INFORMATION EXCHANGE IN GREEN

PROCUREMENT; ABSORPTIVE CAPACITY

VIEW
Mieko Igarashi
Mieko Igarashi, M.Sc., is a PhD candidate at
Norwegian University of Science and Technology. Her
research focuses on green procurement, public
procurement and sustainable supply
chain management.

ABSTRACT. Whilst the discussion on buyer and

supplier relationship is vast in purchasing in the
private sector, little attention has been paid to the
public procurement setting. This paper aims to
investigate exchange of information and its use
between buyers and suppliers from the view of
absorptive capacity. This study applies case studies
and I conducted interviews with public buyers and
their suppliers in the private sector. On buyers side,
assimilation
and
transformation capabilities
in
preparing tender documents stage are in need of
development.
Assimilation,
transformation,
and
exploitation capabilities in awarding stage seem to
be critical for buyers as well. On suppliers side,
transformation capability should be improved. If these
capabilities of absorptive capacity in both buyers and
suppliers work well in combination, GPP outcomes can
be expected, such as lower environmental impact,
dissemination of green procurement cases, suppliers
as driving forces to GPP.
INTRODUCTION
Green public procurement (GPP) is defined as a
process whereby public authorities seek to procure
goods,
services
and works with a reduced
environmental impact throughout their life cycle when
compared to goods, services and works with the same
primary function that would otherwise be procured
(The Commission of the European Communities,
2008). While this definition clearly states that public
authorities, meaning buyers, are the main actors in
GPP, suppliers, or the market, should also be critical
actors in GPP because in the implementation of GPP,
both buyers and suppliers have to deal with
information
on
relevant
environmental
issues.
However, existing research has limited insights on
the interaction between buyers and suppliers as well
as suppliers views on buyers performance in GPP.
Findings from limited research are: different views
on the application of environmental information in
supplier selection process between
buyers
and
suppliers (Michelsen & de Boer, 2009; Holt, 2004),
more use of collaborative methods in procurement
projects with environmental or social goals than with
commercial and regulatory goals (Erridge & McIlroy,
2002), and the importance of the supply side of the
market for actively attracting public demand (Rizzi,
Frey, Testa, & Appolloni, 2014). While research on
the dyadic relationship is enormous in the private
purchasing setting, little attention has been paid to

the public procurement setting (Erridge & McIlroy,

2002).
This study aims to investigate the exchange of
information and its use between buyers and suppliers
to suggest potential methods of more efficient
interaction between buyers and

suppliers. More specifically, research questions in this

paper are formulated as follows: How (what kind of
interface and in which communication methods) do
buyers and suppliers exchange information in GPP?
What kinds of capabilities are in need of
development in buyer and supplier organizations for
more
efficient communication? How are those
capabilities combined in the relationships between
buyers and suppliers, and how do they produce GPP
outcomes? I would like to note that the term buyer is
used as buyer organization and supplier is used as
supplier organization through the paper.
To answer these questions, this paper focuses on
absorptive capacity. Absorptive capacity refers to an
ability of a frim to recognize the value of new,
external information/knowledge, assimilate it, and
apply it to commercial ends (Cohen & Levinthal, 1990,
P128).Knowledge includes not only substantive,
technical understanding, but also awareness of where
useful complementary expertise resides both inside
and outside the organization. The basic concept of GPP
relies on having clear and ambitious environmental
criteria for products and services in procurement
projects
(The
Commission
of
the
European
Communities, 2008). Thus, it is critical in GPP for a
buyer to refer to the correct resources and acquire
enough knowledge to identify environmental criteria.
Subsequent processes of how that critical information
is transmitted to potential suppliers, how suppliers
send back related information, and how buyers make
use of information from suppliers are of great
importance as well.
This paper fills two gaps in the current literature in
both purchasing and absorptive capacity, or in a
broader
term,
organizational
learning.
Most
procurement research has had a dominant focus on
buyers perspective (Revilla, Senz, & Knoppen, 2013;
Igarashi, de Boer, & Fet, 2013). This paper includes
both buyers and suppliers perspectives. In terms
of contributions to absorptive capacity, there have
been very few empirical studies that directly examine
absorptive capacity (Lane, Koka, & Pathak, 2006).
The structure of the paper is as follows: First,
relevant literature and basic theoretical foundations
are presented. The next section describes the case
study method and the gathering of empirical data.
Then, the qualitative data analysis is presented,
followed by a discussion and interpretation of the
results. The paper ends with conclusions, implications
for policy-makers and researchers, and a discussion of

the studys limitations.

