Author(s):
1. Jelena Budak, Institute of Economics, Zagreb, Barbados
2. Edo Rajh, Institute of Economics, Zagreb, Croatia

Abstract:
This study empirically evaluates the public procurement system in Croatia, a transition country and the new EU member-state. The research is based on the empirical evidence collected by surveying the large sample of companies. Our aim is to assess experience, attitudes and practices of Croatian companies involved in the public procurement and to shed light on soft indicators governing this business activity. This paper investigates how businesses as actors in the public procurement tenders evaluate the system and what are their perceived and experienced views on the various components of public procurement. Are there differences in attitudes between direct suppliers and their subcontractors? Which principles of public procurement are fulfilled and what are the weak points? How national system actually performs compared to the “ideal” EU standards? What are the determinants of attitudes and business behaviour? We use the data collected by the survey conducted in April 2013 on the net sample of 300 Croatian companies. Survey methodology is based on the existing literature and specifically designed to capture the specifics of the public procurement system in Croatia. We posit that there are significant differences in attitudes and ratings among companies that participated in public procurement as direct suppliers compared to the companies that had been indirectly involved as subcontractors. The structure of the survey enabled us to differentiate experiences of Croatian companies that have participated in the public procurement tenders directly as principal contractor and those who had participated as subcontractors. For both groups of participants the study identified main reasons for not-participating and for not being awarded a contract. The business opinion on the public procurement system procedures and regulations has been accessed as well, providing insights into the business perceptions on main public procurement principles: accountability, effectiveness, value for money, integrity and achieving the EU standards. The special attention has been dedicated to the assessment of corruption risks in the public procurement. The evidence of young democracy and institutional set up similar to other Western Balkans countries reveals that despite of EU standards introduced there are still, at least from the point of view of companies, irregularities and lack of trust in the Croatian public procurement system. This study provides unique insights into the functionality of the system from the business sector perspective, and the results could be instructive for both public procurement authorities and for policy-makers in the countries with similar business environment in particular in the Western Balkans region.

Key words:
public procurement, survey, Croatia, business attitudes

Date of abstract submission:
15.11.2013.

Conference:
REDETE 2014 - Researching Economic Development and Entrepreneurship in Transition Economies