The Economics of Social Innovation

Judith Terstriep, Dieter Rehfeld, Judith Terstriep, Dieter Rehfeld

• Publisher: Routledge
• Year: 2022
• eBook ISBN:
  9781000607901
• Topic: Architecture
• Subtopic: Urban Planning & Landscaping

This book addresses 'the economics of social innovation', a widely neglected topic in regional development. The chapters in this edited volume cover distinct but complementary and related aspects concerning the existing gap between the hitherto unexploited potential of social innovation in relation to socio-economic challenges that regions across Europe and globally face.

Research on social innovation has gained momentum over the last decade, spurred notably by the growing interest in social issues related to policy making, public management and entrepreneurship in response to the grand challenges societies in Europe and worldwide face. Accelerated by the normative turn in research and innovation policies towards 'missions', social innovation is nowadays a central element on policy agendas, from the urban and regional level to the national and subnational level of the European Commission and the OECD. However, for social innovations to unfold their full potential a better understanding of underlying mechanisms, processes and impacts is necessary.

The first three chapters focus on framework conditions and characteristics of social innovation. The following two chapters emphasise the determinants of social innovation and translocal empowerment. In the last part, attention is devoted to social innovation in specific fields such as health care and greening society, and social innovations' transformative potential.

The chapters in this book were originally published as a special issue of the journal, European Planning Studies.

Context dependency of social innovation: in search of new sustainability models

Alessandro Deserti and Francesca Rizzo

ABSTRACT

Increasing attention is being paid towards the potential of social innovation (SI) in responding to society’s greatest challenges. While measures have been taken to support the flourishing of these innovations, they have thus far been made on ideal models of development, misaligned with what occurs in reality. This has led to the creation of supporting infrastructures that fail to respond to the real needs of social innovators. The article seeks to provide a picture of the real SI development process through a case-based discussion coming from the results of the SIMPACT European research project. The article will also present areas of improvement and reflection, on which to develop an evidence-based model of SI development. Moreover, it will connect SIs with local conditions that determine their development, suggesting that their growth and diffusion are primarily based on the adaptation to the context rather than on the scaling up mechanisms that characterize for-profits. The article argues that this leads to the necessity for social innovators to find a difficult balance among contradictory needs, and to develop peculiar typologies of business models to make their innovations sustainable.

Introduction

While social innovation (SI) is hardly a novelty, its acknowledgement as a driver of societal and economic growth has only recently come forth in the aftermath of the financial crisis and in light of failing welfare states. While other forms of innovation, like technological innovation, have been exhaustively explored, relatively little is understood regarding the process of SI, which has been primarily conceptualized as innovative activities and services that meet a social need, diffused by organizations whose primary purposes are social (Mulgan, 2006), or else innovations that are primarily social both in their means and in their ends (Caulier-Grice, Davies, Patrick, & Norman, 2012).

Based on these definitions and on a specific interest in investigating ‘innovations that take the form of replicable programs or organisations’ (Caulier-Grice et al., 2012, p. 148), the few existing frameworks explaining the SI process have adopted a generic new product development process, replacing the tension towards profit that characterizes enterprises that bring new products to the market with the idea that SIs aim (or should aim) at scaling up to achieve greater social impact. In particular, the so-called ‘spiral’ model of SI (Murray, Caulier-Grice, & Mulgan, 2010), as well as other circular (Bates, 2012) or linear (Santos, Cotter Salvado, Lopo de Carvalho, & Schulte, 2013) models, are commonly accepted as descriptions of the actual SI process. On the contrary, our empirical findings demonstrate that they represent ideal models of innovation far from reality, which has led to a number of misconceptions and faults in supporting and managing SI.

The article will address how this misalignment has crippled the effectiveness of policy measures meant to support the development and growth of SIs through an analysis of the SI process in its real-life context. The analysis will shed light on the mechanisms behind establishing and developing SI through a comparison of the different phases of the ‘ideal’ SI process with reality. The article aims at discussing the implications that reside behind the mismatch between the idealized SI process and the real one, drawing conclusions that may be useful in developing evidenced-based policy measures to better enable SI development.

