Innovation in public sector institutions in the Federation of Bosnia and Herzegovina

Innovation has become a necessity in order to overcome some challenging timesin the rapid changing world. The world’s paradigm is shifting towards sustainabledevelopment and shared values. Even though numerous benefits of innovating thepublic sector (PS) have been recognised worldwide, the concept of public sectorinnovation (PSI) is still new for Bosnia and Herzegovina. The complex and stratifiedstructure of the Federation of Bosnia and Herzegovina (FBiH) and its PS has beenforever standing in the way of any larger progress. The purpose of this paper is tocontribute to the development of PSI in FBiH as an opportunity to enhance the performance of public services, increase their efficiency, and decrease the costs.The research was completed by using a mixed-method approach in order to analysethe concept of innovation in the PS. The primary data was collected through semi-structured interviews with the management and a survey with close-ended questions which was completed by the employees of the public sector institutions in FBiH.The method of structural equation modelling was used in order to test the researchhypotheses.A part of this paper is analysing the main PSI drivers and challenges. The resultsshow that the main obstacles to PSI are the institutional system and the regulationsin the FBiH. On the other side, the manager and employees are considered to bethe largest drivers of public sector innovation in FBiH. The paper concludes withseveral recommendations on how to overcome the main barriers of public sectorinnovation in FBiH.