THEORETICAL FOUNDATION FOR THE STUDY

In
this
section,
existing
discussions
in
communication with suppliers in public procurement
are outlined. Then known insight into information
exchange and communication is highlighted. Next, I
explain the underlying theoretical concept applied in
this study: absorptive capacity.
Communication with Suppliers in Public Procurement and
The terms procurement, or purchasing, in a
wider definition, covers not only supplier selection
but also contract management, placing orders,
handling delivery, follow-up, and further supplier
development, such as knowledge and capability
development (Cousins, Lamming, Lawson, & Squire,
2008). This applies to GPP, which means attempts or
efforts toward GPP can be found not only during the
formal tendering process (i.e., supplier selection), but
also during the pre-tendering process and the contract
execution period. In fact, the handbook from the
European Commission states the possible usefulness
of engagement with the market as follows:
To get a more detailed picture from the market you
can also engage in dialogue with potential
suppliers prior to tendering. This may be of
particular use if you wish to apply ambitious
environmental
requirements.
(The
European
Commission, 2011).
Public procurement differs from private sector
purchasing in that it needs to comply with
regulations aimed at avoiding discrimination and
differential treatment of suppliers (New, Green, &
Morton, 2002). Public purchasers are not allowed to use
environmental criteria that can be regarded as
favoring (or excluding) specific suppliers (The
European Commission, 2011). Democratic procedures
guard the procurement process very closely, because
it is through these procedures that the public sector
interfaces directly with the private sector (Gianakis &
McCue, 2012).
Following a procurement process model (Igarashi,
de Boer, & Michelsen, 2015), related activities for
information exchange are described as follows: Once
buyers recognize a need for future procurement,
they collect information from the market and/or
users to specify the levels of requirements and criteria.
They need to formulate their message in tender
documents
toward
possible
suppliers.
Then,
procurement-related information from the buyers is
transmitted to the suppliers. Once suppliers receive
the message, they can judge whether they would like

to participate in the bids. If they do wish to participate,

they usually need to collect information from subsuppliers and formulate their answers. Suppliers send
their bids back to the buyers. Then the buyers

evaluate the suppliers answers and make a decision

on which supplier to award the bid. Buyers report their
decision to all bidders. Suppliers can send complaints
about the evaluation or decision. Buyers negotiate the
contract with the awarded supplier and follow up on
the suppliers performance during the contract period.
The scope of this paper includes all potentially
related stages of procurement.
Existing Literature on Information Exchange and
Communication Literature on green purchasing in
the private sector typically
describes suppliers as barriers because of their lack of awareness
of environmental issues (Min & Galle, 1997),
unwillingness to share environmental information
(Walker, Di Sisto, & McBain, 2008), and a lack of
information sharing between buyers and suppliers
(Nawrocka, 2008; Wolf & Seuring, 2010).
Some studies reveal discrepancies between
buyers and suppliers and their perceptual differences
regarding
the
frequency
and
importance
of
environmental requirements formulated by buyers
(Michelsen & de Boer, 2009) and the rejection of bids
for environmental reasons (Holt, 2004). Michelsen and
de Boer (2009) also discovered how environmentally
related information is used; while 74.3% of public
buyers put forth demands on
environmental
performance when calls for tender were announced,
50% of them used information on environmental
performance in their final selection of suppliers.
Absorptive Capacity
The first and original definition of absorptive
capacity is provided by Cohen and Levinthal (1990).
Their
definition
includes
three
capabilities
(dimensions): recognition, assimilation, and utilization
of new knowledge. These capabilities collectively
constitute absorptive capacity. They emphasize the
importance of prior knowledge in order for a firm to
assimilate and utilize new knowledge. Following those
three dimensions, Lane and Lubatkin (1998) expand
the definition from a relational perspective. Their
main argument is that a firms absorptive capacity is
determined by the similarity of characteristics between
the two firms. Zahra & George (2002) incorporate
dynamic capability into their definition. In their view,
absorptive capacity is a dynamic capacity embedded
in a firms routines and processes (P186) and
involves four dimensions: acquisition, assimilation,

transformation, and
suggests that the

exploitation.

This

definition

four dimensions are combinative in nature and build

upon each other.
TABLE 1
Definitions of Absorptive
Capacities
Study

Definition

Main arguments

Cohen and
Levinthal (1990)

An ability to recognize
the
value
of
new
information, assimilate
it, and apply it to
commercial
ends.
(P128)

-The
organization
needs
prior
related
knowledge
to
assimilate and use
new knowledge.
-Absorptive capacity
develops
cumulatively and is
path dependent.
-Highlights
assimilation
exploitation.

Lane and
Lubatkin (1998)

Zahra and
George (2002)

and

Relative

-The

absorptive
capacity
is
jointly
determined by three
characteristics of the
student and teacher
firm.
1. Knowledge base, 2.
Organizational
structure
and
compensation policies,
3. Dominant logics.
(P461 and set
a
473
of
organizational
routines
and
processes by which
firms
acquire,
assimilate,

definition
presumes
oneway interorganizational
learning, but
also
represents
fundamental
contingencies
in
all interorganizational
learning.
-AC
is viewed as
a
dynamic capability.

