The Influence of Public Institutional Collaboration on Social Innovation Efforts and Types in Heterogeneously Endowed Organizations

Master’s Thesis

The Influence of Public Institutional Collaboration

on Social Innovation Efforts and Types in

Heterogeneously Endowed Organizations

Björn Thiesen (s2726211)

MSc. Strategic Innovation Management

Supervisor: Dr. Florian Noseleit

Co-Assessor: Dr. Pedro de Faria

Date: 20

_​

_{of January 2020}

Table of Contents

Abstract

3

1.Introduction 4

2. Literature Review 6

2.1 Defining Social Innovation 7

2.2 Types of Social Innovation

8

2.3 The Role of Public Institutions in Social Innovation 9

2.4 Heterogeneous Organizations and Resource Endowments

11

2.5 Research Gap

12

3. Methodology 13

3.1 The Research Context: The Sports Industry 13

3.2 Research Design 15

3.3 Data Collection and Analysis 15

3.4 Research Quality 18

4. Results 19

4.1 Different types of social innovation

19

4.2 Focus of Differently Endowed Firms in Social Innovation

20

4.3 Governance of Social Innovation and Third-Party Collaborations

23

5. Discussion 27

5.1 The Influence of Resource Endowments on Social Innovation

27

5.2 Heterogeneous navigation of Institutional Barriers

29

5.3 Proposed Model

31

6. Concluding Remarks

32

6.1 Implications 32

6.2 Limitations and further research 33

Abstract

Oftentimes private organizations collaborate with public institutions to create social innovation in organizations. These social innovations can be distinguished in two main categories: bifocal and purely social innovations. What has become evident is that the behaviour of well endowed firms and less well endowed firms with regards to their financial resources and networks differ when it comes to these collaborations with public institutions. This paper explores how differently endowed organizations navigate collaborations with public institutions with regard to social innovation efforts and types. The results indicate that well endowed firms possess the scale, network and financial resources to navigate around any institutional barriers and conduct social innovation on a for-profit basis (bifocal), while less well endowed organizations cannot directly navigate around those barriers and are highly dependent on the resources collaborations with public institutions bring. Therefore, oftentimes the decision making and flexibility of less well endowed firms is highly compromised, making social innovations efforts regularly purely social. However, by using the financial resources and networks of the public institutions less resource endowed firms might leverage the scale disadvantage and create strong social value for their stakeholders. The findings have relevance to companies seeking to innovate and collaborate in the CSR and “shared value” space, to social entrepreneurs, and to researchers interested in these topics.

Keywords:

Social Innovation; Resource Endowments; Public Institutions; Institutional Barriers; Heterogeneous Organizations; Football Industry, Collaboration.

1.Introduction

The attainments of social innovation (SI) are everywhere. These new ideas (products, services, and models) that simultaneously meet social needs and create new social relationships or collaborations while improving society (Murray, 2010) are drivers for various and highly diverse industries such as energy production (Mulgan, 2007) and for this research most importantly, sports (Tjønndall, 2017). Consequently, the movement of social innovation has gained momentum through the growing interest in social issues related to management, entrepreneurship, and public management (Cajaiba-Santana, 2013). More and more organizations are interested in social phenomena and tackle societal problems with innovative solutions. This rising interest is also supported by a study of the consulting firm McKinsey. Its 2007 survey of 400 chief executive officers of global companies found that 70% of the respondents consider a strategic approach to social and environmental issues as having either a very high or high priority. These findings strongly contrast the 2002 findings where only 33% found it relevant (Oppenheim et al., 2007).

The demand for social innovation is not unilaterally coming from inside the businesses, but stems also largely from society, creating a high demand for further exploration (Leadbeater, 2007). However, to achieve social innovation, a wide range of resources and skills are needed (Murray, 2010), whereby many organizations turn to open innovation and collaborative test environments. Especially open innovation has mitigated the historical resource endowment differences, by allowing organizations to pass on some of the risks and costs associated with innovation to their strategic partners (Livescault, 2019). Because of the mutual interest and benefits, private organizations often choose to collaborate with public institutions (PI) for social innovation, whereby PIs can offer resources and support in realizing SI while simultaneously driving regional sustainable development (Lepotre & Heene, 2006). However, the more heavily organizations rely on each other to venture into the realm of social innovation, the more control they forfeit in the hands of the greater collective. Oftentimes, early-on

compromises determine that organizations enter social innovation efforts with a different goal than the one that originally made them interested in the collaboration. So, through the involvement of public institutions, firms can tap into networks, resources, and subsidies, but on the other hand often encounter various trade-offs such as compromised objectives, risk-averse behaviour and a slow-moving system, which might drastically limit the autonomy and flexibility of the operations (Lepotre & Heene, 2006).

These findings give reason to believe that if the resources and support of public institutions are not necessarily needed, many firms might behave differently to navigate or avoid those complementary trade-offs that collaborations with PIs can entail. This claim is supported by Orr et al. (2017) who found that firms with better resource endowments have greater choices in markets and partners and overall more resources to spare for innovation (slack resources), allowing for more collaboration autonomy.

Hence, it is highly interesting to investigate whether the resource endowments of an organization play a significant moderating role in the collaboration efforts of firms with public institutions. The focus of this research will lie on less resource endowed firms (LEFs) and well resource endowed firms (WEFs) with regards to financial and network resources. Moreover, it will be examined how the efforts of social innovation differ in terms of social innovation types when they are supported by public institutions versus self-arranged and funded. To be able to answer these questions most precisely the research question will be defined as follows:

How do organizations with different resource endowments navigate collaborations with public institutions with respect to their social innovation efforts and types?

The SI literature is a fairly new field of research and therefore does not yield sufficient information to answer this research question. Murray et al. (2010) even state that there is a significant lack of research into the process of SI and few academic studies, comparative research or quantitative analysis in the

extant literature. Focussing qualitative research on the role of public institutions in social innovation efforts will drive the scientific field further and will allow managers to draw conclusions on when, how and whether to collaborate with public institutions and when it is advisable to seek support through other channels. Moreover, future researchers will be able to develop this arm of literature further by building on this qualitative analysis.

