Encouraging innovation in the public sector

Abstract

The public sector has traditionally been considered inhospitable to innovation, particularly innovations initiated by middle managers and front‐line staff. Unlike the private sector, the public sector is characterized by asymmetric incentives that punish unsuccessful innovations much more severely than they reward successful ones, by the absence of venture capital to seed creative problem solving, and by adverse selection by innovative individuals against public service careers. A growing body of evidence based on applications to innovation awards reveals that, despite this inhospitable environment, frontline public servants and middle managers are responsible for many innovations. In addition, some public sector organizations have consistently produced a large number of innovations. Draws on this evidence to suggest ways of enhancing public sector organizations’ capacity for innovation.