There is a long history of research on the economics of innovation, and the importance of innovation to economic development (e.g. Schumpeter 1934, 1942). Scholars have grappled with how innovative practices are adopted and diffused to create value in a public sector context (e.g. Walker 1969), and there has been a renewed focus on public sector innovation in recent years (Borins 2001; Mulgan and Albury 2003; Windrum and Koch 2008; Potts 2010; Potts and Kastelle 2010; Bloch and Bugge 2013; Mulgan 2014).

The impact of regulation on public sector innovation remains unclear within the current theoretical framework. This paper proposes to advance this understanding by bringing the public sector innovation literature into conversation with the existing research on school autonomy. This paper explores regulatory constraints on innovation in service delivery by examining Queensland’s Independent Public Schools (‘IPS’) program, which was announced in 2012 and commenced operation in 2013. This program was instituted specifically to provide schools with additional ‘autonomies focused on cutting red tape and opening up new opportunities for innovation’ (Queensland Department of Education and Training 2012a). Admission to this program is through an expression of interest that required schools to specify what innovative programs or practices they would implement as an IPS (‘Innovation Question’). This paper systematically examines responses to the Innovation Question from successful applicant school principals, showing the perceived effect on innovation as regulatory constraints change.

The paper is arranged as follows: Section 1 outlines the public sector innovation literature; Section 2 considers the relevance of the school autonomy literature; Section 3 introduces Queensland’s IPS program; Section 4 outlines the study’s method; Section 5 discusses the results; Section 6 concludes the paper by considering the study’s implications and directions for future research.

1. Public Sector Innovation

Innovation is essential to the improvement of public sector services (Albury 2005). It is important because it is a significant area of public expenditure, in terms of budget and as a percentage of GDP (Potts and Kastelle 2010). This expenditure on public sector services has grown over the last decade. For example, in 2014-15, combined government recurrent spending on public school education in Australia totalled $40.3 billion – a real increase of $7.6 billion from 2005-06 (Productivity Commission 2017). The size of the sector means that there is considerable scope for innovation to drive improvements in service delivery. Additionally, productivity and efficiency gains through innovation mean that improvements can be achieved without the sector becoming an increasing drag on economic activity (Moran 2010, Stewart-Weeks and Kastelle 2015).

There is tension about what is considered innovation in the context of the public sector. Mulgan (2007) adopts an outward facing definition of innovation: ‘new ideas that work at creating public value’ (Mulgan, 2007, p.6). While variations on that definition have been adopted by other scholars (e.g. Kastelle and Steen 2011; Stewart-Weeks and Kastelle 2015), incorporating any measure of “public value” into measurement of public sector innovation seems problematic. The term is impre