Academic journal article Research-Technology Management

New Business Models for Public-Sector Innovation: Successful Technological Innovation for Government: Commercialization Partnerships Can Support Public/private Collaboration and Bring New Thinking to Government Service Agencies, Nurturing Technological Innovation

Academic journal article Research-Technology Management

New Business Models for Public-Sector Innovation: Successful Technological Innovation for Government: Commercialization Partnerships Can Support Public/private Collaboration and Bring New Thinking to Government Service Agencies, Nurturing Technological Innovation

Article excerpt

Governments around the world are faced with severe budgetary constraints and an increasing demand for public services (Hawksworth and Jones 2010). The recent economic crisis has led governments to place increasing emphasis on technological innovation to increase the efficiency and effectiveness of public services (see, for instance, the U.S. Government Memorandum on Transparency and Open Government [2009] and Sood 2011). In fact, technological innovation can play an important role in improving both the efficiency and the effectiveness of public services (Albury 2005; Kohli and Mulgan 2010), as demonstrated by several initiatives, from the incremental deployment of enterprise resource-planning systems in back-office functions such as human resources or finance, to the more radical use of Web 2.0 technologies to transform citizen engagement via the Internet (Varney 2006).

However, while there are a number of success stories, the introduction of new technologies in the public sector has often failed (Davis et al. 2010; Franza and Grant 2006). This is not necessarily because of the specific technology but rather because the public sector presents specific challenges to the effective diffusion of innovation. Previous researchers (see, for instance, Borins 2002) have identified three main barriers to the adoption of new technology:

1. Resistance to change: In the absence of the competitive pressures that drive commercial enterprises, public-sector organizations may focus on maintaining current performance rather than striving to innovate (Mulgan and Albury 2003; Borins 2006; Damanpour and Schneider 2009).

2. Risk aversion: Public-sector organizations generally find it difficult to manage either technical or market risk (Chesbrough 2004) because failures are potentially high profile and open to public scrutiny (Mulgan and Albury 2003).

3. Hierarchical structure: Public servants tend to view their own senior managers as the primary source of ideas for innovation (Parker, Paun, and McClory 2009). This may be problematic, as centralization can reduce innovativeness (Greenhalgh et al. 2004).

Recently, the role of business models has been examined as a potential enabler or obstacle to innovation. Although it is acknowledged that business models are an important dimension of sustained innovation in the private sector (Chesbrough and Schwartz 2007), including service innovation (Chesbrough 2011), there has been little focus on the deployment of new business models in government (Moore and Hartley 2008; Mulgan and Kohli 2010).

Although researchers have not fully examined the area, governments around the world are actively exploring alternate models to streamline and improve operations. One emerging business model, commercialization partnerships, offers a potentially beneficial approach to public-sector innovation. A commercialization partnership is a collaboration between a public-sector organization and a private company aimed at generating economic value from a public-sector asset. In this model, the private-sector partner generally provides business development expertise and technology solutions, and the public-sector partner provides rights to specific assets, such as data or government real estate or other facilities. The contractual basis for commercialization partnerships can vary--it may include subcontracting, joint ventures, or concession arrangements--but reward sharing is a common feature to motivate the private-sector partner. (1)

Introductions of commercialization partnerships in Australia and New Zealand have shown that this model could bring about the main advantages of privatization, including reduced cost, increased efficiency, and income generation (Boycko et al. 1996), without transfer of ownership (Brown et al. 2000). Privatization has often proven unsuccessful in cases in which the monopolistic nature of services makes competition difficult to achieve (Baylis and Kessler, 2006). …

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