Book excerpt: Innovation is seen as an interactive process that involves many actors within and across organizational boundaries. In public sector services, innovation is a frequent, often holistic, and multi-layered process that involves many actors and many services at the same time. However, most of the existing literature on innovation in public sector services is based on the economics of innovation, which is heavily influenced by investigations of the private sector. Innovation in the Public Sector develops a more context-sensitive and rich approach in order to explore the different logics of innovation that prevail here. Rather than presenting a general theory of innovation, the book specifies how innovation and value creation are interconnected with social and institutional elements. Analytical constructs, including dynamic capability, absorptive capacity, and practice-based approaches, are reviewed and anchored in the organizational context of public sector services. Such a perspective on innovation can help us develop new understandings of the process and history of innovation, contributing to processual organizational analysis in a broader sense, and further developing present theories of organizational change.