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

Abstract

Research into the phenomenon of social innovation has long focused on what it is and why people become engaged in this form of behaviour. However, another piece of the theoretical jigsaw requires understanding how this type of innovation is enacted by organisations. This article looks at the means by which not-for-profit ventures pursuing socially innovative activities develop the necessary capabilities to innovate. The multidimensional theoretical construct of absorptive capacity and the evolutionary economics concept of organisational routines are used to analyse 14 case studies of innovative not-for-profit ventures in Australia and the UK. The results show that these organisations have a unique mediating function in the social innovation process by configuring internal and external absorptive capacity routines to combine user and technological knowledge flows. The article concludes by proposing some research directions for those taking forward the study of social innovation.