Social innovation: An exploration of the barriers faced by innovating organizations in the social economy

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Social innovation: Anexploration of the barriersfaced by innovatingorganizations in the socialeconomy

Dominic ChalmersUniversity of Strathclyde, UK

Abstract

Social and community-based organizations are increasingly viewed as wellsprings of valuable social

innovations. Government policies, most notably David Cameron’s Big Society initiative, have

entrenched the concept of localism across the UK, and the move towards smaller government

has placed the onus on communities to creatively tackle their own problems. While antecedent

research on social innovation has largely concentrated on success stories, few have stopped to

consider the profound nature of this shift and the operational obstacles it may pose for small

resource-constrained organizations. This article seeks to contribute to current debates on social

innovation by critically reviewing extant literature and proposing a model of ‘open’ social innov-

ation. Furthermore, it serves as a tool to stimulate further discussion around the ‘opening up’ of

the social innovation process and raises some timely questions about the efficacy of localism

policy measures.

Keywords

Big Society, localism, open innovation, social enterprise, social entrepreneurship, social innovation

Introduction

The locus of social innovation has shiftedradically over the past 60 years, from a pre-dominantly centralized state-led approachencompassing innovations such as nation-wide health care systems, towards a locallydevolved patchwork of civil society organ-izations providing customized solutions toniche problems. These individuals and

organizations, often working across sectoralboundaries and embedded within resource-constrained milieu, have adopted entrepre-neurial and often market-based approachesto meeting demands in a sustainable and

Corresponding author:

Dominic Chalmers, Hunter Centre for Entrepreneurship,

University of Strathclyde, Strathclyde Business School,

199 Cathedral Street, 7th Floor, Glasgow, G4 0QU, UK.

Email: [email protected]

Local Economy

28(1) 17–34

! The Author(s) 2012

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DOI: 10.1177/0269094212463677

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effective manner. Despite a tremendousmeasure of goodwill from academic andpolicy circles, some critics argue that socialinnovation is failing to live up to its promise(Jankel, 2011). Barriers exist, both in theconceptualization of social innovation andin the larger social innovation system, thatrestrict or disincentivize such activities.These barriers include: market protection-ism, risk aversion, problem complexity,access to networks and access to finance.

To fully realize the potential of sociallyinnovative behaviour, and to effectively lever-age the value created by thosewho participatein socially innovative activities, it is arguedthat a new ‘open’ paradigm should be for-mally embraced. The idea of an ‘open’approach to innovation has received muchattention of late, supported in particular bythe work of Chesbrough (2003, 2011) andChesbrough et al. (2006), who define the phe-nomenon as ‘purposive inflows and outflowsof knowledge to accelerate internal innov-ation, and expand the markets for externaluse of innovation respectively’ (p. 2). The cen-tral thesis of this approach, that the verticallyintegrated, ‘closed’ model of innovation isnow unsustainable and outmoded, assumesmost valuable knowledge exists outside ofthe firm’s boundaries. Therefore, organiza-tions that widely search distributed know-ledge sources and, more importantly, cansuccessfully assimilate external knowledgeinto their own innovation process, are in amore advantageous position than their com-petitors (Laursen and Salter, 2006). The openapproach is increasingly being applied toorganizations outside of the high-technologymanufacturing sector and towards low-tech,service-based SME firms (Brunswicker andVanhaverbeke, 2010). It is argued thereforethat socially innovative organizationsshould adapt both their internal structuresand strategic search activities to best capital-ize on valuable knowledge available throughpartnerships, competitors and the scientificresearch base.

With the concept of localism enjoyingcross-party support (Wilks-Heeg, 2011), anddevolution of power and responsibility shift-ing rapidly away from the State (Flinders andMoon, 2011), it is necessary to explore howsocial and community-based organizationsare equipped to ‘fill the gap’ left by smallergovernment. This article will therefore ana-lyse contemporary social innovation fromthe organizational perspective whilst alsoconsidering the interactions socially innova-tive organizations have with local stake-holders and the broader political andsocio-economic systems. In particular, thisarticle examines the barriers faced by inno-vating social and community-based organiza-tions and explores approaches that maymitigate some of these obstacles. Althoughsocial innovation as a process has beennoted across diverse contexts, from develop-ing regions in Africa (Rodima-Taylor, 2012)to wealthier Scandinavian countries (see, forexample, the innovation unit Mindlab inDenmark1), this article has specific relevanceto developed economies which have adoptedneo-liberal economic policies and whose gov-ernments are in the process of reducing thebreadth and scope of the welfare state infavour of greater civil society participationin social welfare provision.

Following this introduction, the litera-ture on social innovation and other closelyrelated fields is reviewed. From this, themost prevalent barriers to socially innova-tive behaviour are identified and analysed.These barriers form a framework for dis-cussing the applicability of open innovationpractices for more effective social innov-ation. The article then concludes with asummary of the discussion points and anoutline of further research avenues.

