How Supply Networks Influence Sustainable Innovation: Evidence From Ghana's Public Works Procurement

ABSTRACT Recent environmental and sustainability standards in procurement increase short‐term production and operational costs to suppliers, which are often recouped by charging price premiums for innovative solutions. However, public buyers are less likely to pay such price premiums, resulting in a disincentive among suppliers to bid for innovation (unique) contracts. This article examines how innovation procurement stimulates network emergence to mitigate innovation costs and facilitate suppliers' sustainable innovation capacity. We inductively analyse interview responses, observations, archival data and modified Delphi discussions with technical experts involved in innovation‐oriented public works procurement projects (i.e., building, water and road infrastructure) in Ghana. Our findings suggest that buyers' procurement strategy, driven by operational processes and mimetic mechanisms, stimulates emergent networks towards accessing complementary innovation resources and synergy benefits. The structure of each emergent network (i.e., formal or loosely binding) determines suppliers' reach and receptivity to complementary innovation resources needed to enhance their sustainable innovation capacity and mitigate innovation‐related costs. While the quality of innovation resources is often limited to a network's resource pool, our study found that members with absorptive capacity may access resources beyond their existing networks to innovate. We offer guidance to innovation procurement managers and researchers in designing network‐precise evaluation metrics and exploring the best levels to organically allow or stimulate emergent networks towards local suppliers' sustainable innovation capacity.