When innovation comes to town—the institutional logics driving change in municipalities

IMPACT

Innovation has become a buzzword of the contemporary public sector, yet the practical uses of innovation are diverse and sometimes conflicting. This article highlights four different innovation approaches and describes their use with examples from the municipal organization in Stockholm. These innovation approaches have different end goals, perspectives and logics that drive them. With a better understanding of the broad concept of innovation that is relevant within a city organization, municipal officials can make conscious decisions about their innovation practices.

ABSTRACT

Innovation is an increasingly influential agenda for municipalities to apply to multiple activities and objectives. This article presents an institutional logics framework to clarify the ways that municipalities use innovation to achieve their long-term ambitions. The framework consists of four approaches that co-exist within a single municipality: the business-enabling approach supports local economic growth, the organizational change approach focuses on improving internal processes and services, the attractiveness approach promotes the territory for investment, and the transformative approach engages with broader societal challenges. The framework clarifies how innovation is interpreted and practised by municipalities and reveals opportunities to enhance these activities.

KEYWORDS:

• institutional logics
• innovation
• innovation policy
• local governments
• municipalities
• Sweden

Introduction

Innovation is a very important part of sustainability work, therefore Stockholm needs to develop new, horizontal and innovative working methods and technologies to solve future challenges in a sustainable way … To achieve this, a cultural change is required, both in relation to external collaboration processes and internal processes within the city organization. This relates to understanding the system perspectives, training innovation leaders, changing leadership and working methods, applying innovation procurement to a greater extent, and developing the city's processes. In order to maintain Stockholm's strong position in the global competition for investments, business start-ups and the workforce, collaboration is needed that contributes to innovations. From the City of Stockholm’s website: https://start.stockholm/om-stockholms-stad/sa-arbetar-staden/innovation/

Urban and global challenges are expected to be solved by the powerful and omnipresent concept of innovation (McGuirk et al., 2022). The above quotation from the City of Stockholm illustrates the multiple interpretations of innovation that are commonplace in many local governments today. Innovation has emerged as a panacea for all municipal matters, ranging from evolving citizen expectations to budget constraints and ecological crises (Borins, 2002; Hartley & Knell, 2022; Osborne & Brown, 2013). It appears as a magic concept (Pollitt & Hupe, 2011) for the public sector due to its high level of abstraction and its strong normative connotations (Osborne & Brown, 2013). At the same time, innovation is ambiguous and, similar to the terms ‘smart’ and ‘sustainable’, is often used by urban boosters as an ‘empty signifier’ (Laclau, 1989) to promote a plethora of ideas and actions with little to no justification or clarity (Baregheh et al., 2009). Such abstract concepts require translation and interpretation by municipal officials to ensure that they can create genuine change in the organizations (Sahlin & Wedlin, 2008). Reflecting on the different framings of innovation actions is helpful to design and implement relevant policies to address a range of contemporary challenges (Schön, 1983).

To engage with the broad application of innovation in municipal organizations, this article draws on organizational and institutional theory to delineate four approaches to municipal innovation through the lens of institutional logics. Institutional logics underpin innovation approaches and are useful to understand the diverse innovation landscape within municipalities. The framework summarizes the specific purpose, concepts and end goals of innovation in municipalities to address two research questions:

• How do municipalities translate and apply the notion of innovation into concrete actions?

• What are the underlying institutional logics that support these actions?

The article begins with a brief overview of innovation as a municipal development strategy and summarizes how institutional logics inform innovation approaches. Institutional logics are important because they define the conditions of behaving in an organization and the different (and sometimes clashing) pressures faced by organizations. This is followed by a discussion of four municipal innovation approaches that are derived from traditional business-supporting policy, internal public sector innovation, competitive promotion of the territory and the pursuit of sustainable transformations. These innovation approaches are described, with their different end goals, perspectives and institutional logics that drive them. Each innovation approach is illustrated with examples from the City of Stockholm—a municipality that exemplifies the contemporary use of innovation in multiple activities. The discussion focuses on the tensions and synergies between the innovation approaches to clarify the work of the innovation concept. The article concludes that municipalities need to clearly frame how they are using the concept of innovation to avoid vague practices of municipal boosterism and, instead, use the concept to drive substantive and fundamental institutional change.

