Are there differences between public and private organizations? If so, what are they, and why do these differences matter for innovation? This chapter provides answers to these questions. It discusses the similarities and differences between public and private organizations, along with what makes public organizations “public.” Scholars have been discussing the unique aspects of public organizations for some time based on ownership, funding, control, and the personnel management system. Generally, if an organization is owned and controlled by the government, its funding primarily comes from the government, and its personal system is regulated or controlled by the government, then this organization is a public organization. Understanding sectoral differences matter because these distinctions may have different implications for different outcomes, including innovation. Thus, this chapter also discusses how these differences affect innovative activities in the public sector. For example, the rationale (the “why” question), the mechanism (the “how” question), the criteria for success, the measurement, accountability, the organizational climate, and the transferability of innovations differ based on the sectoral differences that this chapter explains.

This chapter analyzes the influences of the disparate impact of public sector innovation. It is one thing for a public sector organization to innovate but quite another for that innovation to have an unequivocally positive impact. If we consider innovation as an ecosystem, there are inputs, actors, and processes, and there should also be outputs and outcomes. Innovation for the sake of innovation will not work, so we need to consider and analyze particular effects, such as benefits, outputs, and outcomes, both in the short and long term. We can also connect the outputs and outcomes of innovations and features such as the context, sources, conditions, and barriers to innovation. For example, an innovation may have different outputs and outcomes in different contexts, and one source of innovation (e.g., bottom-up innovations) may bring about more positive benefits to organizations under certain conditions (e.g., more resources). This chapter defines outputs and outcomes and discusses how they can be associated with innovation. Then, it explores and discusses how outputs and outcomes can be linked with sectoral differences, different levels of analysis, and negative outcomes of innovation.