Do All Roads Lead to Innovativeness? A Study of Public Sector Organizations’ Innovation Capabilities

• Date: 01 September 2021
• DOI: 10.1177/02750740211010464
• Published date: 01 September 2021
• Subject Matter: Articles

https://doi.org/10.1177/02750740211010464

American Review of Public Administration

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DOI: 10.1177/02750740211010464

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Article

Introduction

The myth of the ossified public sector has long existed in the

minds of nearly all innovation and public administration

scholars; however, that myth has finally been dispelled

(Torfing, 2019). Intensive research over the last two decades

has provided rich evidence of public sector organizations’

innovativeness (De Vries et al., 2016). The current literature

demonstrates that public sector organizations develop and

implement innovations that are novel (at least to the imple-

menting public sector organizations) and that create or

improve public value (Chen et al., 2019). We also know that

public sector innovation can take different forms, such as

service innovation (Nelson & Svara, 2012), collaborative

innovation (Sørensen & Torfing, 2017), or innovative public

procurement (Torvinen & Haukipuro, 2018). In addition, the

existing findings show that public sector innovations help

public sector organizations increase their efficiency and

effectiveness (Arundel et al., 2019), deal with constantly

emerging social and economic challenges (Torfing et al.,

2019), and respond to pressures and expectations from mul-

tiple stakeholders (Sørensen & Torfing, 2019).

However, less is known about how public sector organi-

zations “systematically raise innovation outputs over time”

and manage their innovation processes and how such sys-

tematic development and implementation of innovations

affect the public value that they create (Arundel et al., 2019,

p. 794). The current research suggests that the possession of

innovation capability explains why public sector organiza-

tions can continuously develop, manage, and implement

innovations (Clausen et al., 2020; Trivellato et al., 2021).

The previous studies define innovation capability as an

organizational dynamic capability that stimulates continu-

ous innovation activities and strategic change (Schilke et al.,

2018). Although these recent insights shed some light on

why public sector organizations can continuously develop

and implement innovations, it is clear that we need addi-

tional investigations to explain how public sector organiza-

tions develop the capabilities that make them innovative

(Zyzak & Jacobsen, 2020).

Therefore, drawing on the insights from the dynamic

capabilities perspective (Schilke et al., 2018), this study

seeks to explore how public sector organizations develop

their innovation capabilities and how such innovation

capabilities spur public sector innovations. As we know little

1Nord University, Bodo, Norway

Corresponding Author:

Petter Gullmark, Business School, Nord University, P.O. Box 1490, Bodo

8049, Norway.

Email: petter.gullmark@nord.no

Do All Roads Lead to Innovativeness?

A Study of Public Sector Organizations’

Innovation Capabilities

Petter Gullmark1

Abstract

Although much has been written about public sector innovation in the last two decades, we still do not fully understand how

public sector organizations become innovative. Therefore, this study inductively explored how four Norwegian municipalities

developed innovation capabilities. I found that public sector organizations develop two forms of innovation capability in

a path-dependent manner: low-routinized innovation capability and highly routinized innovation capability. In the former,

dynamic managerial capabilities in the form of individuals’ entrepreneurial and leadership skills comprise the source of

innovation capability. In contrast, in the latter, innovation capability emerges from dynamic organizational capabilities, that

is, a set of innovation-stimulating routines, processes, tools, and structures. Notably, I found that regardless of the form

of innovation capability, both spur the continuous development and implementation of various radical and incremental

public sector innovations. Based on these findings, this study offers several contributions to the literature on public sector

innovation and to the dynamic capabilities research agenda.

Keywords

dynamic capabilities, innovation capability, public sector entrepreneurship, inductive research methods, Norwegian

municipalities

2021, Vol. 51(7) 509–525

about public sector organizations’ innovation capabilities, I

employed an inductive, longitudinal research design. Using

the case replication approach (Eisenhardt & Graebner, 2007;

Huy & Zott, 2019), I studied innovation capabilities in four

Norwegian municipalities over a period of 4 years.

This study makes three important contributions to the lit-

erature. First, this study provides new insight into how public

sector organizations develop their innovation capabilities

(Piening, 2013; Trivellato et al., 2021). I found that politi-

cians and top public managers used their dynamic capabilities

to successfully respond to various external and internal chal-

lenges that emerged in the focal organizations over time.

Their decisions initiated and then strengthened the develop-

ment of low-routinized or highly routinized types of innova-

tion capabilities in the examined public sector organizations.