Innovation as a municipal development strategy

Municipalities in the global north tend to be large, sectorized, bureaucratic organizations with multiple, and often conflicting, targets (Christensen et al., 2020). They have a broad range of responsibilities, for example housing, planning, infrastructure, schools, elderly care and culture, and have more recently embraced cross-cutting policies related to sustainability, resilience, digitalization and liveability. Municipalities can be characterized as a ‘geographic entity with local autonomy and self-government’ (Nilsson, 2013, p. 22) and ‘a primarily urban political unit having corporate status and usually powers of self-government’ (Merriam-Webster, n.d.). Beyond these formal definitions, municipalities have multiple interests and responsibilities that complement and extend the taken-for-granted work of governance and public service provision. Palm and Wihlborg (2007) define the municipality as a community, a place, an institution and an organization. The community perspective focuses on the inhabitants and establishing the common democratic ground to steer development processes. The place-perspective is the geographical territory that delimits the municipality’s boundaries while creating identity and possibilities to compete with other municipalities (Pollitt, 2012). The municipality as an institution highlights formal and informal rules about governing, such as autonomy and self-governance, as well as the potential to develop partnerships and collaborations. And, finally, the municipality as an organization embodies the elected officials, committees, boards and professional competencies that are needed to deliver public services. These perspectives, together with the multiple sectors engaged by the municipality, illustrate the breadth of municipal responsibilities and multiple opportunities to innovate.

Innovation is tightly coupled to creativity and change (Baregheh et al., 2009). It is a concept widely used within research without an authoritative definition (McGuirk et al., 2022). Existing definitions involve the development of new products, services and processes, their applications into new contexts, as well as the realization and redistribution of values, in a radically disruptive or incremental way (Baregheh et al., 2009; ISO, 2020). Jessop et al. (2013) highlight the alignment with invention in economic conceptions, while the social innovation literature aligns it with applications in new contexts with a focus on the public good. If value is central to all innovation practices, innovation within public organizations is about creating public values (Moore & Hartley, 2008) that result in ‘desirable outcomes relating to the quality of individual and collective life for citizens shaped by the normative consensus of society, policies, and governance’ (Chen et al., 2019, p. 1676). This means that the drivers and barriers for innovation in public sector organizations diverge significantly from private companies (Bloch & Bugge, 2013). Public sector innovation might involve products and services (as in the private sector) but, since the goals are broader and more complex, innovation within the public sphere could also include new ways of creating external output and, ultimately, new ways to govern society (Hartley, 2005). However, the innovation concept tends to be normatively good, involving expectations to find the best solutions to societal challenges (McGuirk et al., 2022).

Public sector organizations do not have a long track-record of interpreting and applying the innovation concept, despite their tradition of working with reforms and investments that could be interpreted as innovation (Hartley, 2005). Public innovation policy traditionally emphasizes support of the business sector, rather than development of internal operations or societal change (Schot & Steinmueller, 2018). However, this situation has changed in the past two to three decades as municipalities are increasingly engaging with sustainable urban development, transitions and transformations and new modes of local and regional governance (Brorström, 2015; Czarniawska, 2002). Bason argues that there is a ‘conscious and systematic approach’ (Bason, 2010, p. 12) among politicians and practitioners to catalyse a wide range of fundamental changes to the governance of society. However, the growing research strands related to innovation in cities and the public sector present a broad, heterogeneous framing of the innovation concept related to public sector development (Chen et al., 2019), business development and regional economy (Cooke, 2001) and transformative urban policies (Wolfram et al., 2019). This is also evident in the contemporary agendas of municipal organizations, highlighting innovation for internal process development, as well as support of businesses and as way to achieve a more sustainable future. Taken together, the innovation concept creates an atmosphere of reform and improvement of the public sector that is inspired by the private sector (Osborne & Brown, 2013). It is an enticing way for municipalities to demonstrate that they are forward-thinking and committed to improving governance processes.

Similar to other public sector organizations, municipalities develop their innovative approaches to react to challenges, but also to respond to ideas and policies that travel between cities and between institutions (Healey, 2013). Municipalities tend to imitate one another, as well as organizations in other sectors (Czarniawska, 2002; DiMaggio & Powell, 1983). However, there is a need to translate generic concepts to be relevant to a specific organization (Sahlin & Wedlin, 2008) and to ground these concepts in existing problem constellations and social practices (Schön, 1983). As such, public sector organizations need to better understand the different types of innovation and how they influence specific governance processes (Nählinder & Eriksson, 2019). To make sense of the multi-faceted concept of innovation, it is helpful to apply the theoretical lens of institutional logics, as described in the next section.