To draw conclusions and find valid results, the research will focus on the sports industry, which has many similar characteristics and faces similar struggles as other markets. It is a consumer product industry, that develops many innovations, of which the acceptance is mostly based on the adaptation to its stakeholders’ needs. The conformity of the sports industry with other markets has the advantage that the developed theoretical insights may be applied to other commercial contexts as well.

The structure of this study is as follows: First, an overview of the literature on social innovation is provided and the term is defined. Thereafter, the types and focus of social innovations are examined. Thirdly, public institutions and collaboration barriers and challenges are introduced. Then, the innovation characteristics of heterogeneous organizations will be investigated, with a special focus on resource endowments and how their approaches to (social) innovation differ. Accordingly, in the methodology, an overview of the sports industry will be provided and the research design and quality will be introduced. Finally, the results are presented and propositions are developed, then the theoretical and managerial implications of the results are discussed and concluded.

2. Literature Review

Currently, social innovation is investigated by many researchers and debated widely. Research has produced many definitions, uncovered many different forms and types of SI, and along with it, environments where it is applied. Contradicting to the beliefs of many, the phenomenon is not new to the world or to economists; there has been documented writing about SI for nearly two centuries

(Mulgan, 2012), and the enduring presence can be explained by the fact that social innovation in its nature is a part and driver of many industries, as touched upon in the introduction. This literature review will prune the many definitions of social innovation and narrow them to one that clearly fits the design of this research. Furthermore, a bilateral focus distinction of SI is introduced to create a framework to differentiate the efforts. Then the role and barriers of PIs collaborations and heterogeneously endowed organizations are introduced.

2.1 Defining Social Innovation

To better understand social innovation with its functions and differentiation, one must recognize its underlying concepts and motivations. Social innovation is a part of economic practices, whereby Joseph Schumpeter was the first to mention the economic need of it, which he described as the “innovative response to growing concern about the broad range of sustainability and social issues” (McNeill, 2012). Next to the relevance in economic relations, Schumpeter also recognized innovations importance in other societal fields such as cultural, social and political life (Moulaert and Nussbaumer, 2006). For this research, it is important to point out that Schumpeter defined his version of SI as an innovation which is emerging from within the capitalist system and combines its processes with social goals (“social wants”), but also one which works across sectors and seeks favourable social outcomes deliberately instead of just as a by-product of market processes (McNeill, 2012). This is in line with the definition of Moulaert et al. (2005) who propose three dimensions of social innovation which oftentimes interplay: 1.) satisfaction of human needs that are presently unmet; 2.) changes in social relation; and 3.) an empowerment dimension in the form of increasing socio-political capability and access to resources. In an extension of Schumpeter’s idea of social innovation, Moulaert et al. add a recognizable component of sociology. Pol and Ville (2009) simply defined social innovation as an action to increase the quality and quantity of life. As seen by the three definitions above, the difficulty to define SI is amplified by the fact that it is very subjective and transformational, which makes it appear and feel different in each field, industry and context. On top of that, the disintegrating state of

the SI research complicates the development of generalizable knowledge and makes it hard to hypothesize about consequences, guidelines and tangible outcomes of social innovation in collaborations between private and public entities. What becomes clear by analysing the above definitions, is that in order to consider an innovation as social, there must be clear social value creation and a new model to bring a new design or development to market and/or to access new markets (Szegedi and Bereczk, 2016). For the purpose of this study, the researchers have chosen the SI definition of Pol and Ville (2009) with the extension of an innovation component found in Szegedi and Bereczk’s (2016) definition. Therefore, the definition involves a quality and quantity improvement of life achieved through innovative means.

Another important aspect of this study is to be able to differentiate SI from corporate social responsibility (CSR) to understand the various social efforts of firms. The European Commission (2015) defines CSR as the: “responsibility of enterprises for their impacts on society”, and it is a voluntary managerial approach to sustainable development (Carroll and Shabana, 2010), which many firms pursue and which can bring positive returns and improved reputation. Generally, it is an umbrella term of social efforts where social innovation is one of the firms’ enabling tools to integrate social and environmental aspects into operations.

2.2 Types of Social Innovation

After having defined the boundaries of SI and differences to CSR for this report, it is important to outline the types of social innovation to be able to categorize the innovation efforts of differently resource endowed organizations. The categorization of the social innovations will help to extend the findings of the research and formulate propositions about how collaborations with PIs might influence or challenge the social focus and decision making of private organizations.

Firstly, Pol and Ville (2009) refined social innovation into two general groups, which are relevant for this study. According to them, SIs can be “bifocal” which are the vast majority of social innovations. Bifocal innovations can be considered business - as well as social innovations. Hart and Milstein

(2003) describe bifocal innovation as the generation of sustainable value by employing strategies and practices that contribute to a more sustainable world and at the same time drive shareholder value. Many organizations implement social innovation with the doctrine of the “Triple Bottom Line” (Elkington, Emerson, & Beloe, 2006), meaning the fulfilment of social needs through the combination of social impact with profitability. Popular bifocal examples are energy generation through wind turbines or the sourcing of young, talented football players in developing countries. On the other hand, social innovations can also be of “pure” social nature, which means that those social innovations are not business innovations and address needs, that failed to be fulfilled through market mechanisms itself. Especially public institutions and private interest groups support the development of pure social innovations, because they aim to improve social performance, entail information spillovers for society but by definition do not yield a direct economic return for the acting organizations (Pol and Ville, 2009). However, one motive for any private organization to conduct pure social innovation is that it might engender potential future bifocal innovations which could be of economic value in the future. An example of a pure SI is the introduction of a nonprofit shuttle service for disadvantaged people. Having defined the two distinctions, pure and bifocal social innovation will help to understand the collaborative motives of both the public institutions as well as the differently endowed organizations. However, to fully understand the potential influence of PIs on the conducted type of social innovation, it is important to understand the challenges and barriers of collaborations, that PI can pose. The following section will examine those barriers.

