Thriving Within the Turbulence: A Complexity Theorizing Approach to Social Innovation by Nonprofit Organizations

Thriving Within the Turbulence: A Complexity Theorizing Approach to Social Innovation by Nonprofit Organizations

Rachel Taylor (Federation University, Australia), Nuttaneeya (Ann) Torugsa (Mahidol University, Thailand & University of Tasmania, Australia) and Anthony Arundel (The United Nations University – Maastricht Economic and Social Research Institute on Innovation and Technology (UNU-MERIT), The Netherlands & University of Tasmania, Australia)
DOI: 10.4018/978-1-5225-6301-3.ch003


This chapter embraces complexity theory as a basis for theorizing social innovation in nonprofit organizations (NPOs) operating in the Australian disability sector, which is currently grappling with the implementation of a disruptive policy reform leading to a paradigm shift in the funding of disability support services, the National Disability Insurance Scheme (NDIS). To cope and thrive within a new NDIS-fueled marketplace, disability NPOs need to pursue socially innovative agendas. Through a review of cross-disciplinary literatures on social innovation and the use of a complexity theorizing approach that integrates multiple theories (i.e. institutional theory, resource dependence theory, and user innovation theory), this chapter proposes a holistic complexity-based framework that can potentially: explain how disability NPOs develop social innovations operating at the edge of chaos, help improve the ability of research to tackle societal and managerial problems, and hence strengthen management scholarship.
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Social innovation is a highly complex, interdisciplinary phenomenon characterized for its chaotic dynamics (Taylor, Torugsa, & Arundel, 2018) and its propensity to cross-cut the boundaries of the private, public, and nonprofit sectors (Caulier-Grice, Davies, Patrick, & Norman, 2012; Nicholls & Murdock, 2012). Within the fields of management and organizational studies, the concept of social innovation has gained immense popularity amongst scholars following its relatively recent emergence in the literature (Phillips, Lee, Ghobadian, O’Regan, & James, 2014). Although most commonly defined as “a novel solution to a social problem that is more effective, efficient, sustainable or just than existing solutions and for which the value created accrues primarily to society as a whole rather than private individuals” (Phills, Deiglmeier, & Miller, 2008, p. 39), social innovation is largely recognized for its underdeveloped and contested conceptualizations (Ayob, Teasdale, & Fagan, 2016; Howaldt & Schwarz, 2017), which renders it a pre-theoretical research field.

The aim of this chapter is to explore this perplexing problem-domain by adopting a ‘complexity lens’ to holistically interpret the intertwined forces propelling social innovation within organizational contexts. The authors consider the role and impacts of social innovation as it unfolds in nonprofit organizations (NPOs) operating in a national sector grappling with rapid states of change. Specifically, this chapter outlines a review of germane cross-disciplinary literatures to uncover new theoretical perspectives of the dynamic social processes behind this phenomenon.

The authors use NPOs operating in the Australian disability sector as an illustrative example of how organizations are able to adroitly manage high-stakes and often turbulent change processes within multi-stakeholder environments. With disruptive changes occurring in the wake of a new social policy reform, the National Disability Insurance Scheme (NDIS) (Connellan, 2014), Australian disability NPOs are discarding outworn ways of operating as they attempt to fulfil a critical new imperative to develop socially innovative solutions. In this environment, the social innovations stemming from disability NPOs are multifaceted and are designed to improve service quality, increase organizational responsiveness to client-driven demands, and enhance efficiencies for greater competitiveness and viability (Connellan, 2014; Green & Mears, 2014).

Yet despite the intensifying pursuit of social innovation by managers in these organizational contexts, the current theoretical models found in the scholarly literature fail to adequately explain the dynamism and complexity of this phenomenon (Lettice & Parekh, 2010; Westley & Antadze, 2010). For instance, it is by no means clear how disability NPOs can purposefully foster socially innovative behaviors as they operate in tumultuous external environments, and nor is apparent how the inherent sources of complexity embedded within these contexts may also impact upon their efforts to develop social innovations (Chalmers & Balan-Vnuk, 2012).

Key Terms in this Chapter

Nonprofit Services: Programs, initiatives, or service products provided by a nonprofit organization.

Nonprofit Processes: Combinations of practices or organizational structures in social action, social relations or human interactions within a nonprofit organization context.

Organizational Capability: An organization’s capacity to bring its resources and skills together and deploy them advantageously, thereby forming the identity of the organization by defining what strategies they are good at doing.

National Disability Insurance Scheme (NDIS): A major social policy reform based on a piece of legislation introduced by the Australian government, titled National Disability Insurance Scheme Act 2013 . The Act sets out a funding program based on individualized support packages for people with disabilities, and commenced being rolled out nationally on July 1, 2016.

Australian Disability Sector: A national sector of nonprofit organizations that are predominately funded by government and/or philanthropic grants, and that provide services to people with disability or mental health issues. Services provided within this sector include accommodation support, respite, specialized skill development, and community access services.

Disability Nonprofit Organization (NPO): A non-profit organization that works with people who live with disability or mental health issues.

Social Innovation: A service and/or process that contributes to generating a novel solution to a social problem that is more effective, efficient, sustainable or just than existing solutions, and for which the value created accrues primarily to society as a whole rather than private individuals.

Disability Nonprofit Organization (NPO) Client: An individual who lives with disability or mental health issues, and who participates in programs or accesses support services provided by a disability NPO.

Complexity Theory: An overarching theoretical lens to integrate multiple theories and emergent constructs, and which is concerned with the emergence of order in nonlinear systems.

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