Complex problems require collaborative efforts and knowledge sharing across scales (Bathelt et al., 2018). In
emerging economies, public education necessitates such collaboration, facing gaps, poor infrastructure, skill
shortages, and weak governance, worsened by climate change and the pandemic (e.g., Kaminskiene et al.,
2020). Meeting development challenges in these countries creates demand for advanced services and opens
opportunities for foreign-local innovation (Gómez, 2023), which transnational firms pursue through innovative
models amid geopolitical uncertainty. Collaborative service innovation is recognised for driving productivity
and inclusive development (Rubalcaba et al., 2016). However, research tends to focus on traditional sectors
or community-based initiatives, overlooking transnational private-sector contributions to public systems and
emerging countries.

This paper addresses that gap by examining how foreign firms contribute to innovative public education
services within government-led transnational partnerships. Empirically, we examine the UK-Finnish Koulu
consortium’s role in Peru’s Escuelas Bicentenario program, which aims to upgrade 75 public schools and
learning environments. The qualitative analysis is based on public materials—documents, videos, and social
media—and interviews with Peruvian and Finnish stakeholders from public bodies and cross-sector firms. We
identify the collaboration dynamics in transnational partnerships, focusing on how stakeholders' capabilities
are mutually developed and public value co-created in practice.

The findings reveal both the potential and limits of transnational stakeholder collaboration advancing
innovative public services in emerging economies. While such partnerships bring expertise, challenge
entrenched practices, and foster long-term value through knowledge exchange (e.g., Sulkowski et al., 2018),
contrasting institutional logics, entrenched norms, and risk-averse, hierarchical decision-making constrain
these processes, even when politically endorsed. Ideas grounded in foreign value systems do not always align
with local practices and governance structures. The paper contributes to knowledge co-creation and social
innovation literatures by showing how transnational actors engage within, and adapt to, local structural and
normative conditions. It argues that public value and resilience depend on collaboration and proactive
management of institutional tensions.