2.3 The Role of Public Institutions in Social Innovation

The public sector’s primary role and objective are to produce social value, and both public, as well as private organizations, can contribute to the creation of it and are likely to be motivated to collaborate in its pursuit. (Hartley, Sørensen, and Torfing _{​2013​). Private organizations seek open innovation with} PIs because conducting SI is very resource-intensive and entails great reputational risk in case of

failure or misconduct (Sinclair and Baglioni, 2014). Collaborating with public institutions can provide organizations with additional resources such as finances, reputation and a network for the diffusion of the innovation. Moreover, PIs regulate the conditions in which social businesses operate. This implies that PIs have policies and funding instruments such as legal frameworks, tax treatments and incentives, that can help organizations to increase their (international) competitiveness, while simultaneously supporting regional sustainable development (Porter, 1991; Porter and Van der Linde, 1995). Hence, collaborating with PI is an opportunity for both LEFs and WEFs for joint learning, risk sharing, overcoming of scale disadvantages and resource acquisition (Lepotre & Heene, 2006, The Youth Foundation, 2012). In return, public institutions gain more forward-thinking structures and can profit from private organizational cultures and operations, which allow for more risk-taking behaviour and faster decision making (The Young Foundation, 2012).

However, the absence of competition and economic incentives in the public sector, combined with hierarchical control, regional focus and red tape, might create barriers for innovation and introduce unique collaboration challenges for both WEFs and LEFs (Halvorsen et al. 2005, Torfing, 2018). Research by Downs (1967) for example found that the public sector is compartmentalized in bureaucratic silos which often make the structure rigid, slow, complicated and very unfavourable for innovation. This is accompanied by complete transparency - and accountability requirements and the obligation to meet the contradictory and multifarious demands of the general public. One challenge that is especially relevant to LEFs is the unequal power distribution in public and private collaborations (Gajendran & Brewer, 2012). LEFs, compared to WEFs have less slack resources to counter the unequal power and therefore might forfeit a lot of collaboration control to the PI (Orr et al. 2017). The lack of control could result in early-on compromises, where organizations might dive into social innovation with a different goal than the one that originally made them interested in pursuing the collaboration. Furthermore, Gray (1989) found a lack of collaboration experience and frequent failure to manage inherent collaboration risks for PIs, which might impact the collaboration

negatively. Again, especially LEFs might be more affected by the institutional lack of experience and management qualities, as they do not have the resources to compensate for the partner’s shortcomings. However, one the other hand, as mentioned above PIs have a very regional strategic focus. This might be favourable for the collaboration with LEFs as they also focus their business and social efforts on the local community (Besser 1999).

For this reason, the researchers believe that there might be a significant impact resource endowments can make in SI efforts. WEFs are in a position to use slack resources and create socially innovative operations internally by handpicking potential open innovation partners and thereby aligning the SI efforts and the strategy. LEFs, on the other hand, might often be dependent on the collaboration with PIs to realize any SI. Their operations might get compromised by the involvement of public institutions and accordingly with the more control they forfeit in the hands of the greater collective, they might be losing the authority and flexibility of their SI efforts. Systematic questioning of industry - and field experts will probe into this direction and deliver propositions whether the public institutional impact is higher on LEFs than on WEFs in collaboration efforts. Moreover, questions will be asked to test whether LEFs can navigate those barriers at all, given the little available resources. The next section will focus on pointing out the differences between LEFs and WEFs in terms of innovation and collaboration efforts.

2.4 Heterogeneous Organizations and Resource Endowments

Generally, organizational resource endowments include all assets, capabilities, processes, attributes, information, and knowledge controlled by a firm that enables it to conceive of and implement strategies that improve its efficiency and effectiveness (Daft, 1983). For the purpose of this study, the firm resources are limited to financial resources and network resources.

Research by Hansen (1992), Choi & Lee (2018) and Mousilois et al. (2015) found that less endowed firms are well connected with the proximite external environment but dedicate much fewer resources to innovation than well endowed firms, which gives WEFs an innovation advantage in direct comparison. LEFs base their decision making on their proximate environment and organizational finances while WEFs motivate their decision making mainly on global social issues (where their stakeholders are respectively). For the firms this means that having a good reputation in the local community is far more important for LEF than for WEF, because LEFs engage more in practices that are aligned with the needs of the local community (Besser,1999). Furthermore, with the slack resources, many WEFs conduct for profit social efforts, while many managers of LEFs believe that their social and environmental impact is negligible and that there are not sufficient resources to dedicate to SI (Hitchens et al, 2005, Petts et al. 1999, BITC, 2002; Observatory of European SMEs, 2002; Tilley, 2000). This believe impacts especially the pure SI efforts of LEFs because in most cases they cannot internally sustain operations which yield no immediate returns and require boundary spanning.

In conclusion, the regional focus and innovation disadvantages resulting from the little resources of LEFs could be a motive of increased collaboration activity with PIs to boost social innovations. Moreover, LEFs could use the resources of PIs for the creation of common stakeholder social value and visibility in the local community. Contrasting, WEFs are often able to integrate bifocal social responsibilities in their strategic management and increase returns and organizational visibility through internal efforts (Lepoutre and Heene, 2006).

The above findings shine a light on how innovation efforts differ in regard to resource endowments. What is still inconclusive however is how WEFs and LEFs navigate the PI collaboration challenges and barriers introduced in 2.3. Therefore, the gap in the literature gives a strong reason to investigate these barriers’ influence on the collaboration between differently endowed firms and PIs.

2.5 Research Gap

The above literature shows that implementing and conducting social innovation is not easy and comes with many constraints and barriers. Collaborating with public institutions in SI brings many advantages, but also introduces challenges and barriers to firms. It has also been shown that those barriers may vary from firm to firm and that there are big differences between firms with heterogeneous resource endowments. Especially the financing and reach and diffusion of social innovation efforts differ. The study investigates this under-researched topic and aims to create propositions that could be tested in future research to understand how the challenges of public institutional collaboration influence the efforts and types of social innovation. Ultimately, the findings of this research will help managers to position their firm optimally with regards to open innovation through public institutions.

