Policy diffusion, a classic theme in the policy sciences, has traditionally focused on the binary outcomes of policy adoption. This perspective often simplifies policy transfer into simple replication, thereby overlooking the diverse manifestations of policy reinvention. The complexity inherent in the reinvention process suggests that existing diffusion theories are insufficient to fully explain its formation. While previous research has offered valuable insights from both internal and external perspectives, it has lacked a highly integrated theoretical framework and has not clarified the dominant factors and complex relationships that shape policy reinvention, leading to a fragmented and ambiguous understanding of the process.

To address this gap, this paper draws on advances in policy processes and organizational theories to develop an “Environment-Organization-Network-Leadership” (EONL) theoretical framework. This framework integrates four key concepts—the regional environment, organizational resources, intergovernmental networks, and leadership characteristics—to investigate the formation of policy reinvention. We conduct an empirical analysis using the case of municipal-level government data governance organizations, a significant managerial innovation in digital government policy. A mixed-method approach combining the Doc2Vec model and fuzzy-set Qualitative Comparative Analysis (fsQCA) is employed.

The study yields several key findings: (1) No single condition is necessary to achieve high-level policy reinvention. (2) Multiple conjunctural causations exist. We identify five distinct configurational paths leading to high-level policy reinvention: internal coordination, environmental support, internal-external linkages, external coordination, and comprehensive evolution. The fundamental difference among these paths lies in the dominant role of either the external regional environment or the internal promotion incentives. (3) The relationships between these conditions are complex; Regional Environment and Leadership Characteristics are more critical than Intergovernmental Networks and Organizational Resources. Furthermore, substitutive relationships exist between the Regional Environment and the Organizational Resources as well as between Intergovernmental Networks and Leadership Characteristics.

This study makes several contributions. Theoretically, it constructs an EONL framework, which provides a holistic understanding of the process of formation of policy reinvention by delineating the synergistic effects of multiple internal and external drivers. Methodologically, it applies fsQCA to reveal the causal configurations and complex relationships, enabling an analysis of multiple conjunctural causations. Empirically, it examines the horizontal reinvention of policy within the context of China's urban data governance agencies, addressing the limitations in domestic research that have predominantly focused on the vertical dimension.

In conclusion, this research not only contributes to the growth of knowledge about policy diffusion by refining the theoretical framework for policy reinvention but it also identifies the crucial combinations of conditions necessary for the high-level success of policy reinvention. It offers valuable empirical lessons for local governments that are seeking to promote effective policy localization and optimization.