Governance for Transition: Regulatory Incentives and Stakeholder Engagement in the New European Bauhaus

This paper investigates how regulatory frameworks and financial incentives influence stakeholder engagement and the institutionalisation of grassroots innovations within the New European Bauhaus (NEB) initiative. Launched by the European Commission as a creative and interdisciplinary extension of the European Green Deal, the NEB aims to foster more inclusive, sustainable, and aesthetically engaging urban environments. Despite its transformative ambitions, limited empirical evidence exists on how NEB projects evolve from local experimental niches into institutionalised practices embedded within mainstream governance systems. Building on Transition Theory and the Multi-Level Perspective (MLP), this study conceptualises NEB projects as niche innovations operating within broader socio-technical regimes. It explores how policy instruments shape the dynamics of stakeholder engagement, knowledge diffusion, and adaptive governance. By integrating governance studies into the MLP framework, the paper addresses a critical gap in the sustainability transitions literature: the institutional conditions necessary to scale bottom-up initiatives. Methodologically, the study adopts a qualitative embedded case study design. Data were collected through an online self-assessment form distributed to all NEB prize finalists, complemented by secondary document analysis and semi-structured interviews with project leaders across diverse socio-political contexts. The findings reveal that regulatory incentives are key enablers of stakeholder engagement, particularly when supported by strong institutional backing, clearly defined roles, and mechanisms for continuous co-creation. However, the effectiveness of these incentives is uneven. Ambiguities in policy implementation and disparities in resource accessibility limit participation for smaller or less institutionally connected actors. Some projects succeed in aligning local stakeholders around shared goals, facilitated by municipal support and EU funding, while others struggle with bureaucratic barriers and limited access to technical expertise. Theoretically, the study extends the MLP by embedding stakeholder co-creation and adaptive governance mechanisms into transition analysis. Empirically, it provides one of the first grounded assessments of how NEB projects scale and institutionalise within multi-level governance structures. Practically, the research offers policy recommendations aimed at strengthening long-term engagement mechanisms, improving the accessibility of funding tools, and fostering cross-sectoral collaboration between local authorities, civil society, and industry. Ultimately, this study contributes to a more comprehensive understanding of how participatory governance and regulatory design intersect in shaping urban sustainability transitions. It underscores the need for flexible, iterative governance models that allow experimental initiatives to influence policy landscapes and highlights the importance of inclusive and sustained stakeholder engagement for the institutional success of visionary policy agendas such as the NEB.