Institutional logics and municipalities

Institutional logics can be defined as ‘the socially constructed, historical patterns of cultural symbols and material practices, assumptions, values and beliefs by which individuals produce and reproduce their material subsistence, organize time and space, and provide meaning to their daily activity’ (Thornton & Ocasio, 1999, p. 804). Institutional logics inform the structural conditions that put different, sometimes competing, pressures on organizations. These conditions can be material and symbolic, explicit and implicit and be guided by formal and informal rules that support and restrict internal actions, behaviour and interpretations. They embody norms and expectations that define organizations (Thornton & Ocasio, 1999; Pache & Santos, 2013; Berg Johansen & Waldorff, 2015). Power, interests and politics are relevant to all organizations and institutional logics ‘define the rules of the game by which executive power is gained, maintained, and lost in organizations’ (Thornton & Ocasio, 1999, p. 802).

Thornton and Ocasio (1999, p. 805) argue that the main institutional logics in society are informed by ‘the market, the state, the corporation, the professions, religion, and the family’. Municipalities, with their sectorized political organization, are driven by multiple institutional logics and can be understood as ‘hybrid’ organizations with a plurality of rationales that impact them and shape their actions (Battilana & Dorado, 2010; Jay, 2013). Institutional logics combine and interact in various ways, resulting in synergies and tensions that need to be navigated internally (Dunn & Jones, 2010; Lounsbury & Crumley, 2007). The state logic is the traditional logic, followed by public sector organizations, but other logics often have significant influence and this produces institutional complexity (Greenwood et al., 2010).

Logics are not predefined by society in separate domains but, rather, emerge from different influences, professions and management trends. It is commonplace to illustrate existing logics in organizations and how they affect actions, outcomes and relationships. This has been shown in the public sector with clashes between different logics, such as state versus civil society (Jay, 2013); administration versus management (Meyer & Hammerschmid, 2006); medicine versus business in healthcare (Reay & Hinings, 2009); and national versus local reform agendas (Waldorff, 2013). At the local government level, the existence of municipal companies exemplifies a hybrid of political, market and community logics (Olsen et al., 2017) that create tensions in their organizational structure. New governance paradigms also create conflicts, where traditional planning and innovative actions are driven by different institutional logics that push for different approaches, priorities and focus (Agger & Sørensen, 2018). The traditional public sector organization follows a state logic that involves hierarchies and predictable procedures to emphasize stability and control. This is challenged by calls for ‘collaborative innovation’ that embrace the bottom-up involvement of multiple actors, focusing creativity and experimentation as drivers of change (Agger & Sørensen, 2018; Berglund-Snodgrass & Mukhtar-Landgren, 2020). Multiple institutional logics co-exist within a single organization, creating tensions and uncertainties. Addressing the problem of competing logics requires a common understanding of the different logics and the active negotiation of their synergies and tensions (Reay & Hinings, 2009).

Research process and method

To study the innovation work in a municipal context, I collected empirical data from a City of Stockholm project aimed to increase the organizational capacity for innovation. I served as an action researcher in this project and engaged closely with the municipal innovation strategists at the City Executive Office in Stockholm for five years (2016–2021). Through fieldwork, I developed an insider’s perspective on how the municipality engages in innovation. I attended 24 meetings as a participant observer at the municipal research and innovation network and conducted semi-structured interviews with 28 municipal officials. I also conducted a desk-based study of relevant policy documents, such as the municipal budget, the innovation strategy, the business strategy, the quality programme and the international strategy. Throughout the research process, I documented specific examples of how the concept of innovation was interpreted and applied among the municipal officials and their policy programmes. I sorted the collected data using an abductive approach (Alvesson & Sköldberg, 2018) and applied the three frames of innovation policy presented by Schot and Steinmueller (2018): growth, innovation systems and transformation. Based on the empirical findings, I added a fourth perspective on the internal development of an innovative public organization.

Contemporary approaches of municipal innovation and their institutional logics

The following section summarizes four innovation approaches that are common in many municipalities today and how they are informed by different combinations of institutional logics (see Table 1). These innovation approaches can exist simultaneously in the same municipality and are not exhaustive since they can respond to multiple challenges. The approaches involve multiple practices, from internal organizational development, efficiency initiatives, and user experiences to economic development of industry, resource gathering, place-branding, and large-scale systemic change. Each innovation approach is illustrated with examples from the City of Stockholm—a municipality that has embraced innovation as a driver for institutional change.

