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Innovation capacity in the public sector: A framework for comparative analysis Jenny M. Lewis and Lykke Margot Ricard Innovation in the public sector has become an important focus for governments around the world over the last decade. The pressure on governments to do more with less, in response to shrinking budgets and expanding community expectations and obligations, has led to a much greater focus on how the public sector manages change and innovation (Bartlett and Dibben, 2002). In developed and less developed countries alike, an amplified focus on innovation in the public sector has created a need to understand the innovation capacity of public organisations. For the purpose of this article we will define innovation as: ‘The process from ideas to successful implementation of these, which makes a substantial difference to an organisation’s understanding of the needs it is addressing and the services it delivers.’ This article examines the innovation capacity of municipal governments by examining their innovation environments – governance structures, social networks and leadership qualities. An empirical study of this has been recently completed through a survey of politicians and senior administrators in Denmark (Copenhagen), the Netherlands (Rotterdam), Spain (Barcelona) and Scotland (West Lothian, which borders Edinburgh). The article outlines a framework for the comparative analysis of the four cases. More specifically, the focus is on ‘social innovation’, defined as innovation that is related to creating new services that have value for stakeholders (such as citizens) in terms of the social and political outcomes they produce. A number of concepts from social network theory that are regarded as important for innovation and capacity-building are introduced, namely centrality, the strength of weak ties, structural holes, social capital and trust. Governance structures The innovation capacity of any public sector organisation is related to the environment within which it is located. Therefore, it is important to first consider the formal structures within which each municipality is located. These include the municipality’s political and administrative background, the legal culture of the public sector, state and governance traditions, and the resource arrangements in place. These characteristics can either function as triggers for innovation or as constraints against it. Based on an analysis of the literature surrounding this topic, Bekkers et al. (2013) found the following four environmental characteristics to be important drivers of and barriers to innovation: 1. The social and political complexity of the environment in which public organisations operate that leads to specific demands that function as external triggers of innovation 2. The characteristics and degree of the legal culture in a country or policy sector, which shape the level of formalisation and standardisation, and the degree of rule-driven behaviour 3. The type of governance and state tradition in a country or policy sector, which affects the amount of discretion that public sector organisations have to explore and implement new ideas 4. The allocation of resources, resource dependency and the quality of relationships between different (public and private) organisations at different levels, which all have an impact on how well innovation practices are supported More specifically, the formal structures that have been previously identified as being positively and negatively related to innovation capacity are: political and administrative triggers, such as crises and competition (positive effect); a strong formalised, centralised, rulebound and silo-bound legal culture (negative effect); and a decentralised state, corporatist governance traditions and strong civil society (positive effect). Throughout the years, metrics of the strength of local governance in cities, and the potential of cities as innovation economies, have been drawn up. An example of this is the Innovation Cities 2014 Index by 2thinknow1, which is calculated using 162 indicators across 31 segments and the factors of cultural assets, human infrastructure and networked markets. However, it should be stressed that both the information on governance structures within nations and the strength of local government, as well as nationaland city-level indicators of ‘innovativeness’, serve as relatively broad and somewhat imperfect measures. Social networks and innovation Innovation capacity is expected to be linked not only to contextual factors, such as those listed above, but also to informal social structures. Social networks based on interpersonal communication generate embedded resources, such as social capital and trust relations. The importance of networks in facilitating innovation and shaping innovation pathways at the organisational, sectoral and national level has long been recognised within private sector innovation literature. Abbreviated and adapted from: Lewis, J. M. and Ricard, L. M., 2014. ‘Innovation capacity in the public sector: Structures, networks and leadership’. LIPSE Working Papers No 3. Rotterdam: Erasmus University. The original article presents results from Learning from Innovation in Public Sector Environments (LIPSE) project Work-Package 1: Innovation Capacities of Innovation Environments, conducted in Copenhagen and funded by the European Union’s Seventh Framework Programme for Research. The partners in this work package are Roskilde University, Erasmus University Rotterdam, ESADE Barcelona and Edinburgh University. Commonwealth Governance 44 Handbook 2014/15


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