"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."

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