage cost, maintenance cost and end- of-life cost) in order to understand how it could be used in public calls for tender to assess the cost of circular economy products over their whole lifecycle. As they do not have enough experience on new learning environments, municipality teams have been unable to find out how to calculate the Total Cost of Ownership (TCO) of ‘circular’ furniture. However, they reckon that they will be able to calculate economic savings for the municipality as they expect the new learning environ- ments to improve teachers’ health and so decrease expenses for tem- porary staff. They will also try to compute the economic gains induced by better learning, higher grades and the improved health of pupils.

The Aalborg municipality has engaged in a valuation process which is constructing a market value for the circular economy structured by economic, social and environmental dimensions. Overall, we can see that the ongoing valuation process carried out by the Aalborg munici- pality is helping to build a new market value and arrangements for ‘circular’ furniture which are fostering the creation of new markets for the circular economy. The suppliers having responded to the call for tender have invested time and money in the process, and thanks to the innovative and collective design approach conducted by the Aalborg municipality, they have been able to create or improve their ‘circular’furniture offer.

Most of these suppliers are now expecting new public procurement calls for tender of this type to be issued in the future in order to be able to propose and develop their new offer and make it profitable. For instance, one of these companies (Holmris B8) has recruited a former intern of the contract winner, Højer Møbler, and is now working with her to improve their ‘circular’ portfolio. We can conclude that the case of Aalborg shows the high potential of circular procurement, which is not only about encouraging the purchase of green products and services, but also about constructing new markets for these products and services in order to stimulate the sustainable transition.

5. Discussion and conclusion

The case of the Aalborg municipality constitutes an empirical study which provides several contributions to the nascent literature on CPP. Using a design theory approach, our research describes and conceptu- alizes the mechanisms according to which CPP can foster the develop- ment of sustainable innovations by creating opportunities for innovative procurement practices. Therefore, we show how the framework of innovative design (Le Masson et al., 2010) could be a relevant approach for studying CPP in innovative contexts. Consistent with results devel- oped in the literature on SPP (Brammer and Walker, 2011), GPP (Alvarez and Rubio, 2015) or CPP (So ̈nnichsen and Clement, 2019), we provide a comprehensive, detailed analysis of the mechanisms at work and how they are combined in a dynamic and coherent setting.

Our research converges also with previous results from the literature that underlined the importance of cooperation and collaborative work for local public authorities who often need cognitive and technological support to embrace innovative procurement practices (Lember et al., 2015; Caravella and Crespi, 2020). Aalborg’s case study provides further evidence of the potential of collective innovation to advance knowledge and creativity in local public call for tenders.

This paper helps open up new avenues for the literature on public procurement explaining the potential role of innovation processes in implementing CPP. Indeed, our analysis of innovative design elucidates the mechanisms through which organizations perfom exploration and creative tasks while implementing circular public procurement, advancing the literature on CPP and innovation (So ̈nnichsen and Clement, 2019). Furthermore, from our paper, it can be inferred that the literature on ambidexterity and the paradoxes of innovation related to tensions between exploitation and exploration activities (Andriopoulos and Lewis, 2009) can also be relevant for studying CPP. This literature has shown that organizations which are able to pursue exploitation and explorative innovation simultaneously can attain greater performance (Chang and Hughes, 2012). As innovative design seems to be effective in materializing explorative and collective innovation in CPP, further research should be conducted in order to clarify how organizations can manage the possible tensions that could arise between innovative and more conventional practices in public procurement processes.

The second major contribution of our research is to illustrate how CPP can also be an effective tool for creating new markets or expanding existing ones to include greener products using valuation study concepts (Callon and Muniesa, 2005). Previous works have already emphasized that CPP can be an effective instrument for creating or enlarging markets for green products by sending a market signal that stimulates sustainable innovation (Li and Geiser, 2005; Alvarez and Rubio, 2015). In their recent empirical research, Alhola et al. (2019) set forth the role of local public authorities in creating markets for circular solutions such as smart waste management systems or products manufactured from recycled materials.

The case of Aalborg helps consolidate such research by bringing empirical proof of how CPP can be used as an instrument by local public authorities to construct the criteria and arrangements that structure a market and characterize the qualities of the goods that are designed and exchanged within this market. Therefore, our research clarifies the process through which public procurement can be leveraged to create market value for the circular economy and accelerate its development, enhancing the existing literature on CPP and markets (Cheng et al., 2018).

Nevertheless, these contributions rely on a single case study and would need to be further explored and enriched by more empirical studies to clarify the effects that CPP can exert on innovation and markets for sustainability. What conditions are required in order to develop new innovations and create green markets? How can public and private organizations materialize these conditions? What are the most suitable methods and instruments for leveraging the transformation power of CPP in terms of sustainability? These open questions could be addressed in future research.

Indeed, more research is needed to explore further the mechanisms that have been highlighted in this paper. Is innovative design relevant to all kinds of procurement tenders and products? Is it compatible with any kind of local public authority or public organization? How can public actors manage the tensions between innovative exploration and regular exploitation activities? Other empirical studies are needed to explore these questions and enrich the literature on CPP. Similarly, further research could focus on enlarging the validity of the market creation process conceptualized in this paper, applying it to other types of markets and products.


This research is part of the EcoCirc project led by the Materiaupole, a French cluster, and supported by the following public authorities: Val- de-Marne department council, Grand Orly Seine Bi`evre public territo- rial establishment (GOSB) and Ile-de-France regional department for environment and energy (DRIEE). We also received funding from the Producer Responsability Organization ecosystem® through the Urban Mines Chair.

CRediT authorship contribution statement

Joe ̈l Ntsonde ́Investigation, Conceptualization, Methodology, Writing – original draft. Franck Aggeri: Funding acquisition, Concep- tualization, Writing – review & editing, Supervision, Validation.

Declaration of competing interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.


We would like to thank Pr. Arne Remmen from Aalborg University for providing us with valuable support in organizing and conducting our field research in Denmark. We also thank Pr. Peter Karnøe from Aalborg University for his welcome and support during our visit. Finally, we gratefully acknowledge the support provided by the Materiaupole and the grants provided by our partners: Val-de-Marne department council, Grand Orly Seine Bi`evre public territorial establishment (GOSB), Ile-de- France regional department for environment and energy (DRIEE) and Producer Responsability Organization ecosystem® (Urban Mines Chair).


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