transform,
exploit
knowledge to produce
a
dynamic

-The four
capabilities
(Knowledge
acquisition,
assimilation,
transformation,

Absorptive capacity has been originally applied in

business to business relationships with research and
development and in technical learning settings (Lane
et al., 2006). Several studies have investigated the
application of absorptive capacity in purchasing and
supply management. Schiele (2007) found a
significant relationship between the purchasing
organizations maturity and the firms performance.
The author explains the relationship by stating that a
firm with a higher maturity level is more likely to
have a higher absorptive capacity. Similarly, Revilla et
al. (2013) argued a significant relationship between a
suppliers absorptive capacity and the firms
performance in a buyer and supplier relationship.
Applying absorptive capacity especially in public
procurement
has received only limited attention
until now, with the exception of Zheng and Caldwell
(2008), who looked at absorptive capacity in public
clients and private providers. Given that GPP clearly
involves
environmentally
related
information
exchange and knowledge transfer between buyers
and suppliers, buyers and suppliers respectively play
essential roles of transmitters (senders) and
recipients, depending on the stage of procurement.
How knowledge is sent and received has typically
been analyzed in terms of absorptive capacity (Grant,
1996), and therefore this paper seeks to examine GPP
through absorptive capacity.
This study applies the definition by Zahra and
George (2002) to analyze buyers and suppliers
absorptive capacity. As previously mentioned, the
definition highlights the four dimensions of absorptive
capacity as embedded in a firms routines and
processes. Another characteristic of the dimensions is
that they highlight the distinction between potential
and realized absorptive capacity. Potential absorptive
capacity (PACAP) concerns acquiring and assimilating
external knowledge. Realized absorptive capacity
(RACAP) is a function of transformation and
exploitation
capabilities.
Acquisition
refers
to
identifying and obtaining external knowledge that is
critical to its operations. The intensity, speed and
direction of a firms efforts can determine the quality
of the firms acquisition capability. Assimilation
denotes analysis, interpretation, and understanding of
the
information
from
the
external
sources.
Transformation
concerns
combining
existing
knowledge and newly assimilated knowledge by
interpreting the same knowledge in a different way.
Exploitation refers to refining, extending and
leveraging existing competencies or creating new

competencies
by
incorporating
acquired
and
transformed knowledge into its operations. Potential
absorptive
capacity
(PACAP),
acquiring
and
assimilating external knowledge, does not guarantee
the
transformation and exploitation
of
the
knowledge, which is realized absorptive

capacity (RACAP). Only when RACAP is presented is a

firms performance enhanced. Figure 1 shows the
model including the four capability dimensions
described above. The original model includes triggers
that activate absorptive capacity as well, but this
paper limits its focus to absorptive capacitys
substance, the four dimensions.

FIGURE 1
Model of absorptive capacity (modified based on
Zahra and George, 2002)
In this study, both buyers and suppliers absorptive
capacity is examined. Knowledge transfer is, in this
paper, conceptualized as environmental related
information
and
know-how
transfer
because
knowledge is typically divided into two types:
information (explicit knowledge) and know-how (tacit
knowledge). (Dyer & Singh, 1998)
METHODS
This paper employs an embedded multiple-case
design (Yin, 2009), with three different product
categories as cases in the overall context of the
Norwegian public sector. The case design is depicted
in Figure 2. The reasons for having a product category
as a unit of analysis are as follows: In public
procurement, especially in GPP, product category is a
key distinction both for policy- makers (including
policy-implementation groups) and public buyer
authorities. Manuals and guidelines related to
environmental
aspects
to
be
considered
in
procurement are typically developed based on
product (service) categories, because potential
environmental concerns are diverse among product
types. It is quite natural for buyers to see their
expertise based on product type, and they always
categorize procurement projects into either product or
service categories.
In this study, three product groups were selected
because they are expected to exemplify usual
situations and issues in GPP (Bryman, 2001). The
three
product
groups
are:
Information
and

communication technology (ICT), Consumer suppliers,

and Office suppliers. These are goods that are
typically procured by public authorities. Furthermore,
the product groups are covered by GPP

criteria guidelines issued by the European Union (EU)

and other nations. This implies that these product
groups are knowledgeable enough to discuss
environmental issues, and providers and customers
are more or less aware if environmental issues. Hence,
it is possible to identify environmental issues in
these product groups procurement.

FIGURE 2
Case Design
Data
collection
In each of the three selected product categories, at
least one buyer organization and one supplier
organization were invited to interviews from May
through November 2015. A total of 11 informants
attended the interviews. Interviews normally lasted
from 45 minutes to one hour. Follow-up meetings were
conducted if necessary. One interview was conducted
by telephone and one by written questionnaire due to
accessibility issues (in both cases the informants were
from suppliers). A list of organizations (anonymous)
and the informants information are presented in
Table 2. The informants have 3 to 16 years experience
working in their current capacities, except one who
is new to his current company but has a long history
of experience in the same industry.
This paper looks into the most typical public
procurement procedure, i.e., the open competitive
procedure. There is a group of existing studies that
focus on competitive dialogue procedures that allow
authorities to hold discussions with short-listed
candidates regarding all aspects of the contract before
they invite final written tenders (The European
Commission, 2005; Uttam & Roos, 2015),. This paper
examines information and knowledge exchange
issues in the most customary procedures.

