African Journal of Leadership and Development

AJOLD 2021, Vol. 6 No. 1, 1-15

DOI: https://doi.org/10.20372/ajold.2021.6.1.1

Innovation Adoption, Implementation and the Impact on Public

Sector Performance: An Analysis Using SEM Modeling for Ethiopia
Bereket Solomon1

Abstract
Innovation in the public sector has become mandatory in the current globalized economy and turbulent
environment. Using the cross-section sample of 743 employees and management officials of public sector
organizations at the Federal and Addis Ababa City Administration in Ethiopia, the study explores the level
of innovativeness and the barriers as well as driving factors of innovation. A mixed methods research
design has been employed with an emphasis on quantitative data using a structural equation model
(SEM). The findings reveal that there is an evidence of adoption and implementation of innovation
practices in the civil service sectors of Ethiopia. The results confirm that innovation significantly and
positively affected organizational performance. Government expectation, customer demand, and
globalization are the major driving forces of innovation in the civil service sector. Lack of incentives and
protection along with inappropriate organizational culture and structure are the major barriers to
innovation in the public sector. The policy implication is that the government should design innovation
policy and strategy and the civil service organizations should create appropriate organizational culture
and structure to nurture and faster innovation.

Key Words: Innovation adoption, Implementation, Performance, SEM modeling, Public sector

1. Introduction
Faced with continuous improvement, technological changes and increasing competition, public
sector organizations are trying to improve their performance through different innovations.
Organizational innovation is considered vital for organizations to compete and survive in the
current turbulent, competitive and continuously changing environment (Damanpour, 2017).
During the last couple of decades, due to global competition, technological changes and
increased citizens demand countries in developing world have been forced to adopt and
implement innovative ideas to their public sector services in order to be able to adapt to a

1
PhD, Researcher, Center for Public Sector Reform Studies, Ethiopian Civil Service University, email:
[email protected]
© 2021 Ethiopian Civil Service University (ECSU).
ISSN 2519-5255(print) ISSN 2957-9104(online)
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
2 Bereket S.