The ‘ideal’ social innovation process: literature review

The SI process has been predominantly depicted borrowing models from other fields of innovation, primarily from product and business innovation. Nevertheless, while some characteristics of SI are similar to business innovation, others are rather different. Forasmuch, some of the concepts and frameworks found in studies on business innovation are adaptable to SI, while others are not due to the unique characteristics of SI. Even though SI differs from social entrepreneurship, the need to achieve social as well as economic results and the presence of a double bottom line is a relevant point of difference that leads to internal contradictions which are structural features of SI (Smith, Binns, & Tushman, 2010), as we will see in the following. Yet, following Santos et al. (2013) the relevant cycle to analyse in order to understand how SI unfolds is the cycle of the solution rather than that of enterprise as the purpose of SI is to maximize the value for society and not that for the organization. This is in our perspective the main reason why new product development models have been used to describe the SI process.

The term ‘cycle’, or ‘lifecycle’, implies a sequence of stages in the evolution of a SI, where each stage necessitates different structures, resources, skills and most likely actor constellations. In other words, for what concerns our research ‘cycle’ is equivalent to ‘process’.

Besides the aforementioned model from Santos et al. (2013), we individusalized three more relevant models that tried to capture the characteristics of the SI process.

by first, proposing, while the other two, providing a representation of the process.

Lettice and Parekh (2010) do not propose a model of the SI cycle, but an investigation of how a few SIs unfolded, based on findings drawn from interviews with the innovators and their critical evaluation against literature in diverse fields. Their description of the SI process is focused on identifying emerging issues along the steps that bring a SI from the reframing of the problem to the creation of a network of support that stands at the core of its sustainability. In particular, they identify four themes: changing the lens, building missing links, engaging a new ‘customer’ base, and leveraging peer-support. Finally, they explore some of the practical implications of their findings, suggesting a number of techniques that can help future social innovators to address some of the key problems associated with the four themes.

Bates (2012) proposes a three stages model of six steps to take a social innovator from investigation through ideation to implementation. Investigation, covering the first three steps of the process, begins with defining the social challenge (i.e. the wicked problem), including the identification of the actors in the ecosystem, to determine and prioritize the unmet needs, and examine opportunities and their context (political, cultural, and social framework as well as physical and human resources that can cause the solution to fail). The subsequent innovation stage focuses on devising a workable solution and an effective business model. Implementation, finally, centres on the question of how to ensure that the single solution creates shared value among all stakeholders and innovations do not fail (Figure 1).

Figure 1. The social impact framework.

Source: Elaboration of the authors from Bates (2012).

Santos et al. (2013) suggest a four-stage model, where the SI process starts with the identification of the social problem and the development of a solution which is mainly guided by mission-driven people, while involving an interactive cycle of failure and feedback. Once the solution proves itself as working, the next step is to create a sustainable and replicable model around the solution, i.e. a business model. After successful validation of the business model, the next step is to scale the solution towards greater impact, where the organizational anchor (e.g. SE, social movement) supporting the solution takes centre stage. The final mainstreaming stage focuses on institutionalizing the solution to create systemic change (Figure 2).

Figure 2. The four-stage model of social innovation.

Source: Elaboration of the authors from Santos et al. (2013).

The most diffused and accepted representation of the SI process is for sure the ‘spiral’ model of SI proposed by Murray, Caulier-Grice, and Mulgan in ‘The Open Book of Social Innovation’ (2010), a major collaboration between Nesta and the Young Foundation. The book identifies and mainstreams SI as an emerging approach to provide concrete answers to unmet social needs, in situations typically characterized by market failures and withdrawal of the State.

The spiral model is composed of six main stages, as follows and seen in Figure 3:

Figure 3. The ‘spiral’ model of the social innovation process.

Source: Elaboration of the authors from Murray et al. (2010).

(1) Prompts – which highlight the need for SI;

(2) Proposals – where ideas are developed;

(3) Prototyping – where ideas get tested in practice;

(4) Sustaining – when ideas become everyday practice;

(5) Scaling – growing and spreading SIs;

(6) Systemic change – re-designing and introducing entire systems, which usually involves all sectors.

