Several studies indicate that management styles and knowledge of organizational structures have an impact on the potential for staff innovation. This exploratory study was conducted to investigate the implications of such variables in relation to nursing managers in a public sector health organization in Victoria, Australia. It reviewed factors that appeared to impact and encourage innovative behaviour amongst nurse managers within a decentralized management structure. To evaluate nurse managers' ability to be innovative, a 55-item survey consisting of both open questions and Likert-type scale questions was developed and distributed to 140 nurse managers working in a public sector health organization. The response rate was 58% yielding 82 usable responses. The study findings revealed that factors of management structures and management styles, in conjunction with the nurse unit managers' perceptions and communication skills, had an impact on nurse manager's ability to exhibit innovative behaviour in the 21st century workplace.