Bringing Social Innovation to Scale:

Leveraging Relational Capital and Risk-Taking Behaviors of Actors in Complex Ecosystems

Social entrepreneurs are change agents that seek to maximize their use of limited financial resources to create long-term, lasting solutions to complex issues such as youth unemployment, recidivism, lack of home ownership and a high rate of health disparities. Philanthropists, impact investors and intermediaries play an imperative role in creating systems and influencing the strategies, choices, and intentions of these social entrepreneurs. Researchers suggest “the impact investing industry suffers from inefficiencies that limit its impact: including the lack of efficient intermediation, which implies high search and transaction costs, fragmented demand and supply, complex deals, and underdeveloped networks (Lyons & Kikul, 2012).”  There is as a need to study the interpersonal relationships among all of the key stakeholders in the ecosystem.

My dissertation implements an exploratory sequential mixed methods approach in a 3-strand study to reveal the perspectives of a wide-range of stakeholders in the social innovation ecosystem, such as social and commercial entrepreneurs, social enterprise staff and management, beneficiary groups, philanthropic and investment intermediaries, and funding bodies. The behaviors and practices of actors within the social impact investment ecosystem range from simple, informal responses for use in ‘everyday interactions’ to more complex, formal structures. In the first qualitative study I focus on the individual and organizational processes used to spark social enterprise in communities of economic distress. In the second quantitative study, I analyze the role of social enterprise financing and their social mission, geographic proximity, and risk absorption. Based on findings from the initial qualitative study and the quantitative study, I articulate a research model to study the tensions, issues, and challenges of philanthropic dyads in the social innovation ecosystem.  The final strand of the three-part study examines the impact of investor relationships with intermediaries and investees. This research uses a qualitative, multi-case comparative research design. Examining stakeholder relationships in multiple social impact investments enables the identification of patterned behaviors that have endured across investments, across different settings, and diffused beyond the initial occurrence, indicating the emergence of new logics, structures, and processes.  I develop a theoretical model that offers testable propositions for further exploration.

Key findings include the following leverage points for practitioners and academics alike: social entrepreneurs engaging in continuous, experiential learning to point out barriers in the system; philanthropic intermediaries and impact investors explicitly addressing the challenge of mission drift when expanding the resource pool; and social entrepreneurs using co-creative strategies based on localized knowledge to scale best practices. Specifically, our findings highlight the journey of impact investors to be more strategic in using impact investments in scaling social innovation and making a better social impact.

My dissertation posits a deep consideration of the relational context in which key actors in the social sector operate to influence both unexpected and expected consequences that will shape the vitality of the U.S.