Table 1. Summary of the four innovation approaches in municipal organizations.

	The business-enabling approach	The organizational change approach	The attractiveness approach	The transformative approach
Purpose	To support the business ecosystem	To develop public administration and services	To champion the place and its attractivity	To tackle societal challenges
Concepts	Traditional innovation system, public sector supports industry	Public service innovation, service design	Place branding, policy mobility, triple helix partnerships	Transformative, transition, systemic change, quadruple helix partnerships
Institutional logics	Supporting logic, market logic	Managerial logic, service logic	Market logic, competitive logic	Relational logic, co-creative logic
End goals	Job creation, business climate	Efficiency, user-orientation, service optimization	Attractivity, growth, investments	Sustainability, resilience, prosperity

The business-enabling approach—supporting local innovation ecosystems

The business-enabling approach is focused on creating a favourable business climate and the contributions of the municipality to support innovation in other organizations—mainly the private sector. This approach has its roots in conventional innovation theory where the public sector is expected to create advantageous conditions for the private sector (Nelson & Rosenberg, 1993). Traditionally, this has been closely connected to the national policy level, while also creating local legal and tax structures, research institutions and policies to produce environments where innovation and entrepreneurship can thrive (Edler & Fagerberg, 2017). More recently, the approach has been downscaled to regional innovation systems with cluster development and smart specialization (Cooke, 2001), and even further to emphasize cities as urban innovation systems (Johnson, 2014). Municipalities support and contribute to the local business climate by facilitating permits and land use and other types of business development assistance, as well as such conventional municipal tasks as schools, housing and desirable living conditions. Moreover, municipalities are large end-users of goods and services that can support local businesses through local procurement practices. In some cases, private companies orient their business plans to align with the specific needs of the public sector (Mayer et al., 2016).

This innovation approach adopts a supporting logic to facilitate business development, with economic growth and job creation as primary goals with assistance from the municipality. There is an emphasis on creating productive working relationships between the municipality and companies by reducing bureaucratic barriers and creating a ‘business-friendly administration’ (Panebianco, 2008) where economic development is supported and encouraged by the municipality. Conversely, the state logic involving regulations, permits and bureaucratic procedures is seen as a barrier to business development, and is de-emphasized in favour of facilitating collaboration. The market logic also informs this approach in terms of comparative activities, rankings and bargaining with companies for establishment (Hrelja et al., 2012).

An illustration of this innovation approach in the City of Stockholm involves the activities performed by the publicly-owned company Stockholm Business Region that markets Stockholm as an ideal location for business establishment and investment. The company provides ‘business guides’ for new entrepreneurs, helps to identify land and premises, provides advice to establish new businesses, and supports existing clusters. A concrete example of the business-enabling approach is the yearly Satisfied Costumer Index Conference hosted by the Stockholm Business Alliance—a partnership of municipalities aiming to ‘improve business services as an exercise of municipal authority’. In addition to presenting findings on company satisfaction with the municipalities in the region, the conference aims ‘to strengthen the local business climate through appropriate exercise of authority and establishment service’.

Overall, the business-enabling approach to municipal innovation involves a combination of supportive and market logics to establish and enhance the local ecosystem of private companies. Economic development is the primary goal of policy interventions, and the municipality strives to create advantageous conditions for the private sector to thrive and grow. This is one way that innovation is interpreted and practised in municipalities today.

The organizational change approach—developing internal procedures and practices

The organizational change approach involves the application of the innovation concept to public sector organizations (De Vries et al., 2016; Hartley, 2005; Osborne & Brown, 2013). Public sector innovation (Chen et al., 2019) addresses organizational challenges and responsibilities related to budget constraints, changing citizen expectations, demographic shifts, digitalization of collective services and so on (Osborne & Brown, 2013). There is a focus on building the internal capacity of public sector organizations for change (Lewis et al., 2017). National agencies, such as Nesta in the UK, Sitra in Finland and the New Urban Mechanics in Boston, USA, have promoted public sector innovation by emphasizing service design and citizen involvement.

