Economic foundations of social innovation
The combination of social innovations with growth and evolution will only reach the extent that it can show its social and economic impact for the beneficiaries as well as the society in general. For social innovation to flourish, an inspiring environment that provides support and enables mutual learning is essential.
Europe is facing complex and interconnected socio-economic challenges, including youth unemployment, migration, population aging or poverty, to name a few, but it is difficult to answer them. Individuals and groups affected by the resulting intractable problems—also known as intractable problems—face significant limitations in their ability to participate fully in social, economic, cultural, and political life. Social innovations emerging in Europe and around the world offer promising solutions for sustainable progress in the face of current problems.
However, incorporating social innovation into inclusive growth will only go so far as to demonstrate its social and economic impact for vulnerable and marginalized populations as well as society at large. It is claimed that the strengthening of these groups helps to overcome the problems caused by the lack of resources by increasing the quality of life of people by strengthening the ability of people to participate in society, which strengthens development, well-being and social solidarity in the long term. It means that the exception is not seen as an individual disability, but rather related to institutional blocks and failures, market failures, silo thinking of the public sector, and the increasing fragmentation of society. It can be logically concluded that the change from the perspective of seeing vulnerable groups as a burden on society to a perspective that values their individual capabilities as well as their participation in society is basically one of the foundations of social discussion.
This paper is organized as follows: next, the meaning of “economic base” is introduced, followed by the SIMPACT model of components, objectives and principles used to explain sustainable business models (Section 4). The last section examines the role of the right environment for social innovation.
This paper significantly derives from the findings of the FP7-SSH project entitled “SIMPACT”, which has attempted to provide a better understanding of the economic dimension of social innovations to better understand the impact of social innovations on social and economic transformation.
Meaning of economic base
Emphasizing the economic basis of social innovations, SIMPACT points to the important role of social innovation as a catalyst for individual well-being, collective well-being, social justice and effectiveness, in short sustainable social impact. This tendency to bridge large-scale societal challenges and small-scale social innovation activities as a set of interactions that transcend levels of governance (micro, meso, macro), institutional boundaries, and sectors (public, for-profit, non-profit or social cooperative). are subject to a wide range of exercises. At the micro level, many small, locally embedded activities address a set of distinct needs. By empowering vulnerable groups, they actively facilitate inclusion processes. At the meso level, it refers to institutional change. In other words, social innovators act as “rule breakers” and challenge existing practices, the welfare system, and market institutions (such as rules, regulations, attitudes, governance). At the macro level, social innovation offers a new division of labor between the realm of politics, i.e., welfare systems and the institutions that govern them, civil society, and economy.
The interaction of components, goals and principles
Social innovation as an evolutionary process includes the development, implementation, practical application and consolidation of new innovations and diverse cooperation of different factors. Therefore, social innovations are characterized by an open-ended, iterative process of experience and learning, including abandonment and failure. For this reason, the economic basis of social innovation is based on the proper recognition of social innovation factors, resources and institutions (i.e. components), factors’ objectives and underlying principles (COP).
Components include factors and resources as production factors and institutions as given environmental factors. From an economic point of view, factors from civil society (formal and informal), economic and political sectors are the central factors. The nature and size of the resources mobilized during the innovation cycle significantly affect the solution. Typically, social innovators must combine economic, political, social, and personal resources to bring their solution to life. Information is evaluated as a fundamental economic resource for obtaining opportunities by social innovators. Social resources interact with economic resources and include communication capital. In other words, they invest in relational assets, knowledge sharing routines, complementary resources and capabilities. In addition, political resources such as human rights influence or supplement the use of economic resources. Finally, political, welfare, social and economic institutions can be designed to strengthen social and economic factors as well as support social innovation. In addition, social innovators are embedded in a specific institutional context in which the behavior and interactions of agents are formed.
Goals include the motivations and goals of social innovators that are economically or socially or a combination of both forces. Economic goals include maximum profit, cost reduction, maximum welfare, draining public budgets, and social goals include strengthening, social solidarity, empathy, or quality.
They are life. In particular, social innovators are motivated by commitment and cooperation.
Principles refer to decision-making mechanisms and interactions between agents and the environment. In terms of the economic basis of social innovations, efficiency and governance are more important principles. By acting in the conditions of lack of resources, the efficient allocation of resources to match the goals of the agents is of considerable importance for social innovations. Governance describes decision-making, leadership and ownership mechanisms and ranges from general regulation to co-regulation and self-regulation. The different modes of efficiency are best described by idioms [3]. Examples include contradictions and conflicts between economic and social goals, short-term success and long-term impact, competition and cooperation.
The interference of these components in social innovation can lead to different results. This interference can create conflicts such as the conflict between economic and social goals, the conflict between internal and external decision-making, or the conflict between public management and self-regulation. For example, the short-term economic goal (such as profit maximization) may conflict with the long-term social goal (such as social capabilities), which can lead to misdirection in the motivation and decision-making of social innovators.
Suitable environment for social innovations
To support social innovations, a suitable environment should facilitate its constituent factors. This environment can affect the existing conditions in economic, political, social and institutional fields. For example, a dynamic economy provides financial opportunities for social innovators. Government policies and systems can also provide regulation that helps motivate and engage social innovators. Also, culture and social motivations can also have a great impact on social innovations.
Finally, it is important to note that social innovations require not only economic dimensions, but also social and cultural dimensions. In order to achieve the greatest effect of these innovations, an appropriate environment must be created that pays attention to social, moral and cultural aspects in addition to the economy.
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