Introduction 2010 government expenditure on works, goods and services in EU 19.7% of GDP ,98€ billion. Can be used to stimulate innovation Focus on public procurement of innovation in EU maintain competitive advantage and welfare Governments are important first users for high technology (Urban & von Hippel, 1988). Need interaction in public procurement of innovation (PPI). The aim of this research is to investigate the institutions that govern this interaction and how they influence performance in PPI. Institutions are “the rules of the game” (North, 1990).” Methods two contrasting cases - success and failure interviews with managers, documents, web-pages, news releases Interviews with 5 purchasers in municipalities in Southern Denmark and one development consultant Analysis based on explanation building The analysis focused on: institutions - typology by Coriat and Weinstein (2002) Risk and risk managementt – (European commission, 2010) Rationalities – Economic-, Technological-, political- and legal rationality (Gregersen, 2010) Acknowledgements This research is a part of the INTERREG 4 project ‘Emerging Attractions’ The data was gathered as a part of a bigger project (ProcSouth) lead by PhD Max Rolfstam and some of the stakeholder interviews were conducted by a research partner Edelnora Gisela Abonce Perez. Conclusions Institutions a possible barrier in PPI, specifically; Risk averse behavior of procurers Interpreting EU directives Institutional match between users and producers Short term views in evaluation of PPI Barriers of interpreting EU directives are; Writing specifications for tenders Evaluating innovative offers Courts interpretation of the directives Mismatch between users and producers in both cases is found to be a possible barrier. Cross case analysis suggests that user-producer interaction can be used to overcome institutional barriers. This research was exploratory and results are only based on two cases so more research is needed into the role of institutions in user producer interaction in PPI. Literature cited Coriat, B. and Weinstein O., 2002.Organization, Firms and Institutions in the Generation of Innovation. Research Policy 31, pp European Commission, Risk Management in the Procurement of Innovation: Concepts and Empirical Evidence in the European Union. [online] European Commission EUR EN. Available at: [Accessed 12 December 2010] Gregersen, B., The Public Sector as a Pacer in National Systems of Innovation. In: Lundvall B.Å, ed National Systems of innovation.Toward a Theory of innovation and interactive learning. Anthem press, London and New York.Ch.7. North, D. C Institutions, Institutional Change and Economic Performance. Cambridge University Press. Urban, G. L and von Hippel E., Lead User Analysis for the Development of New Industrial Products. Management Science, Vol. 34, No. 5, May 1988, pp Journal of Blahology 1:1-2. User-producer interaction in public procurement of innovation Rannveig Edda Hjaltadóttir PhD student at IFG The Self Post Unit CaseThe Intelligent Light Bulb Case Original contact Post Danmark, the procurerDesign Peak, the producer Type of procurement Direct procurement with intrinsic needNo procurement took place or is planned Interaction Close interactionlimited interaction Interactive learning Needed each other, different expertise experts from a SDU for participatory innovation process. Limited cooperation on the design, need, use and pilot Cooperation Close, joint decisions, open communication.Dialog on regulations, possibilities and properties - pilot Risk lack of acceptance by employees and customers, technological risk and financial risk Mainly organisational and financial risk Rationalities represented All four represented by the procurer - mainly economic rationality by producer The Self-Postal Unit CaseThe Intelligent Light-bulb case Post Denmark A/S - self-service postal unit No fitting units on the market Developed and produced by aCon A/S SPU self-service of posting a letter/parcel for domestic or foreign destination 36 units delivered to Post DK – other customers Entrepreneur offers an energy saving light-bulb to Sønderborg in 2008 Product developed by Design Peak Movement activated LED lights for bike lanes and footpaths No procurement has taken place Expert Interviews 6 experts from 5 municipalities in Southern Jutland PPI can be done but is difficult and not common – mainly incremental innovations Not much focus on PPI, neither as a policy tool or for securing high level of service Difficulties in writing tender specifications allowing for innovative bids and evaluating different offers Risk of firms appealing the decision of the procuring municipality – possible delays and even fines Contact information Rannveig Edda Hjaltadóttir PhD student at the Department of Border Region Studies University of Southern Denmark, Sønderborg Web: Alsion 2, DK-6400 Sønderborg, Denmark