3. Methodology

As addressed in the literature review and the introduction, there are several research gaps regarding social innovation efforts and how public institutional barriers influence these for heterogeneously endowed firms. The following section will firstly introduce the sports industry to define the boundaries of this research and then elaborate on the research methods that are deployed to address the research gap and to answer the research question.

3.1 The Research Context: The Sports Industry

In an era of hypersegmented social media feeds and tailor-made, personalized content, football still arises as a common platform that economically allows reaching a wide mass of heterogeneous people gathered around a single passion - watching 90 minutes of a ball rolling. And with all signs pointing at football continuing its dominance with a healthy growth rate among most relevant demographics

(Sawe, 2018), it is appropriate to conduct a study about social innovation within the boundaries of this industry. Furthermore, the sports industry, in its core, is of social nature (Taylor et al., 2015) and has many traits where social innovation can be of use to organizations, athletes, and other relevant stakeholders (Tjønndall, 2017). To give one prominent example, one could look at the efforts of the French Football Federation (FFF) in building sports grounds all over France. The primary motivation of the FFF is to physically educate children and to “keep them off the streets”, while it also is a relatively low-cost way of sourcing new extraordinary talent. Lately, the twenty-year-old superstar Kylian Mbappe grew out of this system (Dukic, 2019).

The seamless integration of SI in sports is possible because it transcends cultural, political and social settings and is played throughout the world in various contexts. In the setting of sport, social ideas can thrive and provide the basis for innovation and societal improvement (Ratten, 2011).

Sports organizations have been involved in their local communities for decades, sometimes centuries, and from within the industry, the public outcry against Nike's South Asian sweatshops created natural expectations for a radical shift in industry standards, towards more social operations.

Important social and economic change such as the health of children and youth, a diverse and ageing population, and the mounting concerns regarding the increasing social divide, have resulted in a change of focus on the social responsibility of sports organizations and make the topic of this research even more relevant for organizations (Margolis & Walsh, 2003; Sagawa & Segal, 2000). The societal changes have motivated major sports institutions such as the National Football League to create socially innovative partnerships with nonprofit organizations or to create socially responsible campaigns themselves. One example is the ‘UEFA Foundation’ where the Football association created an effort to innovatively commit resources to social issues affecting minorities (UEFA Foundation 2019).

These social motions in the sports industry are becoming more and more irmportant for society because it is proven that participation and interactions in sports have a beneficial social impact. Sport, the product of the industry, encouraged to form community groups and is inclusive and

confidence-building (DCMS Sport and Government Policy, 1999). With socially innovative efforts, sports organizations are trying to motivate society to participate more in conventional sports, trying to market their product to their stakeholders and are also trying to create new ways of improving the quantity and quality of life (Pol & Ville, 2009). Concluding, the sports industry provides an interesting environment for this research.

3.2 Research Design

Given the underdeveloped state of social innovation research, a qualitative, exploratory research design for this study is most suitable as it is used to study social, cultural and political aspects of organizations. (Shields & Rangajan, 2013, Myer, 2013). Furthermore, inductive reasoning is used, implying that the researchers began “bottom-up” by collecting data about the topic to design proposals (Myers, 2013). By applying the three streams approach by Miles and Huberman (1994) the credibility of these data is improved. Firstly, the approach focuses on reducing the collected data, then making the data visible in a spreadsheet and finally drawing conclusions and verifying them as a means of testing the validity of the findings.

In general, to collect data, the research consists of multiple phases. In the first phase, experts in the field of SI in football and the sports industry were interviewed to define the scope and fitting environment for the research. In the second phase, managers from football organizations were interviewed and these data were triangulated with complementary documents and provided videos (Patton, 1999). Triangulation is an excellent approach to gain more insight and validity into the subject (Myers, 2013). The data that were provided for triangulation mainly described the organizational efforts of social innovation in more detail, so uncertainty could be erased concerning projects. In the third phase, the data were analysed and findings were concluded by creating a holistic approach to extract all relevant information. This three-phase design allows the researches to acquire an in-depth understanding of the industry and the topic.

3.3 Data Collection and Analysis

The qualitative research consisted of six semi-structured interviews, two documents and three videos in total. Semi-structured interviews are chosen because they offer a flexible approach to the interview process and allow for unanticipated responses and the exploration of spontaneous topics raised by the interviewee (Tod, 2006). The first two interviews were conducted to acquire inside expertise from social innovation specialists. Here, the researchers spoke to two experts. One is the partnerships and media relations manager for a non-profit organization that makes an effort to increase social innovations in the football industry. Expert two is a senior consultant in a global sports innovation consultancy. Afterwards, interviews were conducted with interviewee 3, the team manager of a small Eredivisie club in the Netherlands, interviewee 4, the head of communications at a renowned club in the Danish first league. This is a club that is highly socially innovative and the interview offered a lot of expertise as well as practical insights in the industry and socially innovative clubs. Afterwards, interviews were conducted with interviewee 5, an analyst from an Eerste divisie club in the Netherlands, who is also involved in strategic decision making at the club, and interviewee 6, a project manager at a well endowed, successful french first league club. The club competes regularly internationally and has a global reach and fanbase. A more detailed overview of the interviews, documents, and videos can be found below in figure 1. The interview questions can be found in appendices 1, the interview transcripts and additional data sources can be viewed upon request.

Phase 1: Defining the scope: _{​In this phase, the researchers reviewed research about social innovation}

in the sports industry and compared it with the insights from experts of the football industry. The data were generated by means of semi-structured interviews. The objective of the two interviews was to develop a fundamental understanding of the practical application of social innovation in the industry. This practical information, paired with the theoretical background build through the literature review was used to form a more detailed bilateral understanding of social innovation in the industry and how

PIs moderate this relationship. Furthermore, the interviews were used to develop initial questions for the conceptual interviews. All expert interviews were conducted in English.

