Between hierarchies and markets: How street‐level bureaucratic autonomy leads to policy innovations

Abstract Although street‐level bureaucrats (SLBs) play a key role in the implementation of market‐based instruments (MBIs), their participation is widely understudied. This paper addresses this blind spot by engaging the concept of street‐level bureaucratic policy entrepreneurship. Using the case of conservation banking, a market‐based environmental policy in the United States, we explore why this novel instrument has only been adopted in a handful of jurisdictions. We examine both non‐adoption and adoption of conservation banking to find that SLBs are likely to engage in such entrepreneurial acts when a new policy form is particularly useful in legitimizing regulatory enforcement. Implementing a MBI is, however, not straightforward. Organizational conditions can restrain SLB autonomy to implement MBIs, preferring instead to persist with baseline policies, which further underscores the importance of SLB risk‐taking behavior. SLBs must strategically straddle their unique position between the market and the hierarchy to enroll different actors into the new policy arrangement, all within dynamic political–economic conditions.