Complementarities between governance and human capital

In an age of austerity, specifying how governance and innovation interact is an important issue on the agenda of policymakers and scholars when discussing the role of government in dealing with ’wicked problems’. This trend of public sector spending cuts continues unabated in G20 countries, such as the US, Brazil and Saudi Arabia, and is driven by the concurrence of austerity measures and increasing citizen demands for quality public services. As a way to tackle this dilemma, governments have specifically sought, explicitly or implicitly, to urge public sector organizations to become more effective, which calls for innovation in public organizations, which is inextricably linked to performance. For example, Saudi Arabia launched an unprecedented major economic transformation, Vision 2030, which is considered a huge challenge to the public sector, which employs over two-thirds of Saudi nationals, to be innovative.