Opening Innovation in Regulation Inside Government: The Contribution of Innovative Users

A marked increase in regulation inside government has been a defining feature of public management reform in throughout the Western world over the past thirty years, making regulatory innovation one of the most important forms of innovation in the public sector. The process of regulatory innovation, however, has been critiqued for resulting in high levels of compliance costs throughout public sector organizations. Concurrently, we show that it has also generally been dominated by a closed and regulator-centered model of innovative development. In this paper, we develop first a concept of user of regulation and typology of four forms of user involvement based on the available public management literature. Second, we develop a model of the costs of regulation. We then analyze scenarios of how these four forms can contribute to reducing regulatory costs. We find that user innovation can contribute both to lowering and raising regulatory costs, with lowered costs only occurring when innovations are selected by regulators, not users. The practical implications of this argument are discussed as well as directions for further empirical research.