Collaborative innovation is at the heart of smart city development, yet also notoriously challenging due to fundamental differences between public and private sector actors that need to collaborate, while dealing with high levels of uncertainty. Whereas existing practice-based work on collaborative innovation describes various relevant antecedents, barriers and success factors, this prior work potentially underestimates the true complexity of collaborative innovation initiatives. Therefore, scholars have increasingly called for a more dynamic, theoretical understanding of collaborative innovation. In response to these calls, our study draws on institutional theory to build a dynamic understanding of collaborative innovation for smart city development. Specifically, we conduct a longitudinal in-depth case study to develop a causal loop model, grounded in rich qualitative data, to capture and theorize the key behavioural patterns of a collaborative innovation initiative for smart city development. The model describes how the dynamic interplay between uncertainty, adherence to own institutional logics and governance complexity can both enable and undermine collaborative initiatives. We contribute by developing a dynamic theoretical perspective on collaborative innovation, one that promotes cross-fertilization at the intersection of the smart city theory, organization theory and collaborative innovation literature. Moreover, our findings highlight the important role of organization theory, specifically institutional logics, in explaining the collaborative dynamics of smart city development.