María José Zapata Campos

This article examines the challenges and opportunities for novel governance instruments for labour market inclusion of foreign‐born citizens, developed by local governments in collaboration with non‐profit civil society organisations in Sweden. It is informed by the case of the collaborative arrangements developed between the city of Gothenburg and work integration social enterprises (WISE). The article builds upon collaborative governance and innovation literature and focuses specifically on the first reserved public procurements for buying work training and other services from WISE. Our findings show how a tool that originates from a market governing mechanism can develop into a collaborative governance and innovation instrument. The design and implementation of the reserved procurements set in motion collaborative innovation through creation of collaborative spaces, joint ownership and empowerment, and by turning market governance mechanisms into collaborative governance. First, the ‘looseness’ and ‘openness’ of the governmental arrangements and collaboration spaces created by local actors enabled collaborative innovation. Second, the longstanding innovativeness and collaboration of WISE also played an important role in the development of this collaborative instrument. Third, the small scale of WISE and the larger scale of municipal contracts resulted in scaling up strategies that helped shape collaborative, rather than competitive, practices among WISE, as well as the implementation and diffusion of the innovation. We end the article by discussing the study's implications for collaborative governance and innovation between local governments and civil society.