Phase 2: Data collection: In the second phase, the interviewer conducted four semi-structured interviews. As mentioned earlier, three interviews were dedicated to more regionally focussed football clubs from the top leagues in the Netherlands and the first Danish league, while the last interview was focussed on the globally acting and operating football club from a top european league. The interview questions were based bilaterally on the practical input the experts contributed and the theoretical information acquired through the preceding literature review. In order to retrieve rich and novel data, clear examples and follow-up questions were asked from the respondents in case their answer was not fully satisfying. At the end of each interview, the interviewer inquired for additional documents to review, which might be of relevance to this study. This technique enables triangulation in order to prevent retrospective data collection biases (Yin, 1981). Three of the five interview partners provided data in the form of videos or websites (documents) concerning their social efforts to further explore the topic. Five of the semi-structured interviews were conducted in English, one was conducted in Dutch and translated to English. In both languages, English and Dutch, the interviewer is proficient.

Interview/Data source Position/Role Details

1 Interview Industry and social innovation

expert

Skype interview 19.11.2019 1h 02min

2 Interview Industry and (social)

innovation expert

Skype interview 22.11.2019 44min

3 Interview Head coach small Eredivisie

Club

Skype interview 26.11.2019 32min

4 Interview Head of communication

outstanding socially innovative Danish first league club

1. Skype interview 20.11.2019 21min 2. Skype interview 26.11.2019 40min

5 Interview Analyst and strategist Skype interview

at an Eerste divisie club in the Netherlands

29.11.2019 34min

6 Interview Project manager social projects

big french football club

Skype interview 30.11.2019 37min

7 Documents Social innovation projects

overview

Retrieved from: the web on 09.12.2019 & 10.12.2019 8 Video material Social innovation projects Revised on 26.11.2019

Figure 1_{​: Overview of interviews and data sources.}

Phase 3: Data analysis: _{​During this phase, the data were inducted in a spreadsheet for better overview} and comparability. With the help of the spreadsheet, the data were coded and linked to relevant concepts from the literature review. First, the expert interviews were coded and linked to academic articles to increase explanatory power. This process helped to create a framework, which was used to assign codes to the remaining interviews conducted with phase two participants. As the analysis has been an iterative process, complementary, “open” codes were assigned to the interview transcripts. To analyse the interviews, the responses were scanned for recurring keywords and then examined for similarities and combined. Afterwards, they were scanned for relevance for the research question and refined by erasing redundant keywords. During the coding process, a structure similar to the interview questions was followed. After the coding process, the final codes were examined for connections with the themes to address the research question. This procedure was inspired by the above mentioned three-stream activity by Miles and Huberman (1994). A list of the codes can be found in Appendix 2. The spreadsheet of the codes can be viewed upon request.

3.4 Research Quality

To ensure the quality of this research, validity, and reliability were taken into account. The researchers safeguarded validity by asking similar questions to multiple respondents, in order to prevent informant bias. Further, the triangulation of interview data and documents is used to improve general validity (Patton, 1999). It should be noted however that through the explorative nature of this research,

generalizability is not the primary focus of this research. Rather, this study is meant to provide propositions for empirical researchers and theorists.

4. Results

The aim of this section is to present the collected data from the interviews related to the research question_{​. ​}For simplicity and a better overview, the findings are presented in the form of direct quotes and divided into subsections which build a holistic overview of the results of this study. Sections 4.2 and 4.3 directly address the research question, while 4.1 introduces the distinction of different types of SI.

4.1 Different types of social innovation

To understand the different social innovation efforts of the well and less well endowed clubs, it is important to understand the type of social innovations they are conducting. According to the interviewed managers of the LEFs, their social innovations are mostly pure and for social value creation in the local community. In addition, some less well endowed clubs are starting to conduct little bifocal social innovations, due to their severe shortage of resources, the operations are very small. These results are supported by a quote from a small club manager who explains several initiatives his team is working on:

“_​In 2017, we arranged a service for our elderly and disabled supporters, where we offer a shuttle service to and from our stadium. Without this service, many elderly and disabled would be unable to attend our matches.[...] Next to that we are trying to find new ways to scout our players more effectively in the area, and create a profitable niche for us. This programme is what we are investing in right now”.

On the contrary, well endowed football organizations focus their social innovations more on the generation of bifocal innovations and global social value. The interviewed manager states for example that they have recently entered the Chinese market by funding social activities and partnering with local charities, while simultaneously promoting their football team to the people that receive the help and benefit otherwise. Furthermore, the findings show that WEFs also collaborate with local PIs, where they mostly conduct pure social innovation in their hometown, collaborating on social value efforts. To summarize, the results show that the LEF are very locally concerned and have to establish structures to support their day to day business mostly by pure and also very small bifocal innovations, while here the WEFs are past that point and focus their social innovations more on bifocal platform, product, and market innovations. Both clubs conduct pure social innovation through their foundations, while smaller clubs struggle to implement bifocal innovations at all.

4.2 Focus of Differently Endowed Firms in Social Innovation

This section introduces the standings of the experts and the organizational focus differences on social innovation. The focus of social innovation in the organization is relevant to understand the mechanisms behind the endeavours and supports the reader to understand the behaviour of LEFs and WEFs concerning the institutional challenges. This section will explain the geographical focus of SI, and the objectives and strategies of the organizations.

The results give clear evidence that the social innovative focus of less well endowed organizations is fully regional. The interviewed managers point out that it is only reasonable to focus on the proximate environment and on communities that are directly affected by the sporting club. This has two main motivations: The first motivation is that the stakeholders of the interviewed clubs are to a very high percentage from the same region as the club, and people from other regions mostly favour other football organizations closer to their homes. The second motivation for regional and communal social innovation efforts are the financial endowments of the clubs. All the responses of the less well

endowed organizations are in line when talking about the scarcity of budgets for social innovation efforts. At LEFs, finances for social innovation endeavours are almost exclusively sourced from regional public institutions. That is why, the social projects that less endowed organizations pursue are very much adapted to the needs of the community they are operating in. One interviewed LEFs manager states:

“Here at (Club), we do a lot for the local community. Our foundation works together with the public institutions towards a better society in the region. We focus on a healthy lifestyle, especially for children, the creation of opportunities for talent development, mutual respect, equality and also, what I find very innovative and nice, we try to fight the loneliness of elderly people by having them accompany our players on the pitch. For now, we cannot pursue self-funded bifocal innovation next to our youth talent programmes._​”

What becomes evident through the quote and the other interviews is that the focus of smaller clubs is mostly pure social and results-driven. However, with increasing endowments, bifocal innovations also might start to emerge. One LEF’s manager who first worked at a WEF in the social department states:

“At (LEF) we are more focused on the results, while at (WEF) we were looking more at how much money we can make. (WEFs) need to have new ideas for supporter initiatives and actions. At (LEF), the foundation has its own very small budget, while in bigger clubs the budget allocation is not that strict and social projects are not separated from other business efforts. Here at (LEF) everything is combined in one strategy. We do hand out marketing materials at our social activities, but social value for our stakeholders, not marketing, is the main focus there.”