situation that is changing quickly and respond to the continuously increasing citizen’s
expectations (Okafor, Fatile, & Ejalonibu, 2014). In this age of austerity, where politicians
highlight the need to "innovate to do more with less," innovation is a critical issue for public
services and a crucial component of public services reform (Osborne & Brown, 2013).
Innovation in the public sector services cannot be underestimated, because it is the central idea of
public sector performance and productivity (Awosika, 2014). Innovation in the public sector has
become mandatory in the current Covid-19 pandemic scenario, where public sector organizations
are facing stern challenges in delivering their services and meeting citizen's demands (Azoulay &
Jones, 2020). There is a continuously increasing demand for services, with rising citizen
expectations around delivery of virtual services which are supported with innovative digital
technologies (Papadopoulos, Baltas, & Balta, 2020).
Organizations must be open to the possibility of innovation due to rising customer demands,
intense global rivalry, and very turbulent markets (Fay, Shipton, West, & Patterson, 2015). As a
result, bureaucrats are struggling to increase performance in the current climate of rapid change
in order to benefit from the New Public Management (NPM) and outperform the private sectors
(Amusan & Oyekunle, 2016). The current global environment is highly characterized by
ferocious competitor, incessant technological changes, and increased citizen's expectations,
which require knowledge based economy with innovative public service (Bason, 2018).
Consequently, the need for innovation in the public sector has been well-recognized due to
the understanding of that competence, knowledge, skill, product services and branding that are
not competitive compared with the private sector may lead to poor performance results, low
quality service and customer dissatisfaction (Bason, 2018). Public sector organizations face a
number of innate obstacles with regard to innovation, due in part to the specific contexts in
which they function. These can include complex, rigid organisational structures which limit the
flow of information and reduce openness; regulation and formal processes that limit creativity;
and inadequate investment for innovation. A key challenge is to understand how organisational
structures, processes, and competencies should be adapted to design, monitor, implement public
sector innovations, and make them work efficiently (Koch & Hauknes, 2005).
Previous research on innovation focused more on the private sector, especially on the
industrial sector than the public sector, although innovation is an essential element of public
service sector to meet citizen's demand and face their challenges (Sousa, Ferreira, Najberg, &
Medeiros, 2015). Moreover, most public sector organizations in developing countries failed to
adopt and implement innovation in order to deliver improved services (Amusan & Oyekunle,
2016). Scholars argue that, to quickly respond to the Covid-19 pandemic and other unpredicted
crises, the public sector and public servants have to deploy quick thinking, instant creativity and
innovation to counter the devastation caused by the pandemic in service delivery, particularly the
health system and education sector (Papadopoulos et al., 2020).
However, there are still many challenges that need to be addressed in creating an innovative
working environment in the public sector, which has been accustomed to operating in routine,
predictable and regulated systems. On the other hand, De Vries, Bekkers, and Tummers (2016)
suggest that prior empirical research have focused on using qualitative methods, which
necessitates the application of multi-method research approaches. Moreover, it has also been
suggested that there is a need to study cross-sectoral differences regarding the adoption and
implementation of innovation. Moreover, although the public sector organizations are trying to
innovate across different services, sectors, and levels of government, there is still limited
knowledge and analysis. Among other things, it is known that, for innovation to thrive, an
unrestricted environment that fosters creative thinking and action is a necessity.
However, this is not always the case in the public sector, a context strongly defined by the
existence of rules and regulations that impede innovative actions (Sousa et al., 2015).
Understanding what makes successful innovations where the mechanics of change and its
enabling factors are understood, along with the unique challenges faced by the public sector, as
well as the needs and preferences of customers and citizens, is necessary for fostering creativity
and innovation in the public sector (Bason, 2018).
Africa's ability to recover from the terrible Covid-19 outbreak and move forward depends
largely on innovation. The continent's ability to generate sustainable jobs, and create new
technologies to deliver services effectively and efficiently is highly dependent on the level of
innovativeness. However, there is still lack of innovation capability in most of these countries in
general and in the Ethiopian public sector in particular. The purpose of this study is, therefore, to
investigate the adoption, implementation, and challenges in innovativeness of the public sector in
Ethiopia. Due to these facts, this study examined the current extent of adoption and
implementation of innovation in the Ethiopian Federal and Addis Ababa City Administration
selected public sector organizations. The research also identified the factors that promote or
hinder the adoption and implementation of innovation and the effect of innovation on the
performance of public sector organizations.
The research is pursued with the following objectives: What is the current status of the public
sector organizations to adopt and implement innovation? What are the driving forces that
promote the adoption and implementation of innovation in the public sector? What are the
barriers or challenges that hinder the effective adoption and implementation of innovation in the
public sector? What is the effect of innovation on the performance of public sector
organizations? The structure of the paper is as follows: Section 2 provides a brief review of
related literature. Section 3 contains the research design, methods and findings, Section 4
presents a discussion on the results, and the final section provides the conclusion and the policy
implications.

2. Literature Review
2.1 Conceptual Overview
Innovation is not a new phenomenon. Arguably, it is as old as human kind (Fagerberg, Mowery,
& Nelson, 2005). In spite of its importance, innovation has not always received the scholarly
attention it deserves. However, in recent years research on the role of innovation in economic
and social change has flourished, particularly within the social sciences, and with a focus

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towards cross-disciplinary. Sometimes invention and innovation have been used interchangeably
to the extent that it is hard to distinguish one from another. However, an important distinction is
made between the two concepts. According to Fagerberg et al. (2005) invention is the first
occurrence of an idea for a new product or process, whereas, innovation is the first attempt to
carry out into practice. Innovation has been defined in many different ways. Moreover,
according to Hitt et.al, (2007), invention is the act of creating or developing a new product or
process, whereas, innovation is the process of creating a commercial product from an invention.
Thus, an invention brings something new into being, while an innovation brings something new
into use.
For example, Schumpeter (1934) as cited in De Leede and Looise (2005) defined innovation
as the creation of linkage between new ideas and markets, which is at the heart of the
entrepreneurial role. The term innovation generally includes three types of innovations i.e.,
product innovation, process innovation and organizational innovation (Karim Suhag, Solangi,
Larik, Lakh, & Tagar, 2017).
Organizational innovation refers to the development of a new organizational strategy that will
change the organization’s operational practices, as well as the way its workplace is organized
and its relationship with external stakeholders. Organizational innovation is sometimes known as
internal innovation. This kind of innovation can be again sub classified in to incremental and
radical. Incremental is built on existing knowledge bases and provide small improvements in the
current product lines. For this reason they are evolutionary and linear in nature. In contrast,
radical innovations usually provide significant technological breakthrough and create new
knowledge.
Process innovation is about implementing a new or improved production or delivery
approach, including changes in operational methods, the techniques used and the equipment or
software (Karim Suhag et al., 2017). Product innovation is the introduction of a new or
improved good or service. These inventions or changes may have to do with improving technical
specifications, the materials or the software used or even advancing on user experience (Agolla
& Lill, 2013).

