Introduction 

Worldwide, the public sector faces mounting pressure to address complex social and sustainability challenges. In emerging economies, these are often intensified by long-standing infrastructure deficits, limited institutional capacity, and vulnerability to global disruptions like climate change and pandemics. Existing systems are ill-equipped to address these multidimensional challenges.  

These conditions create demand for cross-scale collaborative efforts and knowledge sharing (Bathelt et al., 2018), including the involvement of multinational enterprises (MNEs) whose services and products can catalyse local innovation (Gómez, 2023). In sectors like education, foreign-local service partnerships can have transformative potential.    

Purpose/Objective 

This paper examines the role of MNEs as a catalyst for social innovation in the public sector by examining how MNEs from diverse institutional backgrounds co-create innovative public education services within government-led transnational partnerships.  It addresses a gap in existing research. While it acknowledges that collaborative service innovation drives productivity and inclusive development (e.g., Rubalcaba et al., 2016), it tends to focus on traditional sectors, community-based initiatives, and university-industry collaborations. This focus overlooks the contributions of the private sector, particularly the role of MNEs in enhancing public systems, especially in emerging countries.   

Methods 

The paper examines the case of Koulu, a UK-Finnish MNE consortium involved in Peru’s Escuelas Bicentenario program, which aims to modernise 75 public schools and learning environments. The qualitative analysis is based on publicly available documents, social media, and stakeholder interviews with Peruvian and Finnish public bodies, as well as MNEs providing services and/or products.  Drawing on these data, we examine collaboration dynamics among stakeholders, idea generation, adaptation, and implementation, with a focus on capability development, public services and value co-creation. 

Results 

The program has delivered schools that exceed national standards, serving diverse populations in safe, adaptable, and climate-resilient environments. It also introduced improvements in material quality, building longevity, procurement processes, infrastructure lifecycle management, and staff training. Together, they ameliorate educational and community services and contribute to raising standards for public infrastructure and service delivery. 

The case illustrates how transnational partnerships introduce innovative ideas that challenge conventional design and governance. While these collaborations foster long-term value through knowledge exchange, they face institutional frictions, such as mismatched norms and risk-averse decision-making, requiring adaptation and alignment to enable social innovation.  

Conclusion 

This paper contributes to the literature on social innovation and knowledge co-creation through service provision by showing how transnational stakeholders and ideas navigate through institutional contexts. It extends Cajaiba-Santana’s (2014) framework by conceptualising firms as institutionally embedded actors whose capabilities and values shape their responses to contextual voids. Public value emerges through the dynamic interplay of institutional tensions, collaborative agency, and adaptive innovation.