Social innovation

Recent developments in the managementliterature have signalled a shift in focusfrom technological innovation towards

18 Local Economy 28(1)



social innovation and social entrepreneur-ship (Dees, 1998; Leadbeater, 1997;Nicholls, 2010; Shaw and Carter, 2007).While social entrepreneurship research hastended to focus on the individual drivingsocial change, and social enterprise on thenew forms of organizational structure thatblend commercial and social purpose, socialinnovation literature has concentrated onthe processes and outcomes that changethe ‘basic routines, resource and authorityflows and beliefs of any social system’(Westley and Antadze, 2010: 2). The cruxof this socially innovative behaviour isthat skills and expertise used to develop suc-cessful commercial innovations can be usedto solve a wide range of societal problems.Murray et al. (2010: 3) define social innov-ation as ‘innovations that are social both intheir ends and in their means. Specifically,(social innovations are defined) as new ideas(products, services and models) that simul-taneously meet social needs and create newsocial relationships or collaborations. Inother words, they are innovations that areboth good for society and enhance society’scapacity to act’. Social innovators operateacross all levels of society, from small localorganizations tackling problems specific toa particular area or group (Haugh, 2007),through to those working at an institutionallevel, perhaps even in government or theprivate sector (Dacin et al., 2011; Mairand Martı, 2006). Sharra and Nyssens(2010) note two complementary approachesto social innovation in the literature: onefocusing on social innovation as an out-come and the other focusing on socialinnovation as a process. Increasingly, bothaspects are being incorporated into workingdefinitions, as illustrated by Murray et al.’s(2010) aforementioned definition.

As with any fashionable term in thesocial science domain, a critical interroga-tion of the construct is necessary to ascer-tain its merit and relative value; this isparticularly true when discussing social

innovation, a phenomenon that, due to itsparticular characteristics, has a tendency toelicit passionate and emotional responsesfrom those involved in its practice. This ismanifest in a bias across the wider literaturetowards ‘feel good’ case studies that focusprimarily on reporting the positive out-comes of socially innovative behaviour(NESTA, 2008, European Union/TheYoung Foundation, 2010). It is a moretroublesome pursuit identifying dissentingvoices in the field, largely because it remainsso loosely defined (Pol and Ville, 2009) thatit becomes difficult for one to say they aresomehow critical of or ‘against’ such anebulous concept. Furthermore, Nichollsand Murdock (2012) draw attention to theoften-contradictory nature of social innov-ations whereby they can simultaneouslyenhance and disrupt the existing socialorder, further blurring understanding ofthe often competing ends social innovationseeks to achieve.

An enthusiastic body of extant literature,and the work of organizations such as theNational Endowment for Science,Technology and Arts (NESTA) and theYoung Foundation, has played a criticalrole in propagating the notion of socialinnovation to a wider audience. In doingso, individuals and organizations havebeen offered – and have seized upon – alter-native means of achieving social progressfor their community by challenging trad-itional problem-solving mindsets. In par-ticular, there is greater awareness thatstructural barriers to solving complexsocial problems can be navigated throughthe utilization of entrepreneurial skills.Similarly, it has been shown that tools andsystematic approaches borrowed from thetechnological and commercial innovationparadigms can be successfully appropriatedand applied to the process of identifyingand scaling up socially innovative opportu-nities (Mulgan, 2006; Murray et al., 2010;Saul, 2010).

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Despite this growing awareness andadoption of socially innovative approaches(bolstered by numerous well-reported suc-cess stories2), there has been a relative lackof academic research exploring its dimen-sions and antecedents (Sharra andNyssens, 2010). Although not in itself anew phenomena, social innovation’s rootscan be traced back to the entrepreneurialphilanthropy of Robert Owen (Mulganet al., 2007) and Andrew Carnegie (Harveyet al., 2011), the local community develop-ment initiatives from the 1970s onwards(Benington, 1985; Moulaert and Sekia,2003) and broader historical social move-ments (Banks, 1972); however, it is only inmore recent times that social innovation hasdeveloped a significant public policy foot-hold.3 Of published research into the phe-nomenon, attention is primarily afforded to:defining and understanding the construct(Dawson and Daniel, 2010; Mulgan et al.,2007; Phills et al., 2008); establishing theor-etical models of social innovation (Goldsteinet al., 2010; Mulgan, 2006; Lettice andParekh, 2010); and providing detailed ana-lysis of specific case studies (Klein et al.,2010; Maclean et al., 2012). The generallack of any dominant theoretical assump-tions or methods within the domain how-ever, suggests that social innovation is notyet a paradigm in the Kuhnian sense (Kuhn,1962). Given the multidisciplinary nature ofthe field and the contrasting ways in whichSharra and Nyssens (2010) claim socialinnovation is being interpreted, it followsthat the scholarly field has not yet reacheda normative state, as actors continue tocompete in shaping the dominant logic.Nicholls (2010) argues that the relatedfield of social entrepreneurship is at a pre-paradigmatic stage, and it would appearthat the same conclusions can be drawnfrom analysis of the social innovation field.

