Local Policy Innovation Under Conditions of Resource Uncertainty: Insights from Decentralised Governance in Northern Ireland 

Decentralized governance models are often celebrated for their potential to foster localized innovation, yet they are also deeply influenced by the resource uncertainties that characterize many public policy environments. While existing research emphasizes resource slack as a key antecedent to innovation (Walker, 2013), less attention has been paid to how funding instability shapes the innovation processes of decentralized systems. This study addresses this gap, focusing on how local administrators navigate policy implementation and innovation under conditions of resource uncertainty. Drawing on organizational decision-making theories such as Institutional Theory (DiMaggio & Powell, 1983), incrementalism (Lindblom, 1959), and public sector innovation frameworks like Collaborative Innovation (Sørensen & Torfing, 2011), we propose a theoretical framework for understanding how funding uncertainty mediates the relationship between decentralization and innovation. Specifically, we examine how uncertainty impacts risk calculations, planning horizons, external partnerships, and program design choices, with implications for both the process and content of local policy innovation. Our empirical analysis centers on the Labour Market Partnerships (LMPs) run by local councils in Northern Ireland. Designed to provide flexibility in tackling long-term unemployment and economic inactivity, these LMPs offer an opportunity to study how multiple decentralized actors respond to the same policy directive under conditions of resource/funding uncertainty. Data were collected through interviews with LMP leadership teams across all 11 council areas, focus groups with 26 service providers delivering LMP programs, and thematic analysis of secondary data including LMP action plans and benchmarking reports. This qualitative abductive approach highlights how local leaders balance innovation goals with the constraints imposed by funding uncertainty. The findings contribute to theoretical debates on adaptive governance and decentralization by identifying mechanisms through which resource uncertainty shapes policy innovation outcomes. These include shifts in risk appetite, shortened planning horizons, reconfigured stakeholder engagement, and adaptive program design. By addressing theoretical gaps in understanding how decentralized systems respond to funding constraints and empirical gaps in sub-regional governance dynamics, the study advances knowledge on the institutional conditions necessary for effective policy change and innovation.