It has been argued that political entrepreneurship is playing an increased role for public organizations and play a vital role in local government organizations. Political entrepreneurship has previously been studied from the motivations and actions of the individual entrepreneur. We argue that in order to understand why political entrepreneurship occurs in local public administration, these aspects are not enough. Instead, we need to consider entrepreneurship as situated, and analyse contextual conditions which form institutional demands for political entrepreneurship. A tentative framework is presented, which distinguish conditions coming from reformed organizational setting and conditions coming from new policy challenges. Finally, we conclude that the character of the conditions and thus the institutional demands directs political entrepreneurship towards either value-generative or collaborative entrepreneurship.