It is perhaps too early a juncture toevaluate whether social innovation is a pas-sing fad or will become a dominant

paradigm. Ramsay (1996) equates faddish-ness to superficial quick fixes, and the moresceptical observer may seek to attribute therecent political interest in social innovationand social entrepreneurship to such short-term policy-making opportunism. Althoughthere has been enthusiastic support fromacross the UK political spectrum for socialinnovation, from New Labour to theConservative Government’s ‘Big Society’policy, the structure and prevailing cultureof government is almost antithetical to thehabitually risky nature of disruptive innov-ation (Goldsmith et al., 2010; Jankel, 2011;Osborne et al., 2008). While on one handthere is explicit support and funding fromauthorities to develop pattern-breakingsocial innovations,4 the other paradoxicallyopposes innovative ideas for bureaucraticor risk-related reasons (Antadze andWestley, 2010). When reviewing the fieldas a whole, this systemic inertia may serveto undermine the underlying promise ofsocial innovation as a mechanism for restor-ing depleted communities. Despite enthusi-asm for the approach, clear barriers exist tosocial innovation that may threaten tohasten the ‘fizzling out’ of the conceptunless specifically addressed.

Barriers to social innovation

As both Jankel (2011) and Christensen et al.(2006) have noted, there is a disconnectbetween resources funnelled to the socialsector over the past decade, and both thequality and volume of disruptive innov-ations that have ensued. There are undeni-able successes that have enacted profoundstructural change in certain problemdomains, including Microfinance (the pion-eering micro-lending bank) and the ensuingchanges to the economic development land-scape in Bangladesh and beyond. However,it is questionable whether the hype aroundsocial innovation and social entrepreneur-ship can be reconciled, thus far, with a




corresponding volume of tangible outputs.It is unclear precisely why this is the case.Very little research has been undertakenexploring the reasons for social innovationfailure (a notable example beingMcLoughlin and Preece’s (2010) study onthe failure of rural ‘cyber’ pubs in theUK), and because of the aforementioneddefinitional and conceptual issues, it is dif-ficult to meaningfully interrogate existingdatasets for new insight.

Drawing from several empirical studieson social innovation (Hamalainen andHeiskala, 2007; Holmes and Smart, 2009;Klein et al., 2010) and wider conceptual lit-erature (Antadze and Westley, 2010;Dawson and Daniel, 2010; Jankel, 2011;Osborne et al., forthcoming) a number ofthemes emerge that identify common bar-riers which are inhibiting a greater prolifer-ation of socially innovative behaviour.These are discussed in more detail below.

Protectionism and risk aversion

Rhetoric around social innovation perhapsnaively assumes that all individuals andorganizations share a common homogenousdesire to develop the most effective solu-tions to societal problems; in reality, how-ever, this may not always be the case. TheUnited Kingdom and any other countrywhere social provision is increasingly beingprivatized, risk creating a market disincen-tive for disruptive innovations. Jankel(2011: 7) notes that public managers andnon-profits are encouraged to ‘keep projectsin their own domains and silos, further pre-venting breakthrough innovation’). A fail-ure to transcend these hardenedinstitutional factors supports the statusquo and perpetuates a cycle that allocatesfunding to ‘organizations that are weddedto their current solutions, delivery models,and recipients’ (Christensen et al., 2006: 95).This market protectionism coexists along-side a staunchly conservative culture

within government and philanthropic circlesthat prevents the diffusion of new innov-ations. Antadze and Westley (2010) findthere is a clear appetite to remove uncer-tainty from any novel product or process,even at the expense of potentially disruptivesocial innovations. This, contends Mulgan(2006: 156), is inevitable as ‘innovationmust involve failure, and the appetite forfailure is bound to be limited in veryaccountable organizations or where peo-ples’ lives depend on reliability’.

Problem complexity

Fittingly, a theoretical lens that has beenapplied to social innovation recently, isthat of complexity science (Goldsteinet al., 2010; Moore and Westley, 2011).There appear to be two reasons why com-plexity is considered a barrier to socialinnovation. First, Jankel (2011), Letticeand Parekh (2010) and Antadze andWestley (2010) touch upon the difficultand multifaceted nature of most socialproblems. It is argued that to effectivelytackle an issue requires cooperation acrossmulti-stakeholder environments, oftennecessitating more effort to manage effect-ively than technological-based counterparts(Lettice and Parekh, 2010). Jankel (2011)meanwhile advances the argument that thetrue scale of problems – and therefore solu-tions – are being artificially compartmenta-lized: ‘The ‘‘command and control’’ type ofmanagement so efficient when controllingworkers and increasing their productivitytends to falsely divide complex socialissues into linear, separate parts that onepart of government, or social organization,can focus on’ (p.7)

This is in line with Moore andWestley (2011) who claim that complexproblems are exacerbated by rigid socialstructures that acts as problem ‘traps’. It issuggested, in this case, that applying resili-ence theory offers a promising method

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of understanding and navigating thecomplexity of such problems. This theoret-ical approach uses a four-phase adaptivecycle to examine social systems as theyenter periods of change. Moore et al.(2012) further develop this to examine howdifferent policy approaches can be used tosupport social innovation during each phaseof the cycle. Second, Antadze and Westley(2010: 347) hint at an ignorance towardssocial care provision amongst some serviceproviders who adopt a managerialapproach to problems, with the result thatservices are being delivered where ‘thenature of the true need may not even beunderstood’.

