The public sector is facing an equation that cannot be solved by continuingdoing business as usual. External demands of availability, quality andresilience of services, as well as internal demands of resource efficiency, areputting pressure on the public sector to seek for innovation. In this study, wefocus on local government innovation where high expectations are set on betterutilisation of employees’ creativity and innovative capacity. Based on a qualitativecase study of an innovation programme in a Swedish local governmentorganisation, this study applies institutional theory as a theoretical lens tofurther investigate and analyse the relationship between formal and informalstructures of local government innovation. The institutional structures related tonorms and values, legitimacy and decoupling as well as digital artefacts as institutionalcarriers are discussed. Implications for practice show that formal structures,processes and digital artefacts to support local government innovation areimportant in this work. However, to achieve government innovation, equal attentionshould also be given to informal institutional structures of innovation.For research, this implies that government innovation studies can benefit froman institutional theory perspective to develop a better understanding of how informalstructures affect related processes. We conclude by arguing that theneeded change towards the innovative bureaucracy is a transformative innovationin itself that needs to be acknowledged.