Prior to the interviews, informants from buyer

organizations were asked to focus on one product
category and their latest contract(s) so that they
could give specific and detailed answers to the
questions. During the interviews with supplier
organizations, informants were asked to focus on a
designated product group. Suppliers could also
address issues between buyers and suppliers in
general. Questions asked in the interviews were
mainly concerned with interfaces between buyers and
suppliers,
the
organizational
structure
and
environmental criteria used, and evaluations of
suppliers. The interviews were conducted in an indepth semi-structured way; the interview guide is
presented in the Appendix.
All interviews were digitally recorded and
transcribed. A summary of the interview was sent to
each informant for verification. Relevant tender and
other internal documents were obtained as much as
possible for use as supplementary data.
TABLE 2
Interview Respondents
Buyer organizations
Office supplies
Consumer
supplies

Authority A

Supplier
organizations
Supplier H

-Purchasing advisor

-Tendering leader

Authority B

Supplier I

-Purchasing leader

-CSR manager

-Purchasing advisor
ICT

Authority C

Supplier J

-Purchasing advisor

-Sales

-Category leader

manager

-Category advisor

Supplier K

-Environmentally
advisor

-Tendering manager

Data Analysis
First, the procurement process was chosen as a time
frame to extract which types of interfaces the buyers
and suppliers actually make use of to acquire
environmentally related information from each other.
For each procurement process stage, phrases or words
that indicate any of the four dimensions of absorptive
capacity were extracted from the interviews. Zahra
and George (2002) provide concrete components and
descriptions about the four dimensions (capabilities)
of absorptive capacity, which help
1
0

to objectively identify related elements of the four

dimensions from the interview data.
RESULTS
In this section each case is described, including a
brief explanation of the buyer and supplier
organizations, the informant(s), and their practices of
exchanging environmental related information with
the supplier or the buyer organization. Emerging
capability dimensions of absorptive capacity in each
case is identified, too.
Office Supplies
Authority A is an academic agency located in the
Sr- Trondelag region of Norway with 5,000
employees. The central purchasing department
conducts
purchases
above
500,000
NOK
(approximately $60,000 US). Purchases below this
amount are executed by local purchasers in 50
different
departments.
The
central purchasing
department has a management function with local
purchasers
and
provides
courses
regarding
environmental and ethical issues. The informant
(informant A) is a purchaser from the central
purchasing department and has five years of
experience in her current position. She is particularly
responsible for ethical issues in purchasing. Office
supplies are the focused area of purchasing.
The purchasing department conducts dialogue
conferences during the tender document preparation,
but not for all purchases. In the conferences, buyers
listen to suppliers feedback and learn what are the
most realistic and logical demands. When embarking
on purchases in unfamiliar areas, talking to users is
an informative method for learning potential
requirements. In cases of framework agreements, the
purchase department always meets with contracted
suppliers to follow up on issues addressed in contract
clauses. In such meetings, they also mention possible
future directions of environmental considerations
when purchasing projects. In the focused area,
Informant A thinks that suppliers are not very
concerned with environmental (or, more broadly,
sustainable) issues. Suppliers provide environmental
information only because they are asked to do so by
buyers. However, there was also a case in which a
supplier actively advocated for their new products
that are made from a new biodegradable material.
Supplier H is one of the nation's largest
wholesalers, and has a long history of delivering goods
to industry and the public sector. It has various

17

supply goods, ranging from medical, office and

computer supplies to hardware, facility equipment
(such as chemicals, hand towels and plastic bags) and
school products. It

18

has about 400 employees and a net income of 4 million

NOK. The informant from this company is the leader of
the tender section of the sales department. He has
more than 10 years of experience within the industry.
The tender section is responsible for preparing bid
documents and can seek advice from product experts
when necessary. The company is often asked about
qualified
environmental
management
systems.
Ecolabels are sometimes requested, but not often.
Sometimes, the requirement descriptions in tender
documents are not sufficiently specific, and the tender
section must ask buyers for clarification. The informant
doubts that all public procurement officers actually
understand what they write on tender documents.
The informant stated that communication is not
always convincing. He also acknowledged that some
public procurement officers are good at making use of
environmental information and use Nordic Ecolabel
criteria in the evaluation stage. On the other hand, he
feels that environmental criteria make no difference.
He has often seen cases where all bids received the
same score in environmental criteria, in spite of the
weight given to the criteria, which in some cases has
been 20%. The informant thinks that it is important
to have meetings with buyers to discuss difficulties
and possibilities and analyze markets during periods
without relating to specific tenders.
In short, Buyer A makes an effort to grasp what
are appropriate environmental requirements and their
appropriate
levels
through
different
channels
(Acquisition and Assimilation). When preparing tender
documents, Buyer A cares about how questions in
requirements should be formulated in order to obtain
the needed information (Transformation). It is usually
easy
for
Supplier H to understand buyers
requirements.
However,
he
doubts
buyers
understanding of what they write on tender
documents (Assimilation). Sometimes Supplier H
needs to ask questions of a buyer when descriptions
in a tender document are not specific enough
(Assimilation). Buyer A sometimes has difficulty
understanding suppliers answers, and needs to
research certain technical terms (Assimilation). Buyer A
follows up on issues addressed in contract clauses,
so that environmental information exchanged in the
bidding
process
continues
to
be
monitored
(Exploitation).
Consumer Supplies
Authority B is located in a middle-sized municipality
in Norway with 45,000 inhabitants. There are two