The statement of the manager above is in line with how the manager from a WEF describes the social innovation efforts. During the interview he states that their geographical focus of social innovation has to be global because of the stakeholders they have around the world:

“The organization touches many different aspects across the world. If you look at our portfolio of stakeholders, fans, players, staff, academics all around the world, and the other sports we have, there is a lot to do. [...] For example, on the one hand the foundation helps with global natural disasters and on the other hand, supports local communities in our hometown.”

When the organization had much fewer resources, their focus was national, but with the endowments, the focus also grew and more emphasis was placed on bifocal innovations. Furthermore, he distinguishes the social innovations and efforts between the organization’s foundation and the academy:

“Through (WEFs) foundation the effort is purely philanthropic to benefit societies without any expectations of return. We want to use our wide reach to make a real difference. We have 75 million people we can reach and impact globally, which is more than most public institutions. If it is engaging communities through our academy, then the motive is clearly bifocal. [...] We open our academies in communities with a strong source of talent - to eventually onboard them to our professional teams. Or we open them for commercial reasons, we placed an academy in the US last year. Because the US is a huge sports market with an opportunity to develop long term supporters and fan engagement. Here the kids pay to be a part of the academy.”

This quote shows that better endowed clubs have much more opportunities to engage in social innovation and to diversify their focus towards profitability. This is in line with the findings of paragraph 4.1 which found that bigger clubs are able to conduct social innovation in more diverse

fields such as global product-, market- and platform innovation, while smaller clubs are primarily regionally active. The focus of the differently endowed organizations also varies greatly. Less endowed clubs are more engaged in pure social innovation, while better endowed clubs are in a position to conduct pure social innovation next to self-funded bifocal social innovation which aims at long term economic returns. The claims that WEFs are more eager to conduct bifocal SI are supported by an interviewed industry expert who responded:

“In the upper triangle in the football industry, not many people are thinking about pure social innovation [SI]. The people are mostly focussed on profit and business. The football industry is a short term, aggressive and paranoid business world and there is no point in thinking that you can take football away from the current owners and stop the business of football. It is always going to be for-profit only. The only way to integrate is by using their language, so that they can see that it makes sense from a business, ethical and social perspective to integrate SI and that it opens doors to new means of profitability.”

To summarize, the focus of less endowed clubs is largely regional, given the strong community ties and collaborations with public institutions. The collaborations with the institutions also produce mainly results-driven pure social innovation with LEFs. The researched well endowed organization on the other hand, focuses its social innovation efforts on its global stakeholders and often conducts internally funded bifocal social innovation, due to higher budgets, ROI concerns, and long term strategies. WEFs do not need the network of public institutions because their fan base often exceeds the public reach and is global, while PIs mostly contribute a local network in collaborations. Furthermore, an interesting aspect about the development of social innovation efforts comes with the growth of the organizations and additional resources. Once the organization grows, the regional focus shifts and bifocal social innovations become realisable in the LEFs.

4.3 Governance of Social Innovation and Third-Party Collaborations

This section introduces the results concerning third-party collaborations with special focus on public institutions and potential challenges. Moreover, the findings concerning hierarchy and general governance in social innovation objectives at the differently endowed organizations are presented. The aim is to give a comprehensive overview of how the governance processes differ and how firms with different resource endowments navigate institutional barriers and challenges.

As introduced in section 4.2, well endowed clubs focus more on a global scale of social innovations and therefore need to manage many operations at the same time. This global management approach requires lots of structures and staff as the interviewed manager of the big club points out in this quote:

“_{​We have a foundation for all social affairs. It is a separate whole organization with an allocated} budget. Many people manage the fundraising, allocation, and delivery of the projects, it is a very big organization. We work with local charitable organizations and are approached by third-party organizations almost on a daily basis. Usually, there is a long process of pre-discussion with those organizations to make sure that we are on the same page to build a specific project with specific deliverables [...]. Social initiatives are much more difficult to manage, because of the much higher expectations.”

The quote shows the sheer size and scope of the social endeavours very well. An entire separate foundation is managing all the pure social innovations on a global scale. The in 4.2 introduced academy and other bifocal social innovations are excluded from the work of the foundation. Furthermore, WEFs have the option to choose their partnerships and projects freely, which is highlighted by the following response:

“We (WEF) had discussions with organizations, initially we both have similar views on what we would like to do, but once you discuss the details of either party it is just impossible to realize due to

challenges and barriers of opinions on where things should be done or how they should be done, or timing,...It has happened that we just walked away from proposals. Then, either we do the project ourselves or we find another party to do it with.”

The excerpt above shows that well endowed organizations have many options when it comes to social innovation. If the objectives of collaborations with third parties, including public institutions, are not aligned with the strategy of the organization, negotiations are used to find a common denominator. In case of no agreement, it is possible to execute the aspired project either externally, in collaboration with other partners, or completely internally. These options give a lot of flexibility to bigger clubs, especially concerning the navigation of institutional barriers.

The structure at less endowed clubs, on the other hand, is much more horizontally dispersed and social innovation is integrated into the main business strategy. One manager states that:

“The social innovation decisions at (LEF) are not difficult to make. Once someone in the organization has an idea and cares about it, the management will have an open ear for it, there are not more layers involved. Generally, if the idea is funded by public authorities, and also yields a return for our stakeholders and allows us (the club) to break even, we will pursue it. It is excellent publicity and adds value to our community! Otherwise, if the public institutions are not collaborating or have demands which we cannot agree with, we need to assess whether there are private external sponsors. Internally the funds are really scarce and needed elsewhere.”

