Public Sector Participation in Innovation Governance: Evidence from the Lolli Strategy Project

The impact of globalization has caused innovation to be recognized as a crucial means of addressing complex global governance problems. With an increasing number of entities participating in innovation, promoting diverse entities to work together and preventing market distribution failures have become important issues in innovation governance. Unlike most studies focusing on social and market participation, this study emphasizes public sector participation in innovation governance. Individual interviews, process tracing, case study, and case comparison were used to observe the behavioral differences between German and Mexican local governments in the same innovation project but at different governance periods. Based on the organizational action theory, the study yields several key findings. First, public sector participation in the innovation governance process is of equal significance to social and market participation. Second, when there is a higher demand for governance and an embedded innovation model is used for the innovation project, the public sector is more likely to participate in innovation governance consistently due to the influence of innovation empowerment and cost-benefit leverage. The authors aims to fill a research gap in public sector behavior by providing a medium and micro analysis framework to explain public sector participation in the innovation governance process, and to improve understanding of innovation governance and contribute to a more comprehensive body of research.