Rethinking the effect of risk aversion on the benefits of service innovations in public administration agencies

This study applies a holistic approach grounded in configurational theory to a sample of 2505 innovative public administration agencies in Europe to explore the effect of organizational risk aversion on the benefits from service innovations. The analyses, using fuzzy-set qualitative comparative analysis (QCA),identify several combinations of strategies (varying by the agency size and the novelty of innovation) that managers in risk-averse agencies can use to work effectively around the risks of innovating. The findings show that the managers of both high and low risk-averse agencies can achieve high benefits from their innovation efforts, but their strategizing behaviors differ. An integrated strategy that combines collaboration, complementary process and communication innovations, and an active management strategy to support innovation is the most effective method for ‘low-risk-averse’ small agencies and ‘high-risk-averse’ larger agencies to obtain high benefits from either novel or incremental service innovations. Our results point to the need to rethink the conventional assumption that a culture of risk aversion in public sector agencies is a cause of management ineffectiveness and a stumbling block to innovation success.