Welfare Enhancement through Social Innovation: Balancing State Direction and Grassroots Action

Abstract

This article advances the understanding of social innovation (SI) by examining how public policy frameworks support the development of robust SI ecosystems in dynamic contexts. Using a hybrid framework that integrates ecosystem theory—highlighting multi-actor interdependencies—and Mazzucato’s entrepreneurial state theory—emphasizing the state’s market-shaping capacities—the study offers a new lens to assess public interventions. It asks: How can public institutions address key challenges to expand and implement SI within growing ecosystems? The research design employs a systematic qualitative approach, bridging a content analysis of key international reports and policy documents with original qualitative field data from the author’s doctoral research. This empirical foundation includes semi-structured interviews with 25 public officials across six ministries, conducted between July 17, 2015, and March 18, 2017, to explore institutional strategies and barriers within a growing ecosystem. The study identifies six core public sector roles: initiator, facilitator, resource provider, capacity builder, catalyser, and regulator. Findings show that public institutions operate not as passive enablers but as entrepreneurial actors that de-risk innovation, coordinate stakeholders, and embed SI principles in institutional structures. By combining collaborative ecosystem dynamics with entrepreneurial state functions, the article demonstrates how governments can strategically shape, scale, and sustain inclusive and transformative SI ecosystems while overcoming systemic barriers.