Another LEFs manager responded similarly in his interview concerning the governance and financing of social innovation:

“When ideas arise we discuss them, and propose them to our partners, which for SIs are mostly (PI of the region). Then we discuss the feasibility of the project and if they do not agree, our hands are more

or less tied. With the financing coming from their end, they have the power to decide. We collaborate mostly for pure SI because of the PIs accountability and transparency requirements. If we want to do good for our fans, the local PI can extend our regional network even more, so it’s a win-win situation, we almost never decline. For for-profit (bifocal) SIs, we mostly have to find other partners.”

This quote indicates that decision making is fast and simple in LEFs, but resources are really limited. In order to conduct any social innovation efforts, the less endowed organizations are highly dependent on public institutions or other external funding, whereas the latter is difficult to find. What this quote also shows, however, is the high willingness to conduct social innovation even if it yields no economic return. The managers all state that as long as break-even in terms of finances is given and it adds value to the stakeholders of the organization, the SI is pursued. Another LEFs manager expresses the difference between small and big clubs governance in the following way:

“_{​It is easy to make choices here (LEF). In WEFs, the decisions are always based on the question:} What do we make the most money on now? The decisions are based on short term economic returns. Here, at this LEF, everyone can raise their voice to pursue social innovation endeavours.”

Next to the highlighted profit making concerns of WEFs, experts also focussed their responses on the role of public institutions and other third party actors in the scalability of projects. For them, PIs are essential to grow the projects and diffuse them.

To summarize, in general, well endowed clubs are more rigid in their decision making and slow-moving, but also have more financial independence to conduct social innovation. They have a generous allocated budget for their externally managed foundations and the decision making is separate from the organization’s main line of business. Moreover, due to fierce competition in the top tier of football (see the last quote in 4.2) WEFs decisions might often be based on ROI analyses. They collaborate a lot with external partners such as public institutions, however, whenever an agreement

cannot be found, well endowed organizations have the flexibility to navigate those barriers through other channels. Network endowments from public institutions are less important to WEFs because their social innovations are mostly focussed globally. Less endowed clubs with fewer resources, on the other hand, have very fast decision making and are completely dependent on third parties. When it comes to disagreements about projects, there is very little to no negotiation ground, due to power inequalities as well as accountability, and transparency requirements from the public institutions. However, throughout all interviews a very high willingness to collaborate was found as long as it yields social value for the common stakeholders of the PIs and the LEFs.

5. Discussion

Until now, research about social innovation efforts with respect to different resource endowments of organizations has not been focussed on collaborations with public institutions. This field of research is widely unknown and created a very interesting literature gap. Therefore, this paper has addressed the following research question:

“_{​How do organizations with different resource endowments navigate collaborations with public}

institutions with respect to their social innovation efforts and types?”.

In the following sections, the results of this study are compared with the elements revised in the literature review. This will be done in two categories, first, section 5.1 will address the evaluation of different types of social innovations conducted by differently endowed firms and secondly, 5.2 discusses the heterogeneous navigation and exploitation mechanisms of organizations.

5.1 The Influence of Resource Endowments on Social Innovation

The results concerning the different types of SI conducted by heterogeneously endowed organizations present that, LEFs focus mainly on PI funded pure social innovations which yields no direct economic

return to the private organization (Pol and Ville, 2009). At first, this seems contradicting to economic theories that firms should commercially use the little resources they have to create return yielding bifocal social innovation. However, the LEFs navigate the collaborational barriers of PIs in a way that almost no internal financial resources are used to create social value for their common stakeholders. Furthermore, it is a long term strategy, as Pol and Ville (2009) outline, these social value creating collaborations might even engender future bifocal innovations for the LEFs.

Hence, through the collaboration with the PIs and the exploitation of their resources, the focus of LEFs innovations is on pure, community-centred well being, instead of return yielding bifocal innovations. Very little to no resources are used for these innovations that produce direct social value for their fans and visuality as they are almost exclusively achieved through the collaboration with PIs. Furthermore, the little resources LEFs do invest in SI are invested into bifocal innovations such as more efficient and convenient ticketing systems, their small youth programmes, or other low cost social innovations. This is in line with Mousilois et al. (2015), Tilley (2000), and Pol & Ville (2009) who found that smaller organizations dedicate significantly fewer resources to innovations and cannot sustain operations which yield no immediate returns. Also, Besser’s (1999) findings that having a good reputation in the local community is highly important to LEFs, are confirmed.

Well endowed firms in this study, on the contrary, focus their SI efforts clearly on bifocal innovations, which is in line with the findings of Hart & Milstein (2003), stating that larger organizations rather thrive to generate sustainable shareholder value as a product of SI. Examples of the organization’s bifocal innovations are the academies all around the world which are aimed at low-cost talent acquisition, while simultaneously giving the participants education and the chance to become a successful footballer. These actions of the WEFs are supported by the findings of Elkington, Emerson & Beloe (2006), and Lepoutre & Heene (2006), who found that firms can fulfill the social needs of their stakeholders through a combination of social impact and profitability, if the efforts are integrated into their strategic management.

Overall, the study’s findings are complementing Pol and Ville’s (2009) research by confirming the pure social innovation funding of public institutions with the goal of social value creation (Hartley, Sørensen & Torfing, 2013). Furthermore, it confirms that LEFs lack the resources to conduct extensive social innovation processes, especially if they are not yielding immediate returns. LEFs rather focus on extensive pure social innovation and low-cost bifocal innovation that aims at the creation of immediate cost reduction or other economic returns.

In line with this is that the study confirms the possibility to profit from social innovation if it is well integrated into the business strategy. In this study, both firm types primarily use different types of social innovation and manage to increase social value, while operating economically. This paper builds on the above literature and extends the research with the context on which types of social innovations are conducted when organizations are well, versus less well endowed and have to navigate institutional conditions. The findings lead to the following propositions:

1. Most social innovations in less resource endowed firms are pure social innovations funded by public institutional collaboration. Most social innovations in well resource endowed firms are bifocal social innovations.

a. Collaborations with public institutions reduce the scale disadvantage of less resource endowed firms.

b. Well resource endowed firms pursue a composition of purely social and bifocal social innovations due to the better resource endowments and increased financial autonomy. c. Less resource endowed firms conduct some low-cost bifocal innovations.