Public sector innovation involves processes of long-term change that alter the operations of the organization (Hartley, 2005) and are oriented towards processes, services and organizational development, rather than products. There is an internal focus that is inspired by New Public Management principles of efficiency, cost reduction and promotion of innovative practices (Hood, 1995), as well as the more recent emphasis on developing structures and cultures for complex societal challenges, increasing the trust of professionals, and breaking down silo structures and zero-fail cultures to better serve citizens (Mayer et al., 1995; Torfing, 2016). It includes a range of methods including administrative reorganization, service delivery changes, development of citizen engagement processes, and an increased emphasis on end-user satisfaction (McGann et al., 2018; Chen et al., 2019). Unlike private sector innovation, public sector innovation is less about competitiveness and more about accentuating public values. Public sector organizations can share their good practices with other organizations and inform their change processes (Hjelmar, 2019).

The development of the public organization and its staff are at the core of the organizational change approach to optimize public value for citizens. The state logic that is dominant in traditional public sector organizations is de-emphasized in favour of a managerial logic to optimize performance and productivity (Meyer et al., 2014). This is an explicit attempt to debunk the long-stand reputation of public sector organizations as slow, inefficient, and ineffective. There is also a prominent service logic that champions citizens as customers and end-users (Kurtmollaiev et al., 2018). This recognizes that public organizations have a commitment to ensure that their actions enhance the lives of their constituents.

Since 2015, when they adopted a strategy involving new practices, digitalized working methods, and internal structures to develop their organizational capacity for innovation, the City of Stockholm has described their internal development actions as a form of ‘innovation’. This is clearly illustrated in their action plan for an ‘elderly-friendly city’: a cross-sectoral programme that engages multiple municipal departments in internal collaborations to address loneliness, safety, and security. It also involves the application of new digital technologies to elderly lifestyles and care facilities, and the use of service design to engage users in the development of the built environment, healthcare and domestic services.

Overall, the organizational change approach emphasizes the development of internal structures and working methods within the municipality to achieve better outcomes for citizens. Managerial and efficiency logics are combined with service logics to replace the dominant state logic of bureaucratic structures and practices. Innovation involves the enhancement of the public sector to better serve society.

The attractiveness approach—focusing on the territory

The attractiveness approach is distinctive due to its place focus, where the geographical territory is a site to attract resources in the competitive knowledge economy. It has many parallels with the business-enabling approach but involves a broader agenda to support cities as ‘engines of growth’ and to compete in a global arena to attract investment, residents and visitors (Hall & Hubbard, 1996). Local and regional development strategies are used to strengthen the local economy, support structures for growth, develop collaboration platforms, and enhance infrastructures and urban assets (Jessop, 1998). Attempts to create innovative and attractive places have led to increased competition between cities (Harvey, 1989) and an emphasis on place-branding and the promotion of showrooms that feature best practices for sustainable solutions (Ward, 2003). This feeds into a global awards industry that produces annual comparisons and rankings, as well as global knowledge networks of concepts, solutions and policies involving foundations and funding agencies, government agencies, private consultants, NGOs and the media (Peck, 2011). Well-known examples of international knowledge networks including C40 Cities, Eurocities, ICLEI and United Cities and Local Governments (see Acuto & Leffel, 2021).

A central component of the attractiveness approach is the development and promotion of a positive image of the city (Czarniawska, 2002; Syssner, 2012) that includes culture, recreation, environmental policy, tourism, and business development to embody an ‘environment favourable for growth’ (Lidström, 1998, p. 23). Municipalities engage in public-private partnerships and triple helix collaborations to create attractive places that leverage the common interests of all stakeholders. This is a multi-actor agenda of planned and spontaneous activities involving networking, governance, trust-building and entrepreneurship. The promotion of place goes beyond the support of local businesses to enhance the social capital of all local stakeholders (Malecki, 2012).

The end goal of the attractiveness approach is to put a specific city or region on the map, cognitively and discursively. This work is strongly influenced by the market logic, where cities compete with other cities for investment by companies, visitors and residents. Municipalities take part in commercial activities and branding exercises to emphasize their strengths related to entrepreneurship, smartness, ecological friendliness, safety and so on. Overall, global city competitiveness supports the local growth agenda and is frequently connected to goals of sustainability, resilience and liveability but is ‘fueled by recognition of the branding advantages and economic opportunities’ (Metzger & Rader Olsson, 2013, p. 32).