informants from Authority B, a purchasing department

manager and a purchasing advisor. Authority B
conducts market investigations when preparing
upcoming procurement projects. Purchasers either
visit the suppliers or talk with them by telephone.
Authority B had a lot of

discussions with suppliers, procurers, and the ministry

about the amount of time suppliers take to make offers
to the public sector, when it started to mention criteria
in the Nordic Ecolabel in 2004. Authority B is interested
in hearing suppliers voices and it realizes that there
some suppliers complain that they have to spend
money and use a lot of time in order to meet certain
criteria.
Authority B is actively involved with several
networks in terms of procurement; it initiates
procurement
cooperation
with
18
neighboring
municipalities, and is a member of a purchasers club.
When deciding environmental demands, either in
specifications or award criteria, they seek help from
Nordic Ecolabel, as they also do when evaluating
suppliers environmental performance. Regarding
qualifications, Authority B has a template that they
previously developed with a consultancy firm.
Authority
B
spread
through
its
procurement
cooperation practices in the cooperation (Exploitation).
Supplier I is a large international wholesaler listed
in the Fortune 500. Supplier I has a clear sustainable
vision, which states, we offer only sustainable
choices to our customer. The informant from Supplier
I is a CSR and quality manager. A tender manager, a
product expert, and the CSR manager work together
when preparing a bid. The informant thinks that only a
minimum of communication is allowed in public
procurement, in which suppliers can ask buyers
questions about tender documents. After submitting a
bid, there is no chance to communicate until
suppliers have received an award notice. As a
member of the same purchasers club as Authority B,
Supplier I think that it has good communication with
large purchasing organizations and are frequently
updated about new regulations, etc.
Both Authority B and Supplier I make efforts to
get updated environmentally related information by
joining a purchasers club (Acquisition). Authority B
works hard to understand the market through
several channels and seeks effective and realistic
requirements (Assimilation). When it comes to
environmental information related to environmental
criteria, while Supplier I realizes that it is not easy to
formulate
answers
to
buyers
requests,
(Transformation), Supplier I suspects that buyers in
general do not seem to understand the information
that suppliers submit, which can include information
from sub-suppliers (Assimilation). On the contrary,
Buyer B described cases in which suppliers sent many

documents that lacked relevant information. Another

emerging issue is that while Buyer B claims that a
weight of 20% for environmental criteria in the
award stage makes a difference, Supplier I doubts
whether buyers evaluate data from suppliers in
general. Supplier I feels that lower bids (and lower

environmental performance) usually win. It should be

noted that these discrepancies arise not only in the
specific Buyer B/Supplier I relationship, but in
consumer supplies buyer and supplier relationships in
general.
ICT
Authority C is an administrative agency that is
subordinate to a Norwegian ministry. The agencys
headquarters is located in Oslo and has eight units.
There are multiple informants from Authority C as
shown in Table 1. The purchasing department
collaborates with the IT department when they
purchase IT equipment. The former department is
responsible for the procurement process and tender
documents, and the latter is responsible for technical
specifications and evaluation. Authority C includes
fewer environmental criteria in their current tender
documents than they have in the past, because all
their suppliers now meet the previous criteria.
Authority C has meetings with suppliers during the
framework agreements period, but is cautious about
contacting suppliers during the tender document
preparation stage, due to the public procurement
principles of equal treatment of all suppliers.
Supplier J provides IT infrastructure to Nordic
countries. The supplier J informant is a sales
manager. The company does not face particular
challenges
in understanding and answering
environmental demands during the tendering process.
The informant does not recall any discussions related
to environmental aspects between customers and the
company. Usually demands concern standardized
programs or documentation, thus it is not difficult to
prepare answers to buyers questions. The informant
has the impression that customers ask about
environmental requirements because they are obliged
to do so in order to comply with regulations. Providing
environmentally related information is required for
suppliers seeking to do business with public
authorities.
Supplier K is one of the largest IT providers in Nordic
countries and Europe. Supplier K recently bought
Supplier J. The Supplier K informant, who is a bid
manager, works in a different section than the Supplier
J. The bid manager points out that there is no followup regarding environmental aspects in meetings
during framework agreements. Supplier K states that
only a few types of customers are very concerned
about environmental aspects, and most are not
concerned about those issues. His general impression

is that environmental aspects are not a focus, and

there are other issues buyers evaluate as much more
important. Supplier K would like to see more
interest in environmental