A compelling argument begins to emergethat failure to adapt the social innovationprocess towards tackling the root of com-plex societal issues diverts attention andresources away from developing the bonafide innovations that will work beyond thesuperficial ‘symptomatic’ level.

Networks and collaboration

Lettice and Parekh (2010) find in theirempirical study on the process of socialinnovation, that failure to connect to theright network has a negative effect on boththe morale of the social innovator andaccess to finance and other support.Specifically it was found that ‘sometimesinnovators struggle to identify which con-ventional networks to align with, as socialinnovations often span boundaries and donot neatly fit into a single category’ (Letticeand Parekh, 2010: 150). The effect of thisambiguous identity is confirmed in theEuropean Commission report (Pulford,2010), which advocates stronger networksto help social innovators identify themselvesas such, and in turn, to create a mutuallysupportive community. The same report(Pulford 2010) notably claims that socialinnovators are ‘hard to reach’ which sug-gests the networks that Moore and

Westley (2011) describe as being critical tothe scaling up of ideas, are largely absent.

The importance of networks to entrepre-neurial growth has been covered extensivelyin the entrepreneurship literature (Greveand Salaff, 2003; Hansen, 1995; Hite andHesterly, 2001; Hoang and Antoncic,2003) and it is judged to have similarimportance for social innovators. Mulganet al. (2007: 35) argue the absence of net-works ‘explains why so many social innov-ations are stillborn and why so many socialentrepreneurs are frustrated’.

Summary of barriers

In sum, innovative organizations face manyconsiderable obstacles when attempting tocreatively tackle social problems. First,both governmental and philanthropicorganizations are naturally risk averse andlargely tend to reject disruptive solutions,i.e. innovations that will alter social systemsand structures (Nicholls and Murdock,2012) in favour of incremental improve-ments, i.e. innovations that will addressmarket failures more effectively (Nichollsand Murdock, 2012). There also exist deeprelationships between funders and servicedelivery partners that contribute, in part,to a perpetual cycle of incremental improve-ments to social problems. It is a fallacy inthe social sector to assume that firms pro-viding social care wholeheartedly welcomedisruptive innovation – even if it promisesto solve a social problem. Like the privatesector, such innovation threatens to makeorganizations redundant and may bring toan end sometimes profitable relationswith the public sector. Established fundingstructures, clearly drawn down the lines ofgovernmental functions and philanthropic/charity missions, artificially compartmental-ize social problems, meaning it is unlikelytruly systemic solutions will be achieved.Finally, social innovators are failing toidentify and gain access to the networks




that will facilitate their success. This reducesexposure to valuable sources of knowledgethat may subsequently feed into the socialinnovation process.

Integrating open innovation andsocial innovation

The aforementioned barriers present a sig-nificant hindrance to social innovators andreduce the potential for disruptive socialinnovation. It is suggested, therefore, thatattention should turn to developments inthe parallel field of open innovation forinspiration on how to overcome deficienciesin both social innovation research and prac-tice. The following section will discuss theopen paradigm in greater detail and a the-oretical framework will be constructed foranalysis of social innovation.

The open paradigm

Open innovation has emerged as one of themost popular strands in the innovation lit-erature over recent years (Chesbrough,2003, 2011; Elmquist et al., 2009;Lichtenthaler, 2009; Traitler et al., 2011).The term describes a move from verticallyintegrated ‘closed’ models of innovation,typified by Edison’s Menlo Park and count-less other large technology companies inwhich the entire innovation process is con-ducted in-house, to an ‘open’ model thatutilizes knowledge and expertise from out-side of the organizational boundaries. It isdefined by Chesbrough (2006b: 2) as ‘theuse of purposive inflows and outflows ofknowledge to accelerate internal innovationand to expand the markets for external useof innovation respectively’). Although openinnovation is a relatively new term, someauthors have pointed out that the conceptbehind it is not (Paul and Dap, 2009).Huizingh (2011) contends that open innov-ation is simply a neat umbrella term for acollection of parallel developments such as

the use of networks and outsourcing in theinnovation process, that provides a valuableintegrative framework for academics andpractitioners. The degree of originality ishowever a relatively moot point; the aca-demic literature has since built upon theidea and extended theory in a number ofdifferent areas, including: leadership andorganizational culture (Dodgson et al.,2006; Fleming and Waguespack, 2007),business models (Chesbrough, 2007, 2010)and industrial dynamics (Vanhaverbeke,2006). Similarly, detailed case studies onfirms such as Proctor and Gamble(Dodgson et al., 2006) have described howopen innovation practices have revolutio-nized the organizational processes of estab-lished manufacturing and technologycompanies, assisting in the creation ofmany valuable products and services.