Despite the spiral shape of the model, which would suggest non-linear development, the logical order of stages assumes the perspective of an orderly process. On the contrary, scholarship on innovation processes makes clear that the path from idea generation to diffusion rarely follows a predictable logical order (van de Ven, Polley, Garud, & Venkataraman, 1999) and likewise, literature today coherently describes innovation processes in organizations as complex, iterative, organic, and untidy (Greenhalgh, Robert, Macfarlane, Bate, & Kyriakidou, 2005).

The spiral model of SI was in fact re-elaborated specifically to revise its linearity during the TEPSIE research project (Caulier-Grice et al., 2012). Moreover, the model was further revised during the TRANSITION (Transnational Network for Social Innovation Incubation) research project, with the aim of turning it into an operative process – called The Social Innovation Journey – for the development and the scaling up of social ventures, jointly with a set of tools organized along its diverse phases and areas (Transition, 2016).

In these further elaborations, arguments have been made to re-conceptualize the model and introduce a more iterative nature through the inclusion of design loops at each stage, as well as feedback and re-orientation loops. In this, the model is quite similar to the updated version of the stage-gate process of new product development (Cooper, 2008), as well as to many other models of the design process. However, despite these changes, in our view the diverse versions of the model continue to describe ideal conditions, more easily found in existing organizations that rely on an already-established culture of design and innovation (Deserti & Rizzo, 2014).

In the following, we will introduce the methodology adopted in the research, and explore the above-mentioned gap between the ideal and the real SI process in more detail, by comparing and contrasting the different phases of the spiral model with what in our view actually happens at each phase, through a case-based discussion.

Methodology

The article builds on the results of the recently concluded SIMPACT EU-funded research project (www.simpact-project.eu), where 60 cases of SI occurring across Europe were analysed, with a specific focus on their economic foundation. The research followed a structured, qualitative research process: (1) an initial meta-analysis of a wide number of existing SI cases; (2) the adoption of a set of criteria leading to the selection of relevant cases to be further investigated; (3) the integrated analysis and discussion of a set of business case studies (desk research) and innovation biographies (field research); (4) the triangulation of results to draw evidence-based findings and discuss them against existing literature; (5) the proposal of a typology of SI Business Models, based on the ‘reverse engineering’¹ of the business case studies; and (6) the development of recommendations and tools to support SI and SI policies. In order to guarantee a high level of quality in the development of the cases, a joint analysis framework and a minimum standard for documentation to be retrieved for desk research were adopted. Innovation biographies (Butzin, 2013) complemented the desk research ensuring direct contact with SI actors and stakeholders which reconstructed the innovation processes from idea to implementation, combining interviewing techniques, egocentric network analysis and triangulation.

The overall methodological process followed in the research is described in detail in Deliverable D3.2 of the project (Terstriep et al., 2015), while a detailed description of the methodological issues connected with the development and the interpretation of the Social Innovation Biographies can be found in Kleverbeck and Terstriep (2017). In the following we will provide a short description of the research steps relevant for the formulation of this article.

According to the project’s rational, in an initial step two filters were applied to scan existing databases for relevant cases: firstly, distinct welfare regimes across Europe and secondly, fields of action, namely employment, migration and demographic change, as well as gender, education and poverty as transversal themes. In total 94 SIs were documented in ID Cards, summarizing the basic information for each case. Meta-analysis in the form of a ‘qualitative comparative analysis’ (QCA) was conducted for all 94 cases.

Combining a qualitati...

Table of contents

• Cover
• Half-Title Page
• Title Page
• Copyright Page
• Contents
• Citation Information
• Notes on Contributors
• Introduction: Bridging local embeddedness and global dynamics – the economics of social innovation
• 1 Context dependency of social innovation: in search of new sustainability models
• 2 Favourable social innovation ecosystem(s)? – An explorative approach
• 3 Social Innovation Regime: an integrated approach to measure social innovation
• 4 Emergence and diffusion of social innovation through practice fields
• 5 Understanding the determinants of social innovation in Europe: an econometric approach
• 6 Translocal empowerment in transformative social innovation networks
• 7 Applying the concept of social innovation to population-based healthcare
• 8 Monitoring inclusive urban development alongside a human rights approach on participation opportunities
• 9 Transition through design: enabling innovation via empowered ecosystems
• 10 Green social innovation – towards a typology
• Index