Second, this study deepens our understanding of the out-

comes of innovation capability in a largely unexplored con-

text of public sector organizations (Arundel et al., 2019;

Clausen et al., 2020). Current private-sector-situated concep-

tualizations (Slater et al., 2014) describe innovation capabil-

ity as a highly routinized organizational capability that spurs

radical, mostly product and service, innovations (Janssen

et al., 2016) and that endows the organization with revenue

and profit growth. Instead, this study showed that in the pub-

lic sector context, innovation capabilities take two forms—

low-routinized and highly routinized. I found that both types

lead to equifinal outcomes (Eisenhardt & Martin, 2000)—

they spur continuous development and the implementation

of both incremental and radical public value-creating policy,

management, partner, service, and citizen innovations.

Finally, this study enhances our current poor understand-

ing of the relationship between three dimensions of dynamic

capabilities—the functional domain of innovative capability,

its degree of routinization, and the source of its “dynamism”

(Schilke et al., 2018). My research demonstrated that when

the entrepreneurial and leadership skills of individuals—

their dynamic managerial capabilities—are the source of

innovation capability in a public sector organization, the

innovation capability is low-routinized. However, when

organizational structures, processes, tools, and routines—

dynamic organizational capabilities—are the source of inno-

vation capability in a public sector organization, the

innovation capability is highly routinized. Hence, this study

provides evidence that the dominance of either dynamic

managerial or dynamic organizational capabilities in the pro-

cess of continuous innovation development and implementa-

tion determines the degree of routinization of innovation

capability in a public sector organization.

Theoretical Background

Innovation Processes in Public Sector

Organizations

The phenomenon of public sector innovation has been exten-

sively examined in recent years (De Vries et al., 2016). The

main focus of the prior research has been the antecedents and

outcomes of various public sector innovations (Barrutia &

Echebarria, 2019). Consequently, we have a relatively deep

and nuanced understanding of public sector innovations’ out-

puts such as new services, processes, or policies; their deter-

minants; and the effects of such outputs on public sector

organizations (Chen et al., 2019).

We also know that public sector organizations are innova-

tive (Arundel et al., 2019). The prior studies provide substan-

tial evidence that innovation processes are performed

simultaneously in several public sector organizations’ depart-

ments and that such processes lead to the continuous devel-

opment and implementation of different innovation types

(Clausen et al., 2020). In addition, we have some insight into

the relevant antecedents that facilitate or hinder the develop-

ment of public sector organizations’ capability for innovation

(Sørensen & Torfing, 2017). We know, for example, that the

heroic efforts of innovation sponsors and champions stimu-

late innovation processes in public sector organizations

(Zyzak & Jacobsen, 2020). Some studies also note that inno-

vation-friendly organizational culture, available resources,

and structures and systems can stimulate public sector orga-

nizations to continuously innovate (Trivellato et al., 2021).

However, the foregoing contributions offer a relatively

static and fragmented picture of the innovation processes in

public sector organizations. We know relatively little about

how the interactions of the relevant antecedents result in the

development of innovation capabilities in public sector orga-

nizations (Arundel et al., 2019; Clausen et al., 2020).

Furthermore, we need more profound insight into how public

sector organizations manage their innovation processes so

that the abovementioned innovation outcomes can come to

fruition (De Vries et al., 2016).

Adopting an innovation capability lens may deepen our

insight into innovation processes in public sector organiza-

tions (Clausen et al., 2020). The concept of innovation capa-

bility is well established in the literature on dynamic

capabilities (Schilke et al., 2018). Therefore, I draw on the

dynamic capabilities theoretical framework to comprehen-

sively explore how public sector organizations develop and

manage their innovation capabilities to pursue innovations.

In the following section, I briefly discuss the current state of

knowledge on the dynamic capabilities perspective.

The Current State of Knowledge on the Dynamic

Capabilities Perspective

The dynamic capabilities perspective explains how processes

related to sensing, shaping, and seizing entrepreneurial

opportunities enable an organization to reconfigure its

resource bases and strategically change (Wilden et al., 2016).

Dynamic capabilities are based on two pillars comprising

“the organization’s values, culture, and collective ability to

quickly implement a new business model or other changes”

and “individual managers and the top management team”

(Teece, 2016, p. 211). The former pillar embraces dynamic

510 American Review of Public Administration 51(7)