Various challenges in local government are forcing municipalities to consider alternative models and methodologies of management to deliver services and improve the quality of people’s lives. A literature review of the entrepreneurship field of study confirms the need for entrepreneurship in the public sector, which includes local government, and indicates that it is not only applicable but in fact essential for the public sector to become more entrepreneurial. The research study examines specific individual behavioural and organisational factors that facilitate knowledge creation and enhance the potential of entrepreneurial success in public institutions and local government specifically. The city where the research was conducted implemented alternative operating models and structures by establishing separate utilities and agencies for trading and key service delivery functions, that relate to the concepts of public and corporate entrepreneurship (CE). The research objective was to determine whether the interventions implemented contributed to entrepreneurial knowledge creation, affected managerial behaviour, and had any relationship with the entrepreneurial characteristics and performance of the relevant entities (agencies) and traditional core departments that were maintained. The entrepreneurial performance (intensity), organisational characteristics and key business dimensions as variables related to firm-level entrepreneurial orientation (organisational culture), as well as knowledge creation dimensions (learning styles) of managerial staff, which include the concepts of ‘cognitive analytical propensity’ (CAP) and ‘progressive action propensity’ (PAP), were assessed. The entrepreneurial performance index (EPI) measurement instrument was used to assess the performance of each selected agency and core department. The CAP as well as PAP levels of managerial staff were measured by the Honey and Momford (1992) learning style questionnaire (LSQ). The results indicate that there are no significant variances in the entrepreneurial performance of core departments and independent municipal entities (agencies) of the local government organisation. Significant variances in key business dimensions of core departments and municipal agencies have however been identified, which indicate that the managerial staff regard agencies as being less bureaucratic in terms of resource management practices. Organisational characteristics and ‘Active initiative’ (AI) levels of senior management staff have a positive correlation with entrepreneurial performance, while CAP levels of managerial staff have a negative correlation. These findings have serious and extensive implications for the nature of recruitment, as well as training and development practices to promote entrepreneurship in general and in local government specifically. The primary emphasis that is currently placed on the development of ‘cognitive’ competencies to promote entrepreneurship is subsequently questioned and it is accordingly argued that ‘active initiative’ should be developed instead. The study concludes that the extensive transformation programme that was implemented in the local government organisation, and that resulted in the establishment of independent municipal agencies did not have a significant positive effect on the entrepreneurial and overall performance of organisational units. It is further deduced that the adjustment of structures, operating practices and corporatisation alone are not sufficient to improve entrepreneurial and overall performance and that the primary distinguishing factor might in effect be related to entrepreneurial behaviour, leadership skills and competencies of managerial staff which should be developed.