Open innovation in the public sector: managing knowledge assets for public value creation through dynamic performance management

Purpose This study investigates how knowledge assets (i.e. human, structural and relational assets) contribute to public value creation through open innovation in the public sector, providing insights into how performance management can support decision-makers in identifying and leveraging these contributions, from a multidimensional accounting perspective. Design/methodology/approach The research adopts a two-phase qualitative design. In the first, a narrative literature review identifies key managerial challenges and barriers to open innovation implementation; in the second phase, three illustrative open-source initiatives in the Italian public administration (i.e. IO, 18App and IdroGEO) are analyzed through the dynamic performance management (DPM) framework to map causal relationships among strategic resources, performance drivers and open innovation outcomes. Findings The study reveals that managing knowledge assets is critical in sustaining open innovation across three loci of public value: user, context and professional system. Specifically, support capacity ensures service effectiveness at the user level; orchestration attitude enables stakeholder coordination at the community level; and interoperability fosters cross-boundary collaboration and data reliability at the professional system level. The DPM framework effectively captures feedback loops between open innovation outcomes and strategic resource development, offering actionable insights for performance management through performance drivers. Research limitations/implications The illustrative nature of the three examples limits empirical generalizability. The DPM models are context-specific and based on secondary data, which may limit the depth of the insights. Practical implications The study provides public managers with a multidimensional accounting perspective and performance measures to assess and enhance the role of knowledge assets for public value in the context of open innovation. The DPM framework supports decision-making by identifying the causal relationships involving resources and performance and foster learning. Also, the study provides an inventory of performance measures (i.e. performance drivers and performance outcomes) which are located at the intersection of knowledge assets (human, structural and relational) and the loci of public value. These measures can support digital transformation managers in implementing open innovation in the public sector. Originality/value This research bridges the gap between technical and socioeconomic perspectives on open innovation in the public sector. It reframes open innovation as a sociotechnical phenomenon and introduces a novel methodological approach to performance management that integrates knowledge assets, public value drivers and open innovation outcomes.