At first glance, Public Sector Innovation (PSI) Labs are gaining prominence within academic literature, the European Union (EU) and beyond. However, because of the relative newness and conceptual ambiguity of this concept, the exact contribution of these labs to theory and practice is still unclear. In addition, most research has been looking at case studies. This publication breaks new ground by elaborating on the concept and also by looking at the perception of these labs in different contexts, by comparing multiple labs in multiple countries. In doing so, we raised the question: ‘What is the perceived added value of Public Sector Innovation labs for further developing theory as well as for society?’ In order to answer this question, by way of an experiment, we combined theoretical research together with focus groups with members of the EU funded project Multi Disciplinary Innovation for Social Change (SHIINE) in combination with questionnaires to selected PSI labs, thus providing us with rich data. Our experimental methodology uncovered a conceptual bias that is probably existent in similar studies and needs to be acknowledged more. In addition, we found that PSI labs have developed over time into an amalgam of two competing concepts. To conclude, we believe that the specific potential of PSI labs as an internal space for innovation within institutions is underutilised. We believe this could be improved by acknowledging the specific aim of PSI labs in a co-creative setting between relevant stakeholders, such as Higher Education Institutions (HEIs).