Going It Alone Won’t Work! The Relational Imperative for Social Innovation in Social Enterprises

Journal of Business Ethics, Jun 2017

Shifts in the philosophy of the “state” and a growing emphasis on the “Big Society” have placed an increasing onus on a newly emerging organizational form, social enterprises, to deliver innovative solutions to ease societal issues. However, the question of how social enterprises manage the process of social innovation remains largely unexplored. Based on insights from both in-depth interviews and a quantitative empirical study of social enterprises, this research examines the role of stakeholder relationships in supporting the process of social innovation within social enterprises. We find that social enterprises are adept at working with their stakeholders in the ideation stage of social innovation. In contrast, they often fail to harness knowledge and expertise from their partners during the social innovation implementation phase. Consequently, we propose a social innovation–stakeholder relationship matrix that provides social enterprises in particular with insight for developing stakeholder relationships to achieve their social innovation missions.

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Going It Alone Won’t Work! The Relational Imperative for Social Innovation in Social Enterprises

Journal of Business Ethics May 2019, Volume 156, Issue 2, pp 315–331 | Cite as Going It Alone Won’t Work! The Relational Imperative for Social Innovation in Social Enterprises AuthorsAuthors and affiliations Wendy PhillipsElizabeth A. AlexanderHazel Lee Open Access Original Paper First Online: 23 June 2017 5 Shares 2.8k Downloads 4 Citations Abstract Shifts in the philosophy of the “state” and a growing emphasis on the “Big Society” have placed an increasing onus on a newly emerging organizational form, social enterprises, to deliver innovative solutions to ease societal issues. However, the question of how social enterprises manage the process of social innovation remains largely unexplored. Based on insights from both in-depth interviews and a quantitative empirical study of social enterprises, this research examines the role of stakeholder relationships in supporting the process of social innovation within social enterprises. We find that social enterprises are adept at working with their stakeholders in the ideation stage of social innovation. In contrast, they often fail to harness knowledge and expertise from their partners during the social innovation implementation phase. Consequently, we propose a social innovation–stakeholder relationship matrix that provides social enterprises in particular with insight for developing stakeholder relationships to achieve their social innovation missions. KeywordsSocial innovation Social enterprises Stakeholder relationships Empirical  Introduction In recent years, we have witnessed a profound shift in how a range of societal needs are being addressed, giving rise to the concept of social innovation. Social innovation is defined as “a novel solution to a social problem that is more effective, efficient, or just than existing solutions and for which the value created accrues primarily to society as a whole rather than private individuals” (Phills et al. 2008, p. 39). Social innovation offers novel ways of addressing unmet social needs, often through the rise of new organizational forms such as social enterprises (EU 2014). Discussion of a “third way” as an alternative for delivering social welfare in the UK provides a political and sociological context that favors the emergence of both social enterprise organizations and social innovation (Phillips and Smith 2014). It also suggests an important role for stakeholder engagement and cooperation in the process of value creation (Freeman et al. 2010) reflecting as it does a shift toward a rethinking of the relationships between business and society. For clarity, we adopt the definition of a social enterprise as “a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners” (BIS 2011, p. 2). This definition resonates with Freeman et al.’s (2010) work on stakeholder theory since social enterprises embody a stakeholder orientation to their operations, relying on jointness of interests with a range of stakeholders through which to collaboratively achieve their goals while seeking reinvestment in their communities, and thus rejecting a profit motive for their actions. As a consequence of the agenda promoting links between the public sector, civil society and the private sector, the UK has witnessed a dramatic increase in the formal role of these social enterprises with almost one-third operating in the most deprived communities, seeking to effect change and address social need (Social Enterprise UK 2015). Increasingly, the links of social enterprises to economic and social programs are being recognized as playing a central role in social innovation (OECD 2011). Against this backdrop, there has been growing interest in the area of social innovation (Cajaiba-Santana 2014; Dees 2008; Mulgan 2006; Nicholls and Murdock 2012; van der Have and Rubalcaba 2016). However, while we know from extant research about processes for business and technological innovation, we know very little about the practice of social innovation (Murray et al. 2009; Mulgan et al. 2007; van der Have and Rubalcaba, 2016). Cajaiba-Santana (2014) calls for a new paradigm arguing social innovation is substantially different to technological innovation since it centers on creating new social structures. In this research, we aim to make a theoretical contribution to the literature on social innovation by examining one particular feature of the problem—how organizations such as social enterprises utilize stakeholder relationships to identify opportunities for, and to facilitate, social innovation. Our view of stakeholder contributions to the social innovation process draws on work by Post et al. (2002, p. 7) that emphasizes the importance of multiple stakeholder relationships as “the ultimate sources of organizational wealth” and the salience of stakeholders for joi (...truncated)


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Wendy Phillips, Elizabeth A. Alexander, Hazel Lee. Going It Alone Won’t Work! The Relational Imperative for Social Innovation in Social Enterprises, Journal of Business Ethics, 2017, pp. 315-331, Volume 156, Issue 2, DOI: 10.1007/s10551-017-3608-1