Innovating not-for-profit social ventures: exploring the microfoundations of internal and external absorptive capacity routines

Abstract

Research into the phenomena of social innovation has long focused on what it is and why people become engaged in this form of behaviour. Another piece of the theoretical jigsaw however, requires understanding how this type of innovation is enacted by organizations. This article therefore looks at the means in which Not-for-Profit (NFP) social ventures pursuing socially innovative activities develop the necessary capabilities to innovate. We use the multidimensional theoretical construct of absorptive capacity (ACAP) and the evolutionary economics concept of organizational routines to analyse 16 case studies of innovative NFP ventures in the UK and Australia. Our results show that these organizations have a unique mediating function in the social innovation process by configuring internal and external ACAP routines to combine user and technological knowledge flows. Other key findings highlight the emergence of internal tensions as established routines are supplanted in order to ‘professionalize’ the socially innovative NFP venture, and between routines underpinning knowledge sharing and resource allocation. We conclude by proposing some research directions for those taking forward the study of social innovation.