Increasing innovation capacity in city governments: Do innovation labs make a difference?

Confronted with a range of complex challenges, cities and their governments are faced with increasing pressure to improve their innovation capacity. In recent efforts to do so, creating innovation labs within the city government’s organizational structure has become a popular solution. This article relies on the experience of the city of Barcelona to analyze how innovation labs contribute to increasing innovation capacity. By applying an analytical framework that includes the key elements of innovation capacity, the article shows that innovation labs promote innovation capacity within a public organization through their contributions to idea generation, knowledge management, and a human resource strategy with a clear focus on innovation. However, the study also shows that innovation labs can be too isolated from their parent organization, which limits their overall impact on innovation capacity and questions the sustainability of innovation in public organizations.