Measuring Innovation in the Public Sector: a literature review

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Measuring Innovation in the Public Sector:

A literature review

The Australian Public Sector Innovation Indicators (APSII) Project

April 2011


Internationally and at home there has been little research into the measurement of innovation in the public sector. Recognition that more complex policy challenges can best be tackled when innovation is nurtured has been documented in various Australian government reports.1 There is strong recognition of the need to develop effective measurement tools to allow continuous improvement in innovation and facilitate international benchmarking.

This paper has been prepared as part of an Australian initiative to address the development of methods to measure innovation in the public sector. The Australian Public Sector Innovation Indicators (APSII) project is situated within the Department of Innovation, Industry, Science and Research (DIISR), Canberra, Australia.

The literature review confines itself to global research efforts in the public sector measurement of innovation and reports on innovation initiatives in Australia to date. There has been substantial research into innovation in the private sector2 and to surveys in the public sector which do not have innovation as their focus, but they are excluded here. The transferability from private to public sectors is not valid for innovation measures due mainly to the differences in the acceptability of risk-taking and the lack of profit motivation in the public sector. It is too difficult to separate the innovation components for independent analysis in non-specific surveys.

Much of the initial research into innovation measurement has come from South Korea, the UK, Europe, the Nordic countries, and the OECD. Whilst there have been initiatives to encourage and develop innovative practice in other countries, there is little evidence of developments specifically into metrics. Some of the key findings from the measurement research so far include survey-based indices can provide useful practical insight into innovation in the public sector, larger organisations tended to exhibit more innovation, the most important driver was identified as new laws and regulations, identification of best practice and ideas is important, lack of resources (financial and human) was found to be a significant barrier, those who were frequent innovators reported higher proportions of staff with degrees, and increased funding does not necessarily lead to more innovation (in fact, the reverse was found to be true).


1. South Korea

The Government Innovation Index (GII) was developed by the Ministry of Government Administration and Home Affairs, South Korea in the mid 2000s. This tool was designed to gauge the level of innovation of organisations in the Korean public sector by determining how well an organisation innovates amidst changing environments. It helps organizations to diagnose levels of innovation, identify weak areas, and develop action plans to fortify their innovation capacities. On a government level, the overall results of the index can serve as a reference for national innovation strategies.

2. United Kingdom

The National Endowment for Science Technology and the Arts (NESTA) is the lead agency in the development of public sector innovation measurement in the UK. In July 2008 it commissioned two organisations to undertake scoping projects, and about a year later it commissioned a further four organisations to conduct exploratory projects

3. Europe

In 2010 the Innovation Policy Directorate, Enterprise and Industry Directorate-General in the European Commission (EC) initiated a project, the “European Innovation Scoreboard 2011-2012”. Its aim – to provide the innovation policy community with statistical and economic analyses allowing evaluation of the characteristics and performances of national and regional innovation systems. Measurement of innovation in the public sector is one component of the work.

A set of relevant indicators to measure innovation in the public sector and/ or public services on a comparable basis across the 27 Member States and other countries participating in the Entrepreneurship and Innovation Programme, is envisaged.

4. Nordic Countries

The MEPIN Project was completed in February 2011. The development of the preliminary measurement framework drew on both existing work on public sector innovation and insights from innovation measurement in the business sector. This was followed by the conduct of pilot studies in five Nordic countries.


After OECD Ministers agreed to a cross-government approach to strengthening innovation an Innovation Strategy was developed. Released in May 2010, part of the strategy relates to the public sector including designing data systems and improving the measurement of public sector innovation. The NESTI task force engaged in consultation with participating country’s representatives seeking input by November 2010.Other key initiatives within the OECD include the centre for Educational Research and Innovation which focuses on innovation in teaching and learning, OECD Public Governance and territorial Development Directorate, and the OECD Health Division which examines performance indicators in health related systems.

6. Australia

There is no indication to suggest that any Australian public sector agency has developed a comprehensive system to measure public sector innovation as seen in some countries overseas. The Australian Public Service Commission conducts an annual survey which includes questions on innovation. Many Australian government agencies are pursuing measures aimed at increasing innovation and establishing and maintaining an innovation culture. The Victorian State government has an Innovation Action Plan and Western Australia is actively encouraging public sector innovation. At the local government level the emphasis has been on developing an innovative culture.

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