Three archetypal processes form the coreof the open innovation concept: outside-inprocesses (OI); inside-out (IO) processes;and coupled processes (Gassmann andEnkel, 2004). Outside-in processes refer tothe way firms use external sources of know-ledge and innovation (Chesbrough et al.,2006). This approach involves firms scan-ning for valuable knowledge that can beabsorbed into their in-house innovationdevelopments. Inside-out involves compa-nies exploiting internal knowledge exter-nally. This may involve the use of patentsthat the focal firm has no use for(Dahlander and Gann, 2010), or mayinvolve revealing internal knowledge to theexternal environment in a bid to improvethe chance of cumulative advancements(Levin et al., 1987) and participation(Henkel, 2006). Finally, coupled processesinvolve utilization of both IO and OI pro-cesses to bring new ideas to market. Thisentails cooperation with other firms in stra-tegic networks and facilitates knowledgecreation and learning within the innovationsystem (Dahlander and Gann, 2010). Agrowing body of literature also finds that

Chalmers 23



this cooperation with customers and com-petitors reduces the risks associated with theinnovation process (Enkel et al., 2005;Kirschmann and Warschburger, 2003;Ogawa and Piller, 2006).

While many of the popular examples ofopen innovation concern large multi-national enterprises (MNEs), the conceptis increasingly taking hold in the broaderbusiness environment (Van de Vrandeet al., 2009). Pullen et al. (2008) discussthe need for SMEs to focus on their corecompetences (i.e. the unique skills and cap-abilities possessed by the organization)while using external sources to overcomeareas of weakness and deficiency. Thisinvolves moving to what Rahman andRamos (2010) call a ‘networked paradigm’of collaboration between competitors andcustomers. Despite examples showing thatSMEs can overcome disadvantages relatingto size and resource scarcity through openinnovation practices (Gassmann andKeupp, 2007), Gassmann et al. (2010) pro-vide empirical evidence to show that alarger organizational size remains benefi-cial. Finally, drawing from research con-ducted in the Taiwanese Biotech sector,Lee et al. (2010) argue that a way of over-coming issues associated with size is tocreate intermediated networks that facilitatecollaboration. On the whole, significantgaps remain in research relating to openinnovation in SME and micro-sized firmsand it is considered unwise to assume simi-larities with MNEs in many areas.

It is acknowledged that some parts ofthe open innovation literature mayhave limited relevance to the field ofsocial innovation (in particular, researchspecifically relating to particular techno-logical contexts and many intellectual prop-erty issues); however it is proposed thatseveral key dimensions of the open para-digm can provide a valuable insight forsocial innovation scholars, practitionersand policy makers. The following section

will examine key theoretical areas of openinnovation:

Knowledge searching and networks

Knowledge is one of the fundamental inputsto the innovation process (Asheim andCoenen, 2005; Fischer, 2001; Nonaka,1995; Popadiuk and Choo, 2006).Schumpeter (1934) theorizes that radicalproducts and services and introduced tothe economy through combination of differ-ent pieces of knowledge. While the closedparadigm of innovation can be character-ized by the notion that ‘the smart peoplein our field work with us’ the open para-digm recognizes that knowledge is distribu-ted (unevenly) across the globe, and as aresult ‘not all of the smart people work forme’ (Chesbrough, 2006c: xxvi). This shift inthe locus of useful knowledge means thatknowledge searching and assimilation cap-abilities have become the key activities andsources of competitive advantage in theopen innovation process.

It has been suggested by Laursen andSalter (2006) that there are two dimensionwhich firms must consider when searchingfor knowledge: breadth and depth. Thedeeper and broader the search for know-ledge, the greater the degree of opennessthe firm displays. Search breadth involvessearching through a number of differentchannels for knowledge while depthinvolves how deeply a firm draws from aparticular external source (Laursen andSalter, 2006). Empirical findings show thatincreasing the breadth and depth of know-ledge searching has a positive effect oninnovation (Laursen and Salter, 2006;Leiponen and Helfat, 2010). Chiang andHung (2010) find that firms who pursuebroad search strategies enhance their rad-ical innovation performance while thosewho pursue depth improve their incremen-tal innovation performance. It is arguedhowever, that there is a tipping point after




which search activities become subject todiminishing returns (Laursen and Salter,2006). This is described as ‘over-searching’and may be a result of: absorptive capacityproblems (i.e. the ability of the firm to rec-ognize and exploit external knowledge);timing problems (ideas in the wrong timeand place to be exploited); or, attentionallocation problems (Koput, 1997).

