Adapting signaling and screening theory to advance supply market orientation in public procurement: a review-based typology

Abstract Public procurement is increasingly expected to advance innovation and sustainability, yet the concept of supply market orientation (SMO) remains fragmented and undertheorized. To address this gap, this study investigates which SMO strategies can be identified in public procurement research when analyzed through the lens of signaling and screening theory, originally developed in information economics, and applies this perspective to the strategic function of purchasing and supply management (PSM). This theoretical lens offers a structured framework to conceptualize how public buyers can proactively screen, interpret, and respond to supplier signals to mitigate information asymmetries and improve procurement outcomes. Using a contextualized explanation approach, a systematic literature review was conducted to examine how SMO is conceptualized and operationalized in public procurement. The findings indicate that SMO strategies remain predominantly short-term and event-related, emphasizing supplier-specific intelligence to support immediate procurement decisions within a limited set of known suppliers, thereby constraining broader strategic market engagement. To extend this understanding, the literature was synthesized into a typology of five SMO strategies: supply market exploration, supply market analysis, supply market observation, and supply market forecasting (Type I and Type II). These strategies were organized along two dimensions, regularity (event-related vs. continuous) and temporal focus (short-term vs. long-term), providing a structured framework for enhancing SMO in public procurement. The study contributes to theoretical clarification of SMO and offers a foundation for shifting from reactive intelligence gathering to proactive market engagement that supports innovation, sustainability, and long-term organizational objectives.