Swedish Public Distribution Strategies and the Effect on the Development of Innovations within Medical Device Companies

Abstract: Through its significant proportion of overall demand for goods and services, public procurement is increasingly relied upon as an attractive and feasible instrument to address various social goals. A body of research has at the same time evolved around the concept of innovation as the engine of economic growth and competitive advantage. While the existing literature supports the notion that public procurement can promote innovation, little is known about the influence of public distribution strategy on innovation. Therefore, the current paper aims to examine the impact of the choice of public distribution strategy, and more precisely the choice between wholesaler and third-party logistics solution, on the development of innovations within medical device companies in Sweden. The research is also intended to study if distribution strategies affect the type of innovation developed, i.e. product versus process innovation. Empirical findings demonstrate through a multiple case study that the use of a medical wholesaler as opposed to a third party logistics solution alters the communication between medical device companies, county councils and medical device users – which negatively affects the source and market access of innovations. In addition, the increased procurement insecurity and less defined standards, associated with the use of a medical wholesaler, are found to inhibit innovations. Other findings indicate that the medical wholesaler strategy is positively related to medical device companies’ focus on process innovations. Finally, the results are summarized by the development of six propositions for future research.