The City of Stockholm has strong ambitions to be a global leader in sustainability and this is apparent in the actions that inform their attractiveness approach. Urban re-development projects, such as Hammarby Sjöstad and the Royal Seaport, serve as international showcases of urban sustainable development and have led to multiple awards including the Bloomberg Philanthropies Mayors Challenge in 2014, the C40 Sustainable Communities 2015 and the World Smart City Award 2019. The Stockholm Green Innovation District provides a tangible example of the attractiveness approach. It involves a combination of existing urban development projects in a joint ‘innovation and communication platform, that will work to spread innovations internally and externally and to market the area nationally and internationally. Through sustainable urban development, Stockholm … want to attract investors, tenants, and the public to businesses in the area’ (Invest Stockholm, 2021).

As a whole, the attractiveness approach exemplifies multiple activities that municipalities have adopted in the past three decades to participate in the global competition of city rankings and brand development. There is a strong emphasis on the market logic to enhance and extend existing municipal development programmes, projects and activities to create a unique narrative for a particular place. Innovation involves a holistic perspective where the public and private sectors come together to create a narrative that is greater than the sum of its parts.

The transformative approach—tackling complex societal challenges

The fourth municipal innovation approach focuses on finding solutions to grand societal challenges. The transformative approach recognizes that large-scale interconnected societal challenges cannot be solved by a single actor alone, and that multilevel, cross-sector collaboration is needed to address wicked problems (Frantzeskaki et al., 2018). This is a ‘new era of innovation policy’ (Hekkert et al., 2020) that replaces the pursuit of economic growth with broader challenges related to long-term prosperity and resilience (Coenen et al., 2015; Kattel & Mazzucato, 2018). There is an understanding that local governments have a better potential than national or transnational government bodies to plan and act faster upon significant challenges related to the climate crisis, social inequalities, public health and digitalization. The emphasis on local innovation is featured in the UN Sustainable Development Goals and has further been promoted by the EU and OECD, as well as by formalized city networks, such as Global Resilient Cities Network, the Civitas network and the EU mission on Climate-Neutral and Smart Cities.

This innovation approach is connected to systemic transformation in cities, as outcomes of cities and driven by cities to other governance levels (Hölscher & Frantzeskaki, 2021). Inspired by ‘the-man-on-the-moon’ project, there is an embrace of the mission-orientation that defines far-reaching grand challenges that cut across multiple organizations and sectors (Mazzucato, 2018). There is an emphasis on co-creation with multiple actors, shared visions, joint arenas and experimental projects engaging in social learning processes (Hölscher et al., 2018). This suggests a move beyond triple helix collaborations to involve civil society in transformative collaborative initiatives (Klijn & Koppenjan, 2016; Wolfram, 2016; Sørensen & Torfing, 2011). Local governments are key actors in this approach, as facilitators and enablers of transformation, while also representing minority interests and ensuring the attainment of long-term goals (Eneqvist & Karvonen, 2021; Mukhtar-Landgren et al., 2019).

The transformative approach involves various institutional logics to achieve radical social change. It is informed by a relational logic that connects seemingly distinct issues such as ageing society, climate adaptation and social learning into a cohesive and shared agenda of action. It is also informed by a co-creative logic that relies on various partnerships and joint actions to catalyse deep changes to existing institutions and societal structures (see Weisenfeld & Hauerwaas, 2018). As Bryson and colleagues state, ‘The required changes are multi-issue, multi-level, multi-organizational, and cross-sectoral, and can cross national frontiers … social transformation requires leadership that is deeply relational, visionary, political, adaptive, and comfortable with complexity’ (Bryson et al., 2021, p. 180). This approach is something of a ‘catch 22’ because it relies on existing institutions to change their long-standing patterns of working, governing and interacting instead of their wholesale replacement with new institutions (Weisenfeld & Hauerwaas, 2018).

In Stockholm, the municipality is a member and co-initiator of the Swedish Strategic Innovation Programme ‘Viable Cities’. This is a mission-oriented programme to ‘accelerate the transition to climate-neutral cities by 2030 with a good life for everyone within planetary boundaries’ (Viable Cities, n.d.). As a part of this work, the City of Stockholm has signed a climate contract between the local government, six national authorities and Viable Cities as a pledge to achieve climate neutrality. The contract involves new ways of working to reduce barriers and to establish co-creative ‘innovation teams’ and new climate investments strategies. The work is highly ambitious with a strong desire to quickly make substantive progress in the pursuit of climate goals.