In terms of searching broadly for sourcesof knowledge, one particular channel hasbeen increasingly integrated into the innov-ation process over recent years: the customer(Franke and Piller, 2004; Von Hippel, 2005;Von Hippel and Katz, 2002). In the privatesector, a failure rate of 50% or greater existsfor newly launched products, a numberattributed to a ‘faulty understanding of cus-tomer needs’ (Ogawa and Piller, 2006: 65).It is argued that integrating the user reducesthe risk associated with introducing newinnovations, primarily as there is a commit-ment from customers. This notion of userparticipation has been particularly welldeveloped in the open-source software com-munity where firms such as Linux havebenefited from the coding expertise andproduct design ideas of thousands of indi-vidual users (Chesbrough, 2006a; VonHippel, 2001). This is an insightful andhighly relevant example of how firms cansuccessfully use open innovation processesin order to elicit participation from users.

A further dimension of the innovation lit-erature has been a focus on going beyondlocal and towards boundary-spanning know-ledge searches, i.e. knowledge existing outsideof the organization’s traditional domain(Rosenkopf and Nerkar, 2001). Localsearches tend to lead to narrow myopicsources of knowledge while boundary-spanning searches can reveal distant know-ledge that can assuage ‘industry blindness’(Brunswicker and Vanhaverbeke, 2010;Gassmann and Zeschky, 2008). It is proposedthat searching for analogical problems – thatis, ‘searching for isomorphic relationships of

apparently unrelated knowledge domains,markets or technology functions’(Brunswicker and Vanhaverbeke, 2010: 684)– is a promising method of ensuring radicalnew innovations. This method has beenemployed in the fields of psychology and cre-ativity thinking for many years (De Bono,1990; Gick and Holyoak, 1980), and itwould appear to integrate easily into theknowledge-focused ‘open’ paradigm.Gassmann and Zeschky (2008) provide theexample of BMW overcoming the problemof providing an easy method for effectivelycontrolling the 200 different functions avail-able to drivers. By examining other indus-tries, engineers were able to recognize asolution in the video game control stick, inturn successfully incorporating the innov-ation into their iDrive device. Further exam-ples of this ‘creative imitation’ are providedby Enkel andGassmann (2010) who illustratehow the easyJet model has been applied toother industries with price-elastic demandcurves (such as easyCar and easyMobile)and even demonstrate how the physics prin-ciple of the Erlenmeyer flask has led to thecreation of waterless urinals.

The extensive use of inter-organizationalnetworks to facilitate open innovation alsoraises questions over the apparently para-dox associated with concurrently sharingand protecting knowledge (Bogers, 2011).It is suggested that firms adopt a hybridstrategy somewhere between ‘open know-ledge exchange’ and a ‘layered collabor-ation scheme’ (i.e. adopting differentknowledge sharing strategies within a pro-ject team to reflect members’ core or periph-eral status), in order to effectively managethe tension that exists with multiple innov-ation partners (Bogers, 2011).

Organizational factors

While the preceding section primarily exam-ines external dimensions of the innovationprocess, attention will now focus on internal

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factors that facilitate organizational ‘open-ness’. As Chesbrough (2006c) notes, firmsmust reorganize their internal operationsand create a porous boundary to fully bene-fit from external knowledge. He(Chesbrough, 2006c) provides the exampleof firms such as IBM and Intel who radic-ally altered the internal dynamics of theirrespective firms in order to adjust to thenew paradigm. A well-reported example ofthis new internal structure is Proctor &Gamble’s (P&G) Connect and Developapproach to innovation (Dodgson et al.,2006, Huston and Sakkab, 2006). Connectand Develop works by tightly defining aproblem then broadcasting the problemacross the firm’s global network. In one par-ticular instance, a baker in Italy had devel-oped a means of printing edible images onbaked goods, and this was soon profitablyabsorbed into P&G’s production process.

One caveat to the open innovationapproach however, is that organizationscannot simply eliminate R&D spend.While some of the MNEs discussed in theliterature have certainly reduced costs,recognizing and integrating external know-ledge requires internal knowledge andexpertise. This capability, known as absorp-tive capacity, is defined as ‘the ability of afirm to recognize the value of new, externalinformation, assimilate it, and apply it tocommercial ends’ (Cohen and Levinthal,1990: 128). While it can be safely assumedthat firms such as IBM and P&G contain asignificantly high level of absorptive cap-acity – especially in the wake of initiativessuch as Connect and Develop that link upand leverage the firm’s global knowledge –the same cannot be said for SMEs.Spithoven et al. (2011) suggest that low-tech, traditional firms do not have sufficientabsorptive capacity to benefit from openinnovation, and therefore should join col-lective industrial research centres toremain competitive in the open era. The evi-dence suggests that firms in such industries

are not exposed to as many opportunities asthose who invest in building and maintain-ing absorptive capacity.

