Social Innovation and Social Enterprise: Evidence from Australia

Abstract

‘Social innovation’ is a construct increasingly used to explain the practices, processes and actors through which sustained positive transformation occurs in the network society (Mulgan, G., Tucker, S., Ali, R., Sander, B. (2007). Social innovation: What it is, why it matters and how can it be accelerated. Oxford: Skoll Centre for Social Entrepreneurship; Phills, J. A., Deiglmeier, K., & Miller, D. T. Stanford Social Innovation Review, 6(4):34–43, 2008.). Social innovation has been defined as a “novel solution to a social problem that is more effective, efficient, sustainable, or just than existing solutions, and for which the value created accrues primarily to society as a whole rather than private individuals.” (Phills, J. A., Deiglmeier, K., & Miller, D. T. Stanford Social Innovation Review, 6(4):34–43, 2008: 34.)

Emergent ideas of social innovation challenge some traditional understandings of the nature and role of the Third Sector, as well as shining a light on those enterprises within the social economy that configure resources in novel ways. In this context, social enterprises – which provide a social or community benefit and trade to fulfil their mission – have attracted considerable policy attention as one source of social innovation within a wider field of action (see Leadbeater, C. (2007). ‘Social enterprise and social innovation: Strategies for the next 10 years’, Cabinet office, Office of the third sector http://www.charlesleadbeater.net/cms/xstandard/social_enterprise_innovation.pdf. Last accessed 19/5/2011.). And yet, while social enterprise seems to have gained some symbolic traction in society, there is to date relatively limited evidence of its real world impacts. (Dart, R. Not for Profit Management and Leadership, 14(4):411–424, 2004.) In other words, we do not know much about the social innovation capabilities and effects of social enterprise.

In this chapter, we consider the social innovation practices of social enterprise, drawing on Mulgan, G., Tucker, S., Ali, R., Sander, B. (2007). Social innovation: What it is, why it matters and how can it be accelerated. Oxford: Skoll Centre for Social Entrepreneurship: 5) three dimensions of social innovation: new combinations or hybrids of existing elements; cutting across organisational, sectoral and disciplinary boundaries; and leaving behind compelling new relationships. Based on a detailed survey of 365 Australian social enterprises, we examine their self-reported business and mission-related innovations, the ways in which they configure and access resources and the practices through which they diffuse innovation in support of their mission. We then consider how these findings inform our understanding of the social innovation capabilities and effects of social enterprise, and their implications for public policy development.

Appendix: Principal Component Analysis

Principal Component Analysis (PCA) is a method of determining the empirical association between a number of variables (Tabachnick and Fidell 2007: 610), by generating a unique mathematical solution which analyses variance (Tabachnick and Fidell 2007: 635). Consequently Principal Component Analysis, with Oblique rotation and Kaiser Normalisation, was used to examine the relationship of the covariance matrix of the types of innovation used in social enterprises. Analysis of the screen plot indicated that there was an elbow, indicating two components in the data. This is confirmed by examining the rotated component matrix (with higher loadings shown in bold) (Table 3):

Table 3 Rotated Component Matrix^a for the Principal Component Analysis

Consequently, two components were found in the data differentiating between organisations which undertook goods innovation and those who undertook process, service and mission innovation.