Israeli local government has reemerged despite a highly centralized political system, as local politics have become more autonomous, as a political party based on grass roots movements assumed national power, and as economic stagnation revealed shortcomings of national policies. Central‐local relations are still cooperative as well as cooperative, continuing to provide safety nets in the event of local mistakes. Austerity and recurring financial crises have necessitated new management orientations and organizational adaptation among local governments. The mode of learning (and unlearning) is highly contingent: in some circumstances a quick process based on opportunism, in others having been fuelled by entrepreneurial forces. The development of strategic organizational capabilities still encounters great difficultie