Discussion

On the surface, the link between socialinnovation and open innovation mayappear slight, particularly given the latter’sgrounding in the hi-tech sectors and the for-mer’s community-oriented focus, howevermore detailed analysis reveals how theorydeveloped in the open paradigm can poten-tially account for perceived deficiencies insocial innovation policy and practice. Forinstance, one of the common barriers tothe adoption of social innovation lies inthe risk associated with disruptive innov-ation (Antadze and Westley, 2010; Jankel,2011). There remains a dichotomy in thesocial innovation sphere however, wherethose offering support to social innovatorsin the form of capital are institutionallyconditioned to favour incremental ‘safer’forms of innovation. Open innovation lit-erature however illustrates that increasing‘openness’ can significantly mitigate someof the risk associated with innovation(Leiponen and Helfat, 2010). First, empir-ical evidence supports the theory thatincreased variety and volume of knowledgesources simultaneously improves the innov-ation, increases the likelihood of disruptiveinnovation, and reduces the risks associatedwith introducing innovation (Chiang andHung, 2010; Laursen and Salter, 2006;Leiponen and Helfat, 2010). It is thereforeworth reappraising whether creating net-works of social innovators – as suggestedby the EU (Pulford, 2010) – is an entirelyproductive venture. If social innovatorsidentify too strongly as social innovators,and develop strong ties to other socialinnovators at the expense of more diverseand distributed groups, the innovation pro-cess may be starved of new knowledge andcapabilities. This myopic ‘local’ sourcing of




knowledge within narrow domains is welldocumented in other industries (Stuart andPodolny, 1996) and risks limiting the cre-ative potential of social innovation.

Proposition 1: Social and Community-

based organizations adopting a more‘open’ approach will mitigate risks asso-ciated with introducing new innovations.

The second factor that may help reducerisk in the social innovation process isthrough systematically searching distantknowledge domains for isomorphic patterns.The ingenious transfer of proven ideas intonew problem contexts is well documentedby Enkel and Gassmann (2010) in the com-mercial sector. In the social innovation field,one only has to look at Kiva for an exampleof the immediate impact analogous problemsolving can have. Kiva, a Swahili word for‘unity’, is a microfinance platform thatextends upon the original concept ofMuhammad Yunus’ Grameen Bank. Theinnovation with Kiva lies in the way inwhich it connects individual funders withrecipients. This is achieved through a processcalled peer-to-peer lending, a concept thatoriginally emerged as a means of sharing –normally illegally – music files and otherdocuments via sites like Napster andBitTorrent. By recognizing the power of thismodel and its applicability to microfinance,the founders of Kiva successfully adaptedand implemented this disruptive innovationinto their own social innovation. The mostinteresting aspect of this for innovators isthat, althoughKiva is a radical idea, the asso-ciated riskwasminimized as the success of thepeer-to-peer platform was proven in anotherindustrial setting.

Proposition 2: Social and community-based organizations adopting problemsolutions from different domains will

reduce the risk of new innovations failing.

A final consideration that has potentialto significantly minimize risk in the social

innovation process is careful considerationand selection of knowledge sources. Asresearch from the private sector hasshown, integrating the user into the innov-ation process has multifarious benefits (VonHippel, 2001, 2005). There is growing con-sensus that this could have a positive effecton the success of social innovations by clo-sely aligning user needs with services pro-vided (Broberg, 2010; Henkel and VonHippel, 2003). Svensson and Bengtsson(2010) analyse the introduction of socialinnovations through a user innovation lensand find that incorporating the user addslegitimacy to the innovation and helps inits wider diffusion. This contrasts withMcLoughlin and Preece’s (2010) work onthe failure of ‘rural cyber pubs’, whereweb-enabled computer units were installedin rural pubs in the UK as a means of pro-viding information technology access togroups excluded from the Internet. The ven-ture ultimately failed however, and one ofthe reasons was owing to poor integrationof user knowledge in the innovation pro-cess. This failure points to a more generalmalaise in some areas of the social serviceprovision, where the question of ‘whetherthe program meets the client needs in asignificant fashion is rarely measured’(Antadze and Westley, 2010: 347). The evi-dence suggests that social innovations workbest when utilizing the expert knowledge ofusers, though at present, the dominantparadigm amongst service providers isoften to provide services to people ratherthan for people. This is potentially thereforewhere smaller socially innovative organiza-tions hold a particular advantage over trad-itional social service providers, asresponsive mechanisms can be developedfor co-producing bespoke, highly custo-mized services that genuinely meet theunique needs of the service user.

Proposition 3: Social and community-

based organizations incorporating user

Chalmers 27



knowledge into the innovation process will

increase their chances of success.

As Jankel (2011) notes, there is also aninherent difficulty tackling social problems,primarily due to the manner in which theyare artificially compartmentalized. This isproblematic as it means dispersed groupsof unconnected individuals see part of aproblem without benefiting from a fullerconceptualization (similar to the blind menand the elephant fable Brazeal and Herbert(1999) use to describe the difficulty ofunderstanding the entrepreneurship para-digm). In contemporary civil society, thou-sands of organizations are operating incomparable blindness, tackling small partsof a particular social problem and perhapseven duplicating failed approaches in differ-ent contexts.

Open innovation provides a mechanismfor cutting across these silos by allowingorganizations to share problems and invitecollaboration from globally distributedknowledge sources. This process may beanalogous to panning for gold: time con-suming and resource intensive. Though, byinitiating this process, there is opportunityto engage a wide range of stakeholders insocially innovative activities and a broaderpool of knowledge can be drawn from.