2.2 Innovation in the Public Sector

There is a continuous debate among scholars about the innovativeness of the public sector.
Some scholars argue that the public sector is not innovative (Bekkers & Tummers, 2016).
Whereas, others believe that, innovation in the public sector is alive and lively (Damanpour,
2017). Proponents of this view justify that; the public sector has undergone through continuous
reformations and also introduced forms of electronic government, making use of the internet and
social media, to improve the quality and efficiency of the public services. Innovation in the
public sector is not very different from other sectors. It frequently happens as a pressing need for
a solution to give better services with tighter budgets to citizens with rising expectations arises
(Agolla & Lill, 2013). It is occasionally, but not always, a component of a reform agenda or a
step taken to enhance how the current state apparatus operates.
Increasing worldwide competition, highly volatile markets and ever higher customer
expectations make it necessary for organizations to be open to the prospect of innovation (Fay,
et.al., 2015). Consequently, the need for innovation in the public sector has been well-recognized
due to the understanding of that competence, knowledge, skill, product services and branding
that are not competitive compared with the private sector may lead to poor performance results,
low quality service and customer dissatisfaction (Amusan & Oyekunle, 2016).
The public sector is constantly subject to intense political pressure and must contend with
social change. Because of this, innovation is essential to ensuring higher-quality services. In
contemporary economies, the public sector has a very important function to play. Similar to the
corporate sector, innovation has the potential to significantly increase productivity, reduce costs,
and improve the quality of services. These advantages can then positively impact the individuals
and businesses that depend on an effective and efficient public sector.
As a result, innovation performance across the economy is increasingly perceived as being
dependent on the public sector's capacity for innovation (Amusan & Oyekunle, 2016). However,
compared to those aimed at the commercial sector, public sector innovation policies and plans
are significantly less advanced. Due to the distinct roles that the public and private sectors play
in the economy, there are significant differences between the two in terms of incentives and
motivation, resource allocation, and risk-taking behaviors. These differences have a significant
impact on how innovation is carried out and how policy can support it (Bloch & Bugge, 2013).
The disruptive nature of innovation can sometimes appear to be at odds with the fundamental
role of government institutions in reducing uncertainty and ensuring stability. A culture of risk
aversion may be reinforced by the political environment in which public sector companies
operate their highly visible activities, and the potentially serious repercussions of failure.
Another key challenge is to develop risk management approaches, such as prototyping and
piloting, and incentive structures that enable and reward public sectors to innovate efficiently
while continuing to prioritize safety and the stewardship of public resources (Bason, 2018).

3. Research Design, Methods and findings

3.1. Research Approach and Design
In this study a concurrent mixed research approach has been used. The approach involves the
collection of both qualitative and quantitative data simultaneously or in parallel within a single
study. More weight is given to the quantitative data, the qualitative data playing a supportive
role in addressing different issues. Based on the concurrent mixed research approach, a
descriptive and explanatory research methods are applied in the data analysis.. The descriptive
methods help in understanding the current practice regarding the adoption and implementation of
innovation in the public sector and the explanatory methods help to verify the relationship
between public sector innovativeness and organizational performance.

