Hierarchical Public Sector Organizations (PSOs), particularly military organizations, face persistent challenges in sustaining innovation due to structural rigidity, hierarchical control, and embedded resistance to change. While existing literature explains why innovation emerges and why it is resisted, significantly less attention has been devoted to understanding how innovation becomes institutionalized as a sustained organizational capability. This study addresses this gap by introducing the Bi-focal Innovation Contagion Model (BICM), an agent-based framework that conceptualizes innovation diffusion and resistance as a co-evolutionary “tug-of-war” between competing organizational forces. The model integrates top-down governance mechanisms and bottom-up innovation processes, capturing how heterogeneous actors interact within hierarchical systems to shape the diffusion, assimilation, and stabilization of innovation over time. Using the Israel Defense Forces (IDF) as an empirical source case, the model explores how Innovation Management Systems (IMS) may be designed to support the institutionalization of innovation as a self-sustaining organizational capability within hierarchical PSOs. Simulation results suggest that hybrid innovation architectures may better sustain innovation across varying leadership conditions. This occurs when centralized strategic coordination is combined with decentralized innovation activity and supported by mature innovation agents with sufficient centrality and hierarchical reinforcement. The findings highlight the critical role of IMS as an organizational architecture for achieving anti-fragility, enabling innovation dynamics to persist, adapt, and strengthen in the face of uncertainty, leadership turnover, and shifting strategic priorities. By integrating agent-based modeling with organizational theory, this study contributes a dynamic framework for understanding and designing sustainable innovation systems in hierarchical PSOs.
Alkaher et al. (2026) studied this question.