Dynamic capabilities in the public sector: a systematic literature review

Purpose Continual improvement and innovation in the public sector depend on maintaining dynamic capabilities (DCs)—the ability to observe, learn and react in transformational ways. While DCs have been widely studied in the private sector, they remain less understood in the public sector, where operational and strategic differences are significant. This study aims to systematically review empirical research on DCs in the public sector and propose a relevant analytical framework. Design/methodology/approach This study conducts a systematic literature review covering about 11 years of research, from January 2011 to October 2021. A total of 46 empirical studies were identified from three scientific databases. The articles are carefully coded based on their findings and the results are synthesized to report the current state of the art. Findings This study enhances understanding of the support, formation, operation and impact of DCs across various public sector organizations. The studies reviewed show that DCs contribute to public value by influencing operational capabilities, fostering innovation, driving organizational change and improving organizational performance. The findings are synthesized into eight central themes, highlighting factors that sustain DCs in the public sector, their unique characteristics and the expected organizational outcomes. Finally, opportunities for future research are identified. Originality/value This paper provides a comprehensive synthesis of empirical research on DCs in the public sector, offering insights into their benefits, challenges and the mechanisms through which they influence organizational transformation. It contributes by synthesizing the current state of the art pointing to future areas of research.