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3.2. Study Area and the Sampling Methods

This study was conducted in the Federal Level and Addis Ababa City Administration selected
Civil Service Organizations. The study population comprises all employees and management
officials of public sector organizations at the Federal, and Addis Ababa City Administration
level. The selection of these study areas is based on the fact that the federal government and
institutions is the sole owner of innovation policy and strategies to be implemented throughout
the country.
Addis Ababa City Administration is located together with the Federal government, which
implies that the city is exposed to the adoption and implementation of innovation and other
digital technologies based on the federal framework when compared to other regional states and
city administrations. Accordingly, based on the data of the National Civil Service Human
Resource Statistics (2018), at present there are 158, 617 (male = 93, 176 and female = 65, 441)
permanent employees at Federal level and 115, 398 (male = 53, 898 and female = 61, 500)
permanent employees at Addis Ababa City Administration. Thus the total study population of
this research is 274, 015 permanent employees. We have used both probability and non-
probability (purposive) sampling techniques in collecting data. The probability sampling
technique was used to collect quantitative data through self-administered survey questionnaires,
whereas, the non-probability sampling technique was used to collect qualitative data through
semi-structured interviews.
A multi-stage sampling technique was applied in order to divide the research areas into two
research sites (Federal and Addis Ababa City). Multi-stage is a sampling technique which is
useful to choose a limited number of smaller geographic areas in which simple or systematic
random sampling can be conducted. Consequently, based on the two research sites, we used a
stratified random sampling technique in order to stratify the organizations in each cluster based
on some common characteristics. As a result, the stratification of the public sector organizations
within each cluster was based on their sector belongingness (i.e., social sector, economic sector,
finance sector and administrative sector). Based on this stratification there are four strata and 4
public sector organizations that were selected from each stratum. Thus, a total of 32
organizations from the two clusters (research sites) were included in the study using simple
random sampling method so that all public service organizations have an equal chance of being
selected in the sample.
The sample size for each cluster was determined using the formula suggested by Yamane
(1967) i.e. n= N /1+ N (e) 2. Where n is the sample size, N and e are the population and the
margin of error respectively. Thus sample sizes of 383 and 360 were determined for Federal
cluster and Addis Ababa cluster respectively, making a total of 743 as the sample size. In order
to identify the sample size of each selected organization, the sample proportion was calculated
by dividing the sample size by the total number of employees for each selected organization. In
addition the sampling interval was decided by dividing the total number of employees in the
selected organization by the sample size.
3.3. Data Sources and Methods

Both qualitative and quantitative data were used in order to investigate the current adoption and
implementation of innovation in the civil service organizations. Primary data were collected
using self-administered questionnaires distributed to selected sample respondents and through
semi-structured interviews. In order to investigate the current adoption and implementation of
innovation practices in the civil service organizations, a cross-sectional survey instrument was
used in order to collect quantitative data. The instrument was implemented in two phases using
10 days interval to avoid the common method bias. In addition, VIF statistics are computed for
all the constructs and they were below 3.3 as suggested in literature (Kock, 2015). A semi-
structured interview was conducted to collect qualitative data from key informants. The data
were transcribed using MaxQDA software. Efforts were made to ask similar questions framed in
the questionnaire and an association analysis has been done. Based on the strength of association,
the questions in the questionnaire were reframed. On the other hand, secondary data were
collected from documents such as strategic plans, annual reports, and guidelines. .
Factor analysis was used in order to reduce the data (variables) and to identify the core
underlying factors (uni-dimensionality) of research constructs. Both exploratory and
confirmatory factor analyses methods were used in order to explore the underlying factors and
confirm the proposed relationships. The statistical software, SPSS and AMOS were used for data
analysis. Internal consistency is verified using Cronbach's alpha and composite reliability
methods are used using Amos software. Content and construct validity was established
discussing with subject experts. Convergent and discriminant validity of the variables is also
verified.
Out of the total 743 questionnaires, 717 questionnaires were retained after verifying for
missing data, outliers and patterns. For the final analysis 378 and 339 questionnaires from
Federal and Addis Ababa respectively were used. This is about 96.5% response rate which is
more than the minimum threshold value in social science research. Data analysis and results
The demographic characteristics of the participants are presented in table 1 below. .

3.4. Demographic Variables

The majority of the respondents were male (422) with the frequency of 58.9% and female
participants were 295 with the frequency of 41.1%. On the other hand, the majority of civil
servants who participated were first degree holders with a frequency of 65.3% followed by second
degree holders (26.4%) with a few were having masters and PhD degrees, 7.8% and 0.06%
respectively.

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8 Bereket S.

