Overcoming Institutional Inertia: Intrapreneurship in Public Sector

Public organizations face higher demands for innovation while operating under institutional structures that prioritize stability and control. This study develops a theoretical model that explains how entrepreneurial leadership (intrapreneurship) strengthens innovation capability at public organizations. Although research on leadership and public sector innovation has expanded in recent years, the two literatures have evolved separately, leaving limited understanding of how leadership orientations shape the conditions needed for sustained innovation. This study integrates insights from public entrepreneurship, leadership theory, and innovation capability research to explain how intrapreneurship influences organizational processes that support continuous innovation. The model identifies five mediating mechanisms that translate leadership behavior into organizational capability: learning orientation, psychological safety, organizational agility, digital readiness, and absorptive capacity. It also specifies contextual moderators, including administrative burden, political support, digital infrastructure, public service motivation, and bureaucratic culture, which shape the effectiveness of intrapreneurship. This framework positions innovation capability as a multidimensional construct incorporating knowledge management capability, technological capability, collaboration and networking capability, dynamic capabilities, and digital transformation maturity. By linking intrapreneurship to innovation capability and ultimately to public value outcomes, the model advances the theoretical understanding of how leadership contributes to organizational adaptability and modernization. This study concludes by outlining implications for leadership development, administrative reform, and digital transformation, while identifying opportunities for future empirical research to test and refine the proposed relationships.