This approach to tackling complexitycan be illustrated by the open sourcingmovement. Although linkages betweenthe software industry and the social sectormay not be immediately obvious,Chesbrough (2011: 135) hints at some pos-sible commonalities:

Unlike the innovation merchants andarchitects, they (open source program-

mers) do not seek financial profits fromtheir work. Instead, the mission is whatmotivates them. This is characteristic of

many community-based non-profits andreligious groups but also occurs in thesoftware industry.

The ‘open’ revolution in the softwareindustry also offers a possible avenue forsocial innovators to overcome the aforemen-tioned vested interests and protectionism.Linux, the open source operating system(OS) created and distributed for free bykeen hobbyists, has taken an unprecedentedshare of Microsoft’s Windows OS market,ending years of the larger firm’s almost mon-opolistic dominance. The collective effort ofprogrammers has also contributed to socialinnovations such as the low cost laptopscheme, One Laptop Per Child (OLPC), asprohibitive cost barriers have been removeddue to a free OS being available. The notionof open sourcing as a method of engagingthe effort and input of others is gaining trac-tion amongst policy makers.

Proposition 4: Social and community-

based organizations participating in someform of open, networked innovation willbe more effective at developing innov-

ations addressing the root causes ofsocial problems.Proposition 5: Social and community-

based organizations engaging in ‘opensource’ collaboration will be more effectivein tackling vested interests and dominant

competitors.

These final propositions have particu-lar relevance to ongoing policy discus-sions around the Big Society and thedecentralization of power to local groups.Fragmentation of general welfare andsocial provision to a patchwork of civil soci-ety organizations and private providers canbe argued in some ways to be more efficientand malleable to highly localized needs, yetthere remains a significant risk that it mayfalter should the traditional closed innov-ation paradigm remain the dominantlogic amongst socially innovative organ-izations. If the new wave of socially innova-tive organizations operate as discrete entities,failing in turn to comprehend the complexityand systemic nature of the problems they are




attempting to address, then meaningfulsocial progress is less likely than either other-wise under a more centralized welfare systemthat has greater oversight and coordinatingpowers, or under a truly open system of col-laborating organizations.

Concluding comments

Although the fields of social and openinnovation have thus far remained some-what distinct, it is suggested that adoptionof openness with regards to solving societalproblems is a promising avenue for futureresearch and practice. While previous workhas either explicitly or implicitly hintedtowards the promise of open innovationfor social entrepreneurs (Holmes andSmart, 2009; Murray et al., 2010), this art-icle offers a more overt linkage of the con-cepts by exploring how increasingorganizational ‘openness’ can overcomecommon barriers to social innovationfrom community level up. It is proposedthat this move towards a more ‘open’social innovation, be characterized by aporous organizational structure, committedinvestment in developing absorptive cap-acity, the involvement of multiple stake-holders – including the user, and asystematic focus on reducing the riskinvolved with innovation through broadknowledge sourcing activities. This ‘open’social innovation differs from some trad-itional social innovation processes in thatit repudiates the heroic individual approachto social innovation and identifies collab-orative organizational structures andbehaviours required to systematicallytackle social problems. Organizations pur-suing ‘open’ social innovation should beprepared to selectively reveal parts of theirknowledge and expertise to both competi-tors and customers/service users in the pur-suit of solving messy cross-disciplinaryproblems.

It is argued that consciously adoptingaspects of the open paradigm will assistsocial innovators in overcoming barriers tosocial innovation that have been identified.In particular, this article has provided aninsight into how network utilization andknowledge-searching activities can posi-tively affect the social innovation process.This article is however conceptual, andempirical work investigating the relation-ship between the openness of the sociallyinnovative organization and innovative out-comes is urgently needed in light of therapid deployment of localism policy meas-ures. Little is known about the knowledgesearch strategies of socially innovativeorganizations and there has been no pub-lished research examining how the absorp-tive capacity of small socially innovativeorganizations limits their potential toinnovate. This begs the question as to howresource limitations may impact the abilityof (particularly smaller) socially innovativeorganizations to actively participate in moreopen practices, and raises further questionsabout the consequences of fragmenting gen-eral social provision. Finally, as risk is con-sidered one of the fundamental barriers toadoption of social innovations, it would bevaluable to explore to what extent differentvolume and variety of knowledge sourcesreduce the perceived risk of introducingany particular innovations.

Notes

1. Mindlab (www.mind-lab.dk/en).2. For instance, Muhammad Yunus winning the

Nobel prize for his socially innovative

Microfinance project.

3. See the recent pan-European develop-

ments led by the European Commission

via Social Innovation Europe (www.

socialinnovationeurope.eu).4. Typified by the Social Innovation Fund (SIF)

launched by President Obama in the USA.

Chalmers 29



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Social innovation: An exploration of the barriers faced by innovating organizations in the social economy