Firms in (Green) Public Procurement : Financial Strength Indicators’ Impact on Contract Awards and Its Repercussion on Financial Strength

• We examine whether the financial strength of companies, in particular, small and medium-sizedenterprises (SMEs) is causally linked to the award of a public procurement contract (PP), especially inthe environmentally friendly “green” area (GPP). For this purpose, we build a combined procurementcompany data set from the Tenders Electronic Daily (TED) and the SME database AMADEUS, whichincludes ten European countries. First, we apply probit models to investigate whether the probabilityof winning the public tender depends on the company's financial strength. We then use theFlexpanel DiD approach to investigate the question of whether the award has an impact on thefuture financial strength of the successful company. On the one hand, we find that a lower equityratio and a higher short-term debt ratio increase the probability of being successful in a publictender. On the other hand, the success means that the companies can continue to work after theaward with a lower equity ratio than comparable companies without an award, regardless ofwhether the company was successful in a traditional or a “green” public tender. We conclude fromthis that the success in a PP is a substitute for one's own financial strength and thus facilitates accessto external financing. The estimation results differ depending on whether public procurement ingeneral or the sub-group of “green” public procurement is examined. 

Subject headings

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Företagsekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Business Administration (hsv//eng)

Keyword

Sustainable Finance

Public Procurement

Green Public Procurement

Small and Mediumsized Companies

Innovation

Financial constraints

Publication and Content Type

ref (subject category)

rap (subject category)