Cover of EconPol Working Paper 63

What Are the Priorities of Bureaucrats?

Evidence from Conjoint Experiments with Procurement Officials

Janne Tukiainen (University of Turku and VATT), Sebastian Blesse (ZEW Mannheim), Albrecht Bohne (ZEW Mannheim), Leonardo M. Giuffrida (ZEW Mannheim, MaCCI), Jan Jääskeläinen (Aalto University), Ari Luukinen (FCCA), Antti Sieppi (FCCA)

The functioning of public bureaucracies is considered a principal driver of government effectiveness and state capacity. Surveying more than 900 real-life procurement officials in Finland and Germany on the basis of hypothetical choice experiments the authors of this study find that bureaucratic decision-making is based to a large extent on intrinsic motivation. While bureaucrats lack important career or pay incentives, they have substantial discretion at work. Contracting officers value a certain degree of competition and consider (too) rigid regulation as the biggest threat to the procurement process. This supports previous research finding that in countries with high public sector capacity more rules are detrimental to procurement outcomes. Another important conclusion that can be drawn from the survey is that procurement bureaucrats aim to avoid negative risks concerning prices and supplier reputation as well as awarding public contracts to bidders with prior bad performance.

Abstract

A well-functioning bureaucracy is a precondition for efficient public goods provision. However, bureaucratic decision-making is still largely seen as a black box. We provide novel insights into the preferences of bureaucrats regarding their work outcomes. We focus on a major public sector activity and survey more than 900 real-life procurement officials in Finland and Germany. The questionnaire includes hypothetical choice experiments to study the relative importance of multiple features in tender outcomes. First, bureaucrats state to have substantial discretion at work but no important incentives. Second, our experimental results show that procurers are particularly worried about avoiding negative risks concerning prices and supplier reputation. Third, an avoidance of bidders with prior bad performance appears to be an extremely important factor. Fourth, procurers value a certain degree of competition, while litigation concerns and regional favoritism play only a small role.The striking lack of heterogeneous effects points towards the role of intrinsic motivation among public buyers in countries with high public sector capacity.

Citation

Janne Tukiainen, Sebastian Blesse, Albrecht Bohne, Leonardo M. Giuffrida, Jan Jääskeläinen, Ari Luukinen, Antti Sieppi: "What Are the Priorities of Bureaucrats? Evidence from Conjoint Experiments with Procurement Officials.", EconPol Working Paper 63, March 2021