There is a popular impression that governments are resistant to change and innovation, and that this is due to a combination of overly bureaucratic processes and a culture of risk aversion. It is debatable that this is well-founded, theoretically or empirically: government bodies differ from private sectors in their structures and objectives, formalised decision-making processes may aid innovation rather than inhibiting it, and the assumption that governments are excessively risk-averse assumes that private sector decisions on risk are correct - an assumption which is hard to sustain given recent economic history.
This paper brings together ideas from public administration, behavioural psychology and economics to ask whether the anti-innovation government has any theoretical or empirical basis. It argues there is some truth in the claim that governments are less likely to innovate; but the paper also argues that a missing piece of the puzzle is provided by incentive structures in government which encourage the status quo irrespective of risk preferences. However, the evidence for these negative incentives is largely anecdotal and derives from those who could be seen to have an interest in this perspective, and so there is a need for more empirical research to explore this idea.