<![CDATA[This study is grounded in Indonesia’s positioning within global indices such as the Global Innovation Index (GII) and Worldwide Governance Indicators (WGI), which reflect moderate innovation capacity typical of a developing economy. At the local level, 21 out of 49 Regional Government Organizations (OPD) in Sidoarjo Regency demonstrate a lack of sustainable innovation, underscoring the need for improved innovation performance. This research aims to examine the effects of dynamic managerial capability and transformational leadership on innovative performance, with organizational change capability as a mediating variable. Using a quantitative explanatory approach and multilevel analysis, data were collected from 49 leaders and 147 subordinates. The results indicate that dynamic managerial capability and transformational leadership significantly enhance organizational change capability and directly improve innovative performance. Moreover, organizational change capability significantly influences innovative performance and serves as a key mediating mechanism. These findings highlight that innovation in public organizations is driven not only by leadership and managerial capacity but also by the ability to adapt and implement change effectively. Practically, the study emphasizes the importance of strengthening transformational leadership, adaptive capacity, and participatory change processes to respond to evolving regulatory, technological, and societal demands, thereby improving the quality and sustainability of public service innovation.]]>
