Innovation has long been considered one of the key engines of economic
growth, and patents as important incentives for research and development
activity. Particularly in terms of intellectual property rights (IPR),
however, little is known about how cities contribute to regional
innovation: are they containers, facilitators or innovators? This is
investigated here through empirical material derived from 27 interviews
with top departmental management in three Finnish cities (Helsinki,
Espoo and Vantaa). The results show that local city governments (LCGs)
consider cities as facilitators of innovation activities but also admit
that there are limits (time constraints and lack of resources) to the
influence of LCGs over the innovation environment. Still, many of the
public sector innovations (especially social innovations) that do not
necessarily have a clear market potential would not have been created
without the active role of LCGs as innovators. City employees are
innovative – the seeming lack of public sector innovation is actually a
result of measurement issues that favour (patentable) technological
innovations rather than those more common to LCGs, meaning service and
organisational types. Therefore, LCGs can be seen as highly innovative
organisations. There are, however, barriers to innovation in the public
sector, such as the cost of innovation activity, the lack of incentives
for it and a working culture that does not support it. Lastly, the
results show that LCGs have not really fully considered the
possibilities and potential of owning their own IPR; to be specific,
potentially lucrative opportunities should be explored.