Table 3.1 Demographic Characteristics of the respondents

Variables Frequency Percent (%)
Gender Male 422 58.9
Female 295 41.1
Education Diploma 56 7.8
Degree 468 65.3
Masters 189 26.4
PhD 4 .6
Mean SD Minimum Maximum
Experience 8.08 7.122 1 38
Age 35.2887 8.54509 21.00 59.00
Total (N) 717
Source: Field Survey

Table 3.2 displays the results of the reliability test. The results confirm that all the variables have
reported internal consistency above the minimum threshold value of 0.70.

Table 3.2 Reliability Test

No Variable No. of Items Cronbach’s Alpha
1 Product Innovation 6 .895
2 Process Innovation 5 .913
3 Innovativeness Level 12 .929
4 Driving Factors of Innovation 7 .860
5 Barriers of Innovation 11 .899
6 Innovation Performance 7 .887
Source: Own Computation

3.5. Factor Analysis

Before conducting the factor analysis, preliminary tests were undertaken. First the factorability
of the data was checked by KMO and Bartlett's test of Sphericity. The results of both tests
confirmed the factorability of the data. The next step was to perform exploratory factor analysis
with principal component factoring and varimax rotation on innovation types. The result
produced a single factor for both process and product innovation types. All the items were loaded
significantly on a single component. Based on the earlier literature, the component was named
as innovation. This single component factor analysis, explained 62% of the variance in
innovation. This was further verified using confirmatory factor analysis and the model fit
measures perfectly fit the one component model. As it can be seen in Figure 3.1, all the items of
both product and process innovation loaded on a single component with above the minimum
recommended threshold value of 0.5.
Figure 3.1: Results of Confirmatory Factor Analysis for Innovation Types

3.6. Driving factors of innovation

Table 3.3 presents the results of the driving factors of innovation adoption and implementation in
the Ethiopian civil service organizations. Based on the results, the most driving forces of
innovation are high level of government expectation with a mean value of (M = 3.7001, SD =
1.00316), followed by increasing customers demand with a mean value of (M= 3.6981, SD =
1.03899). Finally, globalization was also found to be the most significant driving force for
innovation with a mean value of (M = 3.6555, SD = 1.09335).

Table 3.3 Descriptive Statistics of Driving Forces of Innovation

Variable N Mean Std. Deviation
Leadership influence 717 3.2385 1.17482
Technological changes 717 3.3291 1.09488
Competition 717 3.1897 1.11754
Government policy & strategy 717 3.5411 1.08702
Increasing customers demand 717 3.6987 1.03899
High level of government expectations 717 3.7001 1.00316
Globalization 717 3.6555 1.09335
Valid N (listwise) 717
Source: Field Survey
3.7. Barriers of innovation
Table 3.4 presents the results of the barriers that may affect the adoption and implementation of
innovation in the public sector.

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10 Bereket S.

Table 3.4 Barriers of Innovation in the Public Sector

Statement Mean Std. Devn
Employees’ reluctance to change 2.8257 1.21053
Low employees’ competency (skill & knowledge) 3.0377 1.21328
Lack of sufficient information technology infrastructure 3.3515 1.23351
Rigid and complex organizational policies/strategies 3.3529 1.16976
Shortage of Research & Development budget 3.3794 1.21835
Inadequate government support 3.4338 1.18893
Inappropriate organizational structure to support innovation 3.4909 1.19776
Lack of Innovation strategy to promote innovation 3.5105 1.15016
Inappropriate organizational culture to support innovation 3.5453 1.13587
Impossibility or difficulty to protect innovations 3.5718 1.12585
Inadequate incentive and compensation systems for innovation 3.5858 1.14212
Source: Own Survey
As it can be understood from the table, the major barriers of innovation are inadequate incentive
and compensation systems for innovation with a mean and standard deviation value of (M =
3.5858, SD = 1.14212) followed by difficulty to protect innovations with a mean and standard
deviation value of (M = 3.5718, SD = 1.12585). Other barriers of innovation include, lack of
innovation strategy, inappropriate organizational culture and structure to support innovation are
also the major challenges that may influence the effective adoption and implementation of
innovation in the Ethiopian civil service organizations.

3.8. The effect of innovation on the performance public sector organizations

The results confirm that, both process and product innovation significantly and positively affect
the organizational performance. In addition, the items measuring product and process innovation
were combined to measure the total (combined) effect of innovation on organizational
performance. Again the result revealed that innovation significantly and positively influences
organizational performance with (B=0.343, P =0.000). Further, the level of organizational
innovativeness was included in the regression model to verify whether there is a relationship
between innovativeness level and performance. The result confirmed that, organizational
innovativeness significantly and positively affects organizational performance with (B =0 .394,
P = 0.000).