The transformative approach is informed by relational and co-creation logics to support large-scale disruption. It emphasizes the public sector as the primary driver of societal development and progress, while recognizing that cross-sectoral partnerships and co-creation are essential to addressing contemporary wicked problems. This exemplifies a commitment to large-scale societal transformation and recognizes the need to discard existing working methods in favour of actions that can inform a step change in local governance influence. This is the most radical interpretation of municipal innovation because of its focus on grand challenges faced by society and the promotion of new ways of addressing these issues.

Discussion

Each of the approaches to municipal innovation involves a distinct combination of institutional logics with specific end goals. The first and second approaches have been part of municipal development practices for several decades, while the third and fourth approaches are informed by newer interpretations of innovation. The approaches have different targets and highlight the importance of translating the innovation concept into different responsibilities. Municipalities do not consciously choose between different institutional logics—they are all present in organizations all of the time and are taken up by different individuals and activities. This results in a complex landscape of innovation practices with various departments pursuing different objectives based on their responsibilities and professional backgrounds.

There are multiple synergies and tensions between the different innovation approaches. For example, the business-enabling approach is closely aligned with the attractiveness approach, with respect to the focus on business development and economic growth. However, the business-enabling approach focuses on creating environments for companies to develop their innovations while the attractiveness approach integrates multiple agendas, sectors and projects to brand the territory as an international showcase. Meanwhile, the attractiveness and the transformative approaches diverge significantly in their logics of competition versus co-creation. Initiatives that have a genuine impact on societal transformation can certainly gain attention and contribute to attractivity, but the ‘best practices’ of urban development projects that are promoted in the competition of cities might not benefit local residents. Likewise, the organizational change approach tends to promote incremental change, while the transformative approach involves more radical and substantive challenges to the status quo.

All of the innovation approaches inform capacity building within municipalities, but they vary by the types of actors involved and how they interpret and implement change processes. There is a need for municipalities to clarify the different framings, their appropriateness, and their differences to understand their implications to individuals, departments, and the organization as a whole (Crossan et al., 1999). This would make innovation a more meaningful concept to municipalities and help to inform policy development, programmes and projects.

Conclusion

Three decades ago, Friedland and Alford developed the theories of institutional logics and argued that they ‘are interdependent and yet also contradictory’ (1991, p. 250). This article uses institutional logics to open up the black box of contemporary municipal innovation. Several logics coexist in a single innovation approach, as well as in the municipal organization as a whole. The business-enabling approach focuses on how public sector actors can drive innovation in other organizations, mainly in the private sector through traditional business-supporting activities, land allocation agreements and procurement processes. This approach is informed by the supporting logic and the market logic. The organizational change approach focuses on development of internal processes for a more effective public sector organization to serve the general public. This approach is inspired by managerial, efficiency and service logics and serves to counterbalance the state logic of bureaucratic rule-making and control. The attractiveness approach has a place focus, where the geographical territory provides a site to attract people, investment and other resources in the globally competitive knowledge economy. The rise of entrepreneurial cities is strongly influenced by a market logic. Finally, the transformative approach seeks solutions to grand societal challenges. It recognizes that large-scale societal challenges cannot be solved by a single actor alone and that governance through cross-sector collaborative action is necessary. This approach is informed by relational and co-creation logics that blur the responsibilities and roles of urban stakeholders and disrupt and reinvent existing governance structures and norms.

This article is not intended to assess the efficacy of the innovation approaches but, rather, to shine a light on the underpinning logics and drivers of change. It is not suggested that one innovation approach is better than the other but, rather, that there is a need for increased awareness of the different approaches in municipalities, as well as in research about municipalities and cities. For future research, it would be helpful to study the connection between attractiveness and transformative approaches to see how they are related and how they might be combined in productive ways. Furthermore, there is a need to examine the dynamics between internal and external actions by municipalities and to compare across municipalities of different sizes and contexts.

Municipalities with ambitions to catalyse transformative change need to embrace different institutional logics than other municipalities that are focusing on urban branding, organizational development, or business development. To fully make use of innovation activities in municipalities, officials must recognize the broad perspective of innovation and then make conscious decisions about which innovation approaches they want to support. This would provide more clarity and purpose to the messy landscape of municipal innovation and ideally result in more effective ways to govern urban development processes in the short and long term.

Acknowledgements

The author gratefully thanks Andrew Karvonen for his insightful feedback during the work with this article. Thank you also to Maria Håkansson for commenting on an earlier draft.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by Vinnova, The Swedish Innovation Agency under Grant 2019-02711.