aspects from their customers, because they focus on it

as a company.
Supplier K experienced a special case in which a
question was raised about a criterions suitability
related to environmental issues. Supplier K expressed
great concern that the criterion could exclude most of
the ICT products delivered by subcontractors. In the
end, the customer changed the level of the criterion.
In ICTs case, Buyer C clearly feared breaking a
law. In contrast, the two suppliers most important
concern is whether buyers in general regard
environmental issues as one of the important themes
among the criteria. Buyer K feels that bidders are
often evaluated equally (Transformation). There are no
follow- ups regarding compliance with environmental
requirements (Exploitation).
DISCUSSIONS
This section highlights and discusses three issues
that commonly appeared in multiple cases. Two issues
are concerned with activities on the buyers side, and
one deals with the suppliers side, but the issues are
described from the perspectives of both buyer and
supplier.
Formulation of Environmental Criteria for Tender
Documents Phrasing

and

stating

environmental

criteria is difficult;
descriptions should be legal and contain appropriate
levels of requirements. Buyer C is especially
concerned about compliance with public procurement
regulations. This concern seems to dissuade Buyer C
from actively considering and collecting information
related to environmental criteria. Van den Bosch,
Volberda, and de Boer (1999) suggest that rules,
procedures, and manuals (formal systems) could have
a negative impact on the level of absorptive
capacity, while recognizing their positive impact in
some situations. Buyer Cs deliberations about
acquisition capability exhibits the Van den Bosch et
al. (1999) studys negative proposition. Buyer A is
careful about high level criteria and makes use of
supplier dialogue (Acquisition). Criteria should not
include too high level requirements in order to be
effective when screening suppliers. Supplier K has
experienced a procurement case in which the
environmental requirements were at a very high
level. They claimed to the buyer that the
requirements could eliminate almost all sub-suppliers
so that no one would make an offer. In the end, the

environmental requirement was changed to a lower

level. All suppliers state that in general it is not
difficult to understand buyers requirements, while
admitting that they sometimes need to ask questions
about

environmental criteria to ensure what exactly buyers

are asking for. It seems clear that formulating
environmental criteria within legal guidelines and with
appropriate levels according to the market is not an
easy job in terms of interpreting regulations and
understanding the market situation and the wording
of requirements (Assimilation and Transformation). To
cope with this, Buyer B gets help from an expert
organization
when
deciding
how
to
state
environmental
criteria
in
tender
documents.
Memberships in inter-organizational networks may
increase opportunities for acquiring novel knowledge,
but it remains unclear whether the organization will
be able to not only acquire the knowledge but
assimilate and exploit it as well (Lane et al., 2006).
To summarize, this issue highlights the need for
buyers
to
strengthen
their
assimilation
and
transformation capabilities when preparing tender
documents. Acquisition capability levels seem to
differ among the buyers; each buyer uses various ways
of collecting relevant information and knowledge,
such as meeting with their suppliers, referring to
authorized agencies websites, and reviewing other
procurement projects.
Examination of Environmental Performance
Understanding suppliers answers to environmental
criteria questions (Assimilation) and re-coding their
performance (Transformation) requires a great deal
of expertise in chemical and local environmental
management systems (Buyer A), as well as the
competence to fairly judge any supplier answers that
do not follow the certification standards of ecolabels
or environmental management systems (Buyer C).
Given that the procedure for assessing the answers
from the suppliers is key to understanding how green
procurement
leads to
actual
results
(Alberg
Mosgaard, 2015), this issue seems quite critical in
GPP output. To compensate for this competence,
Buyer B makes use of resources from an expert
organization.
Buyer
B
states
clearly
that
environmental award criteria with a weight of 20%
can influence the final result of supplier selection,
and further observes that most suppliers seem to be
unaware of that fact. On the contrary, the suppliers
interviewed in this study uniformly note that they do
not believe environmental performance makes any
difference in evaluation of bids. They observe that
often all bidders are scored the same points in the
environmental category, and whoever submits the
lowest bid wins. Some suppliers raised questions of

whether or not buyers in general actually evaluate

information from suppliers. There are also doubts
that buyers understand the documentation submitted
by suppliers (Assimilation). It was further pointed out
by one supplier

that
there
were
no
environmentally
related
discussions in follow- up meetings during the contract
period (Exploitation). Supplier H and Supplier I hope
for more interactive communication before submitting
answers related to environmental performance.
Suppliers H, I and K wish there were more fairness in
the evaluation of environmental performance in the
awarding process. If suppliers feel that their
performance is not evaluated as it should be, they
might no longer faithfully respond to tender document.
Amann, Roehrich, Eig, and Harland (2014) argue that
the level of inducement is measured by the suppliers
subjective perceived value of the tender. The
suppliers decision about the offer is made in favor of
the expected benefit, if the costs of the opportunity
exceed the costs of bid participation. Further,
borrowing the possibly related concept of buyer
attractiveness (Schiele, Veldman, & Huttinger, 2011),
meaning that a suppliers technical capability more
efficiently influences supplier innovation if the supplier
positions the buyer as a preferred customer, we
would argue that buyers behaving as attractive
customers could be critical in enhancing GPP.
In summary, it appears there are large perception
gaps between the buyers and the suppliers
interviewed concerning evaluations of environmental
performance. Buyers need to further
develop
assimilation,
transformation
and
exploitation
capabilities in order to make use of environmental
information from suppliers at a level that will be fairly
evaluated by the suppliers. This issue may explain
the differences between buyers and suppliers
perceptions of the significance of environmental
criteria (Michelsen & de Boer, 2009).
Looking at the process from an organizational
perspective, it is clear that buyers absorptive
capacity is divided into two issues: absorptive
capacity in preparing the tender documents and
absorptive capacity in evaluating tender documents
and executing contracts.
In the two issues, one buyer borrowed competence
from external experience to compensate absorptive
capacity to their organization. Cohen and Levinthal
(1990) raised the question of whether absorptive
capacity needs to be internally developed or to what
extent a firm may simply buy it, by hiring new
personnel, contracting consulting services, or even
through acquiring other corporations. Public buyer
organizations do not have any production processes,
so they have less of a need to integrate absorptive