Table 3.5: Model Summary

R Square Adjusted R Square Std. Error of the Estimate
0.486 0.484 .60737
Source: Own Computation
Table 3.6 Effect of Innovation on Performance

Coefficients
Model Unstandardized Coefficients Standardized Coefficients t Sig.
B Std. Error Beta
(Constant) 0.875 0.089 9.820 .000
Innovation 0.323 0.041 0.343 7.843 .000
Innovativeness 0.386 0.043 0.394 9.009 .000
Dependent Variable: Performance
Source: Own Computation

Finally, in order to verify the causal relationships between innovation, innovativeness and
organizational performance, a confirmatory factor analysis was performed using structural
equation modeling. As it is indicated in Figure 3.2, both independent variables significantly and
positively affect performance outcomes.

Figure 3.1 The effect of Innovation on Performance

Figure 3.2 The Effect of Innovativeness on Performance

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12 Bereket S.

The study examined the joint effect of innovation and the level of innovativeness on organizational
performance. As displayed in Figure 3.3, both innovation (product and process) and also the level
of innovativeness of the civil service organizations significantly and positively affect
organizational performance. Based on the result of the above structural model, all the model fit
measures achieved above the minimum requirement threshold level (CFI = 0.977, AGFI = 0.956,
X2 = 2.12, RMSEA = 0.76 and SRMR = 0.053). The CFI and AGFI are above 0.90 indicating a
very good fit and SRMR being less than 0.08. The Chi-Square value adjusted for degrees of
freedom (0.212) is less than 3.3.

4. Discussion of Results
Innovations in the public sector mainly focus on processes, products, organisation and
communication. Based on this general premise, this study investigated the current adoption and
implementation of innovation the Ethiopian civil service organisations. The study also examined
the driving forces and challenges of innovation.
The new public management (NPM) model has supported civil service reform for the past 20
years. This has concentrated on utilizing contracting-out, devolution, and performance
management strategies from the private sector to increase the public sector's flexibility,
decentralization, and responsiveness to user demands. Yet, the NPM model has, at times, led to
organisational fragmentation, accountability and control gaps, poor institutional memory and
inadequate democratic engagement among users.
When policy issues like globalization, international migration, and higher public expectations
of government demand coordinated solutions, it has hampered joined-up government. The
empirical findings of the study revealed that there is encouraging insight regarding the adoption
and implementation of innovation in terms of process and product innovation types.
In this regard, Walker, Damanpour, and Devece (2011) stated that innovations are adopted by
public organizations to improve the services delivered to users and citizens, with the broad aim
of improving quality of life and building better and stronger communities. Previous empirical
research also suggested that, in order to meet the increasing demand of citizens, governments
should be innovative.
For many firms, innovation is a crucial driver of growth and a source of competitive
advantage. Achieving innovation requires the coordinated efforts of many different actors and
the integration of activities across specialist functions, knowledge domains and contexts of
application. Thus, organizational creation is fundamental to the process of innovation.
Innovation in Public Sector Organisations (PSOs) is now recognized as a vital factor in meeting
the challenges of globalization and demographic changes, while at the same time, sustaining a
high level of services to citizens and businesses (Agolla & Lill, 2013). This study empirically
demonstrated that, there are different driving factors of innovation in the public sector.
But, past empirical evidence and theoretical reviews suggested that, still there is a need for
innovativeness in the public sector. For example according to Amusan and Oyekunle (2016),
many emerging governments have reviewed their approaches to service delivery as a result of the
current economic climate, the effects of globalization, the desire for innovation, and the public's
demand for better services.
The daily pressures of providing services, functioning, and reporting to senior managers,
legislators, and agencies occupy the majority of public service managers' and professionals' time.
They have very little or no time to consider innovation, which might lessen the demands and
difficulties of providing services.
The public sector is operating in a new landscape. In this regard, public sector institutions face
economic, social and environmental challenges; technology is also transforming how citizens
interact with the government. Accordingly, individuals and organizations across society are
forming new kinds of partnerships. Thus, together these factors create opportunities for new ways
of thinking about government and how it works. Consequently, the sum of all these issues paved
the way to think about innovation in the public sector to respond quickly to the increasing demand
of citizens and to compete and survive in the current globalized world. As a result, the public
sector is an important employer, service provider and procurer.
Innovations in the public sector mainly focus on processes, products, organisation and
communication. Based on this general premise, this study investigated the current adoption and
implementation of innovation the Ethiopian civil service organisations. The study also examined
the driving forces and challenges of innovation.
Over the last twenty years, civil service reform has been underpinned by the new public
management (NPM) model. This has focused on applying private sector techniques such as
contracting-out, devolution and performance management to make the public sector more flexible,
decentralised and responsive to users' needs. Yet, the NPM model has, at times, led to
organisational fragmentation, accountability and control gaps, poor institutional memory and
inadequate democratic engagement among users. It has impeded joined-up government at a time
when policy challenges like globalization, international migration and greater public expectations
of government require cohesive solutions.
5. Conclusion and Policy Implications
The present study tried to provide the evidence for the effect of innovation on public sector
performance. Based on the findings, it is concluded that, the level of innovativeness in the
public sector of Ethiopia is encouraging although it is still in its infant stage. Thus, the public
sector should be able to create different platforms that may encourage product and process
innovation. In this regard, the government should design innovation policy and strategy that help
cultivate innovativeness and create a culture of innovation in the civil service sector
organizations.
The results confirm that increasing government expectations, increasing customer demand
and globalization are the important driving forces of innovation. As earlier research reveals,
globalization stimulates innovation by domestic firms through the vertical transfer of capabilities
and increases product market competition. In addition, there are major challenges that influence
the effective adoption and implementation of innovation in the civil service organizations.
Inadequate incentive and compensation systems for innovation, difficulty to protect innovation

