Innovation has nowadays become the main force to cope with challenging times in the fast-changing world. The influence of public sector innovation (PSI) in resolving dynamic economical and societal challenges is undisputable. Regardless of the numerous advantages of innovation in the public sector (PS) which have been recognised worldwide, the concept of public sector innovation is still novel for the Federation of Bosnia and Herzegovina (FBiH). Moreover, there is limited empirical evidence

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... h would facilitate the understanding of public sector innovation performance. The purpose of this paper is to identify main components of PSI performance. The primary research data was obtained through a survey with close-ended questions which was completed by the public sector institution employees in FBiH. The exploratory factor analysis (EFA) was used in order to determine the principal components of measuring public sector innovation performance. The EFA returned the factor-structures for all four suggested constructs, innovation capabilities, wider sector conditions for innovation, sources of information and the share of creative occupation, explaining between 65% and 78% of the variance of the innovation performance measurement construct. The results from the exploratory factor analysis provided a distinct estimation on the factor structure of measuring PSI. The paper has provided and analysed the first instrument in measuring public sector innovation performance in FBiH.