capacity with the organizations other activities (Cohen

& Levinthal, 1990). Following this argument, it seems
that public buyers making good use of external
expertise is a feasible solution.

Preparation of Answers to Environmental Requirements

This issue is not present in all cases but is at least
discernible in consumer supplies and IT equipment.
Supplier I states that it is hard to document detailed
data about chemical substances when requested by
buyers. Supplier I doubts that buyers in general
understand the documentation, which is based on
information from sub-suppliers. Supplier K talks about
challenges in collecting
information
from
its
contractors (Acquisition). If contractors are operating
in different countries, a lot of work is required, and it is
often difficult to interpret whether they meet buyers
environmental requirements, because national and/or
local environmental standards are different from
Norways (Assimilation). On the contrary, Buyer B
relates the problem that suppliers sometimes send
many documents that turn out, upon inspection, to
state nothing directly related to environmental
requirements. Buyer B believes that because
suppliers do not know what to focus on in their
answers, they try to send documents that may be
irrelevant to the requirements. Regarding this issue,
there seems to be room for improving suppliers
transformation capability when preparing their
environmental answers.
Interaction Between Buyers and Suppliers Absorptive
Capacity This paper does not analyze the
interaction of absorptive
capacity
in
a
specific
buyer
and
supplier
relationship because data from suppliers include
general views on their buyers and little about
specific buyers. However, following Zahra
and
Georges (2002) concept of potential and realized
absorptive capacity (PACAP and RACAP, respectively),
I would argue as follows: If a buyer who is proficient
at obtaining external knowledge and information fails
to communicate necessary environmental criteria,
potential suppliers will have difficulty interpreting the
buyers tender document. In other words, when a
buyer does not develop good RACAP in the tender
document preparation stage, the suppliers PACAP will
be affected. Supplier Hs experience with asking
buyers questions to clarify their criteria illustrates this.
In the same way, assuming that a buyers
environmental criteria is communicated well, if a
supplier is not good at describing performance levels
regarding the criteria, the buyer will not get the
necessary
information
from
the
suppliers
documentation. In this case, there is a lack of the
suppliers RACAP influence on the buyers PACAP.

Buyer Bs statement about excessive information

from suppliers may exemplify this case. Conversely,
the higher the levels of a suppliers absorptive
capacity, the more likely it is that the supplier can
leverage buyer knowledge
to
build
internal
competence and capability, which

lead to a more productive buyer and supplier

relationship (Revilla et al., 2013).
Thus, both subsets of absorptive capacity in both
actors should sufficiently fulfill the conditions for
obtaining GPP outcomes. Figure 3 presents this
argument.
GPP
outcomes
can
include
the
environmental performance (i.e., low environmental
impact) of procurement goods or services, the
dissemination of green procurement examples among
public and private buyers, and suppliers as driving
forces. While a low environmental impact is a direct
outcome, the other indirect outcomes are worth being
mentioned in detail. Positive GPP cases can be learned
by buyers (Acquisition) or shared within interorganizational networks (Exploitation). Such cases will
be those in which advanced environmental criteria
are set within a certain procurement project, the
corresponding market makes an effort to respond to
the
environmental
requirements,
environmental
performance is appropriately evaluated in awarding
stage, and the environmental
performance is
confirmed in follow-ups during contract execution.
Regarding suppliers as driving forces, if suppliers
readiness is sufficiently recognized by buyers, and
suppliers
environmental
performance is fairly
evaluated in the award stage, it would make use of the
suppliers potential for environmental performance and
further motivate them to work on environmental
issues.
Our cases did not include clear examples of
mutual learning between buyers and suppliers. In
public procurement, long contract is normally a fouryear framework agreement, with buyers needing to reannounce the contract each time. According to the
propositions by Dyer and Singh (1998) regarding
safeguard length and relational rent, suppliers feel
secured only for this period, so that it would be
difficult to create a landscape in public procurement
in which buyers and suppliers are willing to exchange
knowledge.

