Hands-off or Hands-on Governance for Public Innovation? A Comparative Case Study in the EU Cohesion Policy Implementation in Finland

Public innovation is increasingly strived for by involving non-state agents in policy implementation. Public governance theory has assumed the public administration better govern the activity hands-off by providing incentives and pressure. The theory-driven research agenda has, however, not sufficiently put the assumption to test. This paper compares two similar public innovation projects in employment management of which one was governed hands-off and the other hands-on. The cases reveal several problems with hands-off governance eventually risking innovation while hands-on governance consistently support innovation. Contrary to previous assumptions hands-off governance through competition in a complex environment confound the objective of the project. Hands-on governance, meanwhile, provide information and support that help the project to experiment and learn. The public governance theory should recognize the innovation potential of hands-on governance in the often complex public sector and be wary of mixing hands-off and hands-on governing techniques.