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14 Bereket S.

and inappropriate organizational culture and structure are the major barriers that influence the
effective adoption and implementation of innovation. Therefore, the government should be able
to create a legal framework to protect process and product innovations.
There should be also national innovation strategy that highlights the government's direction
regarding innovation in the public sector. On the other hand, civil service organizations must
create innovative culture to promote and foster innovation within their respective organizations.
A culture of innovation is a setting that encourages original thought and advances initiatives to
derive economic and social value from knowledge, producing new or improved goods, services,
or procedures in the process. In this regard, the theoretical literature suggests that, the most
important driver of organizational innovation is the internal organizational culture. A culture
that fosters innovation is one that actively promotes the unconventional and innovative thinking
of its citizens and actively encourages it. In addition, appropriate organizational structure also
plays a significant role in nurturing innovation.
According to Kalay and Lynn (2016), through their direct control over an organization's
structure, organizational decision-makers have the ability to affect innovation within their
company. For businesses to ensure strategic decision-making, the settlement of conflicts, and the
active and efficient coordination of the process of innovation, organizational structures that
enable cross-functional knowledge and resource sharing are essential.
The study empirically confirmed the positive and significant influence of innovation on
organizational performance. Previous theoretical literature and empirical evidence demonstrated
that innovation positively affects firm level performance outcomes. In this context, it has been
proposed that innovation is widely regarded as one of the most significant sources of sustainable
competitive advantage in a rapidly changing environment because it results in improvements to
products and processes, makes ongoing advancements that aid in the survival of businesses, and
enables businesses to grow more quickly, be more efficient, and ultimately be more profitable
than non-innovators (Atalay, Anafarta, & Sarvan, 2013).
In general, public sectors managers need to change their attitude and manage these
organisations like their counterparts in the private sector, while bearing in mind that they are
accountable to the general public and government. They must create strong links with other
public or private institutions, particularly in knowledge sharing, that feed innovations.
Public-sector innovation involves significant improvements in the services that government
has a responsibility to provide, including those delivered by third parties. It covers both the
content of these services and the instruments used to deliver them. Today increasingly
sophisticated public demand and new challenges due to fiscal pressures require innovative
public-sector approaches. Nowadays, innovation is gaining in importance in the public sector as
well, as it can improve the quality of service delivery as well as reduce costs. Collaboration
between public and private entities creates better and more effective public and private services
and products.
Acknowledgements

My sincere thanks go to Ethiopian Civil Service University. This work would not have been
possible without the financial support of the university.

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