The social clause in public tenders: strategic interdependence among companies and economic distortions

Purpose of the paper: The aim of the paper is to identify the economic effects of the generalized application of the social clause, i.e., the mechanism established by the legislation and by the collective agreement that foresees the continuity of employment in public tenders. Methodology: The methodological approach is qualitative and based on a multiple case study method. Through the use of a semi-structured questionnaire, interviews were conducted with the ownership and management of certain companies identified on the basis of dimensional criteria and their governance. Results: The results of the research show how the social clause can generate distortive effects both on the decisions and behaviour of existing or incoming companies that could plan exit strategies from the service or manage different means for the allocation of new employees, respectively, and on the market dynamics in terms of barriers to the introduction of technological and organizational innovations, motivation of employees and expected levels of service quality. Research limitations: This research is exploratory in nature and only considers the business perspective. Possible future research could help to overcome this limitation considering the other actors involved in these dynamics, such as employees, trade unions and public administrations. Practical implications: The article provides several policy proposals and indications that could result in a reduction in procurement costs and an increase in the capability to monitor the quality of the service provided. Originality of the paper: The work focuses on the public procurement field and addresses a specific theme, such as the social clause, via a business strategy perspective.