5.2 Heterogeneous navigation of Institutional Barriers

The responses concerning the navigation of institutional barriers for well and less well endowed organizations diverged very much in this research. While the literature predicted that both WEFs and LEFs would be challenged by the hierarchical control, slow decision making, red tape and bureaucratic

silos of the PIs (Halvorsen et al. (2005), Torfing (2018), Downs (1967)), this was not reflected in the findings at all. Contrariwise, the responses reflect that especially less well endowed organizations might actively seek collaborations with public institutions given that they break even in the endeavours. It seems that the predicted power inequality (Orr et al., 2017) and local focus (Besser, 1999) of the PIs have created an environment where LEFs are collaborating on pure SI as much as possible to achieve visibility in the community and social value for the common stakeholders at very low cost. Hence, LEFs are navigating the barriers by collaborating primarily for the financial resources, the network and the exposure, while better endowed companies have less dependency on the financial support and network and can navigate the barriers through internal funding and other open innovation opportunities in the market. Therefore, as predicted in the literature review Orr et al.’s (2017) results are confirmed that WEFs possess more slack resources to navigate the institutional barriers, such as unequal power distribution, imposed by the PIs.

The flexibility of WEFs extends to the collaboration efforts of social innovation itself. The results of this study are indicating that better endowed organizations have the capabilities and resources to finance and conduct social innovation without third parties and public institutions involved. This is important, especially if the contractual conditions are not aligned with their business strategy, WEFs will most likely navigate the rigid structures, lack of economic incentives, and transparency demands by pursuing their socially innovative business strategies without compromise. The motive to conduct such determined bifocal social innovation lays in the competitive and profit-driven character of the football industry which can be compared to and projected onto other markets. This competitive advantage of bigger organizations cannot be realised by smaller organizations alone, given that they are highly dependent on institutional funding and must cope with any challenge that is posed upon the collaboration in order to receive public funding. This predominantly financial limitation creates a gap between the differently endowed organizations, which is also described by Hitchens (1999), Petts (2005) and Choi and Lee (2018) who found that LEFs managers often find their low resource social

efforts to be negligible and at a disadvantage. Concluding, the collaboration efforts with public institutions can help small organizations to overcome scale disadvantages and might decrease involved risks by receiving full financial coverage (Lepotre & Heene, 2006). This leads to the following propositions:

1. Well resource endowed firms navigate barriers of public institutional collaboration with regards to social innovation through extensive internal financing and external partners. 2. Less well endowed firms are highly dependent on public institutional collaborations with

regards to social innovation.

a. LEFs seek collaboration with PIs to achieve social value of their stakeholders if the organization can break even while doing so.

b. The financing of social innovation through public institutions is the most important aspect of the collaboration.

c. The network of public institutions is less important for well endowed firms due to the global focus of SIs.

5.3 Proposed Model

In conclusion, this paper has addressed the research question: _{​How do organizations with different}

resource endowments navigate collaborations with public institutions with respect to their social innovation efforts and types? _​The research question can be answered by the resource endowment itself. The level of resource endowments (left column) indicates whether a firm is likely to have high or low flexibility and autonomy when it comes to the governance of social innovation efforts. Well endowed firms might pursue a self-arranged social innovation and very often conduct bifocal social innovation (right column). Less well endowed organizations, on the other hand, do not possess a lot of autonomy and flexibility when it comes to the governance mode. Through the unequal power

social innovation. The findings are summarized in figure 2, forming a model on how differently endowed firms navigate institutional barriers and what type of social innovations are implemented.

Figure 2_{​: Proposed model}

6. Concluding Remarks

6.1 Implications

The findings of this paper contribute to the integrative perspective on social innovation because the framework is delivered on how differently endowed organizations may navigate institutional conditions. Furthermore, an insight is given on which social innovation types are primarily enforced by the respective organizations. The main contribution of this paper is a suggestion of propositions for managers and stakeholders on both sides of the collaboration efforts. For the managers of well and less well endowed private organizations, the research contributes by suggesting approaches and options for social innovation collaborations with PIs, while on the public institutional side, this research helps to select a suitable partner for several social innovation endeavours. What becomes evident is that less well endowed firms could be a great vehicle for public institutions to conduct pure social innovation in the community, while well endowed organizations oftentimes might thrive for

more and make the communal projects for profit, as they have the clear advantage of financing social innovation more flexible. This option might pose challenges on negotiations and waste resources. The above formulated propositions lay ground for further empirical research into the topic.

6.2 Limitations and further research

The findings of this research are subject to several limitations. Firstly, the definition of social innovation in a research context is very variable and subjective to the researchers, so the study is based considerably on personal interpretation of the subject and the boundaries that are set by the researchers. Other researchers might interpret the definition of social innovation in a less/more exclusive way, producing deviating findings. Moreover, the sample size of six interviews could be increased to give more detailed general insights, which could also include the side of the public institutions and which factors are relevant for collaboration on that side of the partnership. Furthermore, with the strong and rapid change of IT and social media adoption in the football industry, the efforts for social innovation and its collaborations with public institutions might, soon after the publication of this study, not be limited nor constraint by the same factors anymore, giving room to new, improved approaches to the financing of socially innovative projects. This development can give room to a new interesting study, that could analyse the impact of IT and social media reach on SI efforts and how they moderate this entire framework. Lastly, the interviews with the experts have indicated that social innovation is often a CSR tool to make profits for the bigger clubs. It would be interesting to research where the threshold of resource endowments lays until the pure social focus shifts towards a bifocal profitable strategy within the organizations.

Acknowledgments

I would like to thank all of the respondents for their openness and time they made for this research. Furthermore, I would like to thank Dr. Florian Noseleit, my supervisor, for guidance and support during the process of this research.

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