The intensity of innovation in public sector organisations

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  • Published Date: 01 December 2020

The public sector is under pressure to provide new public services with increasingly scarce resources. In response, there have been calls for greater innovation. An empirical analysis strongly supports a central role for innovation capability enabled by both ‘push’ and ‘pull’ sources.

Understanding innovation

The public sector is under severe pressure from new challenges, such as:

  • an ageing population
  • growing debt
  • increased demands for new and/or better services
  • demand for more cost‐efficient solutions
  • alternative ways to interact with citizens.

Innovation is central to the public sector's ability to deal with these challenges. It also has the potential to improve the effectiveness and also the problem‐solving capacities of public sector organisations.

However, the understanding of innovation in the public sector context is underdeveloped. A recent systematic review of public sector innovation studies concluded the literature lacks a clear theoretical underpinning.

Innovation push/pull and the public sector

Classic innovation theory draws a distinction between:

  1. Supply‐side factors related to advances in science and technology ‘pushing innovation’.
  2. Demand‐side factors ‘pulling’ innovation from the organisation.

The relative importance of technology‐push vs. demand‐pull has been one of the central debates in the innovation literature. This debate has been fundamental to understanding sources of innovation for private sector organisations. However, the literature has largely overlooked public sector organisations.

The public sector is different from the private sector, with its lack of markets and need for democratic/public accountability. This can influence how push and pull factors should be conceptualised and how they influence innovation in a public sector context.

Also key is the concept of innovation capability which highlights the role of organisations capabilities in enabling both technology‐push and demand‐pull. This constitutes a key source of innovation in itself.

Capability and public value

Public sector organisations need to innovate in order to create public value in more efficient or better ways. This may be particularly difficult for public sector organisations as they lack feedback mechanisms provided by market signals, such as declining sales and profits. As such public organisations are particularly dependent on organisational capabilities.

Using the lens of capability to examine public sector organisations and their effectiveness is useful because public organisations control a major part of the resources in society. These resources include land, buildings, infrastructure and budgets. Public organisations also have the capabilities to govern and administer these resources.

The creation of public value—or putting resources to their best use—is a fundamental task of public organisations. Capability is essential to creating this public value. While public sector organisations control resources, they vary in their capacity to deploy these in ways that create value for society. This implies these organisations differ in their innovation capability. 

Leadership, experimentation and empowering employees have been found to be critical to innovation capability.

About the research study

The empirical study sought to answer the question:

  • What is the interplay between technology‐push, demand‐pull, and organisational capabilities in promoting innovation within public sector organisations?

It involved a survey of 2,157 public sector institutions in the 27 European Union member states as well as Norway and Switzerland.

The findings

The study revealed:

  1. There is a positive relationship between innovation capability and intensity of innovation within public sector organisations. Without innovation capability, external sources of innovation will not enter the organisation and therefore not influence innovation. Likewise, capabilities are needed to detect and interpret signals from demand‐pull sources of innovation.
  2. Innovation capability has a positive effect on the use of external knowledge within public sector organisations. Advances in science and technology, as well as the external knowledge relevant for innovation more broadly is not automatically transferred to an organisation. External knowledge sourcing and transfers are facilitated by organisational capabilities.
  3. The use of external knowledge has a positive effect on intensity of innovation within public sector organisations. Knowledge can be generated and diffused through different types of actors such industry stakeholders, government agencies, universities, private firms and members of the public.
  4. Innovation capability has a positive effect on identified demand for innovation within public sector organisations. External/political factors and the introduction of new policies can be conditions for successful innovations in the public sector.
  5. Identified demand for innovation has a positive effect on intensity of innovation within public sector organisations.

What this means

  • For public sector organisations to take advantage of push and pull sources of innovation, they need to have the innovation capabilities to enable this process.
  • The pursuit of open and collaborative approaches in the innovation process can be facilitated by developing the organisation's innovation capabilities.
  • Policymakers seeking to enhance public sector innovation should consider how they can stimulate the development of innovation capabilities within the organisations alongside enacting legislative changes and policy reforms that create incentives for innovation.

Want to read more?

Intensity of innovation in public sector organizations: The role of push and pull factors - Tommy Høyvarde Clausen, Mehmet Akif Demircioglu and Gry A. Alsos, Public Administration, Public Administration 2019

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