FIGURE 3.
Interaction of Absorptive Capacity in GPP
CONCLUSION AND RECOMMENDATIONS
This study provides an analysis of GPP from the
absorptive capacity view on a GPP operation level.
The first research question concerned the interface
of environmental information exchanges. Data gained
from the interviews identified several interfaces in
different stages of procurement. In the tender
document preparation stage, buyers and suppliers
have meetings to share state-of-the-art market
situations. Through tender
documents,
buyers
formulate
their
messages
as
environmental
requirements and send them to potential suppliers.
Suppliers formulate answers to the buyers questions
and submit bids to the buyers. The award stage is
another opportunity to communicate, by buyers
sending the results of their evaluation of the bidders.
During the contracting period, a buyer and supplier
can have a follow-up meeting to define items
mentioned in the contract clauses. In addition to
these various interfaces, buyers and suppliers may
meet in a formal setting orchestrated by an expert
organization, and also may have a meeting unrelated
to a specific contract for the purpose of discussing
challenges and updating each other.
The second and third questions are answered
together, and the summary is depicted in Figure 3.
During the phase in which buyers are preparing their
tender documents, assimilation and transformation
capabilities are especially needed for the buyers
absorptive capacity. While assimilation capability is
critical in valuing environmental issues and acquiring
related knowledge, transformation capability realizes
the knowledge that has been absorbed (knowledge
being, in the GPP setting, the environmental
requirements specific to a procurement project). During
the phase of suppliers preparing bid documents,
transformation capability might be influential on how
their answers are perceived and evaluated by buyers.
In the award of contract phase, all capabilities
except acquisition seem important for buyers and in
need of strengthening. Suppliers who are interested in
the tender will send the buyer their bid document.
Buyers do not need to actively acquire suppliers
knowledge; they passively receive information from
the suppliers. Assimilation plays an important role in
understanding the environmental performance data
2
0

provided by suppliers. When this data is correctly

interpreted, buyers are able to appropriately
evaluate and score suppliers performance. This is
transformation capability. Exploitation

2
0

concerns the use of the environmental performance in

suppliers offers during contracting period of a
project as well as in other possible opportunities.
This capability is rarely observed in the cases given,
but its significance on GPP output should be more
strongly emphasized. The final GPP output is
determined by the interaction between the buyers
and suppliers potential and realized absorptive
capacities that are composed of acquisition and
assimilation, and transformation and exploitation,
respectively.
Expected
GPP
outcomes
are:
environmental performance of procured products or
services,
dissemination
of
green
procurement
examples among both private and public buyers,
suppliers as driving forces for GPP.
It is important for both actors to identify strengths
and
weaknesses
in
each
of
the
four
dimensions/capabilities. They should make an effort
to further develop weaker capabilities and balance
potential and realized absorptive capacity. GPP
outcome cannot be expected if potential or realized
capabilities are substantially missing on either the
buyers or suppliers side. Policymakers should
enhance buyer and supplier interfaces by giving
more detailed instructions of what is allowed in public
procurement
than
the
current
description
in
regulations and guidelines. There are still fears of
breaking laws and regulations. Policymakers also need
to assist with information exchanges between buyers
and suppliers. Thus, the two actors capabilities will
be combined effectively. Policy-makers probably
should put more effort into contract management
rather than the procurement process which, as it turns
out, is rarely utilized.
This study has several research limitations. The
case studies cover a limited number of interviewees in
three product categories. Future research needs to
expand this study by looking at other product
categories including services. Such an expansion
would develop generalization of this studys results; it
might also emphasize different issues among different
categories.
Enablers of absorptive capacity were excluded from
this study scope, which was present in the original
model of Zahra and George (2002). Researchers
might use longitudinal case studies, by which they
can look at buyers and suppliers absorptive
capacities in both turbulent and stable GPP
environments. Such studies can capture dynamic
and static nature of both actors absorptive capacity

37

in addition to enablers of absorptive capacity.

Another limitation is that little is addressed about
intrafirm processes of absorptive capacity, i.e.,
communication within organizations. Lane et al.
(2006) point out that researchers should not overlook
the role of individuals in developing, deploying and
maintaining absorptive capacity. We need to

38

understand the interactions among individuals,

organizational units levels, and organizational
absorptive capacity.

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Appendix. Interview Guide

General
questions to buyers

Specific
questions to buyers

General
questions to suppliers

Specific
questions to suppliers

Organizational structure and purchasing

function
Main purchasing goods
Informants responsibility and
experience as a procurer
What are the environmental
requirements/criteria in a focused
procurement project? What is the most
critical environmental aspects?
How do you identify/choose
environmental criteria?
Do you have any experience that your
suppliers ask questions about, or they
show interest on environmental
requirements/criteria?
How do you think of your suppliers
understanding of environmental
requirements/criteria that you
state in the tender document?
Do you get correct and sufficient
information from suppliers?
Do you have any
experience of
misunderstanding?
How do you make use of the
information that suppliers provide?
Are there any strategies or actions in
order to
improve
or enhance
Organizational structure and
sales/marketing
function
Main supply goods, main customers
Informants responsibility and
working experience
What is the most common environmental
requirements/criteria you receive
Are requirements different among your
buyers?
Is it easy to understand the buyers
words on tender documents? Easy to
meet?
How do you think that buyers make
use of the information that you
provide?
Are there any strategic changes
regarding environmental issues at your
buyers side? If yes, how buyers inform


Do you want more dialogue with buyers (dialogue
conference, meeting during a framework agreement)? Why?