Enhancing Cross-Sector Collaboration: An Analysis of Social Impact Bonds in Corporate Welfare States

• In Event: Cross-sector collaborations

Abstract

Welfare states globally face a variety of challenges like climate, geopolitical or health crises such as the recent COVID-19 pandemic, while at the same time struggling with limited financial resources (Maier et al., 2018; Olson et al., 2022). To address this dilemma, discussions have focused on the importance of social innovation approaches, cross-sectoral collaboration and leveraging private resources alongside government funding (Becker & Smith, 2017; Bertelsmann Stiftung, 2015; Maier et al., 2018; Pittz et al., 2021; Schaefer & Bauer, 2015; Then & Schmidt, 2020).
An exemplary instrument that facilitates this cross-sector collaboration and leverages private capital to address societal problems is the Social Impact Bond (SIB). SIBs function as social impact partnerships in which private investors provide upfront funding for a social project and recoup their investment from the public sector, which acts as the outcome payer if the intervention proves successful (Bertelsmann Stiftung, 2017, 2018; Cohen, 2020; von Schnurbein et al., 2015).
The current discourse on the contribution of SIBs includes several arguments: One argument posits that SIBs could act as a catalyst for promoting social innovation (Millner et al., 2017; Olson et al., 2022; Sinclair et al., 2014; Social Finance, 2009). Another perspective suggests that SIBs could serve as an innovative financing tool for impact investing (Millner & Meyer, 2022; Sinclair et al., 2014, p. 20; Social Finance, 2009). Other scholars argue that SIBs bolster efficient collaboration among government, civil society, and private sector entities, thereby strengthening inter-sector partnerships (Maier & Meyer, 2017; Millner et al., 2017; Millner & Meyer, 2022; Olson et al., 2022; Sinclair et al., 2014; Social Finance, 2009).
Compared to the 283 SIBs implemented worldwide, progress has been limited in states with a corporate welfare state orientation (Government Outcomes Lab, n.d.). One reason for this slow progress in corporate welfare states may be differing stakeholder interests and limited experience with cross-sector collaborations (Maier & Meyer, 2017; Millner & Meyer, 2022). In this study, we examine whether SIBs can foster cross-sector collaboration in corporate welfare states and identify the barriers that have impeded their achievements thus far.
The study employs the Institutional Logic Perspective (Friedland & Alford, 1991; Thornton et al., 2012) as a theoretical framework. A cross-national multiple-case study design has been adopted to compare the developments in Germany, Austria, and Italy. Guideline-based interviews with diverse sector actors triangulated with SIB-reports provide data, which are analysed through qualitative content analysis incorporating a deductive-inductive category system (Mayring & Fenzl, 2019).
Current results show that the slow progress in these countries can be partly attributed to conflicting interests and incompatible rationales, requiring intermediary structures for balancing these concerns. Research conducted in Germany accentuates the imperative and advantages of SIBs, highlighting the urgency for a collaborative debate among concerned parties (Muhr & Bahlmann, 2022). This research enhances the discussion on the impact of financing tools like SIBs in promoting cross-sector collaboration within corporate welfare states. The findings provide valuable insights for SIB policies and practices and encourage further exploration of similar challenges in different welfare state models.

References

Becker, J., & Smith, D. B. (2017). The Need for Cross-Sector Collaboration. Stanford Social Innovation Review, 16(1), C2–C3. https://doi.org/10.48558/8473-JD42
Bertelsmann Stiftung. (2015). Wirkungsorientiertes Investieren: Neue Finanzierungsquellen zur Lösung gesellschaftlicher Herausforderungen (p. 77). https://www.bertelsmann-stiftung.de/fileadmin/files/user_upload/Studie_Wirkungsorientiertes_Investieren.pdf
Bertelsmann Stiftung. (2017). Prävention in den Hilfen zur Erziehung stärken. https://www.bertelsmann-stiftung.de/fileadmin/files/BSt/Publikationen/GrauePublikationen/Informationsblatt_ZZ_Praevention_in_den_Hilfen_zur_Erziehung_staerken_Social_Impact_Investment_in_Deutschland_2017.pdf
Bertelsmann Stiftung. (2018). Bildungschancen für Kinder verbessern in der Stadt Mannheim. https://www.bertelsmann-stiftung.de/fileadmin/files/BSt/Publikationen/GrauePublikationen/Informationsblatt_ZZ_Bildungschancen_fuer_Kinder_verbessern_Social_Impact_Investment_in_Deutschland_2018.pdf
Cohen, R. (2020). Impact. Reshaping capitalism to drive real change. Ebury Press.
Friedland, R., & Alford, R. (1991). Bringing Society Back In: Symbols, Practices, and Institutional Contradictions.
Government Outcomes Lab. (n.d.). Impact Bond Dataset. The Government Outcomes Lab. Retrieved December 18, 2022, from https://golab.bsg.ox.ac.uk/knowledge-bank/indigo/impact-bond-dataset-v2/
Maier, F., Barbetta, G. P., & Godina, F. (2018). Paradoxes of Social Impact Bonds. Social Policy & Administration, 52(7), 1332–1353. https://doi.org/10.1111/spol.12343
Maier, F., & Meyer, M. (2017). Social Impact Bonds and the Perils of Aligned Interests. Administrative Sciences, 7(3), Article 3. https://doi.org/10.3390/admsci7030024
Mayring, P., & Fenzl, T. (2019). Qualitative Inhaltsanalyse. In N. Baur & J. Blasius (Eds.), Handbuch Methoden der empirischen Sozialforschung (pp. 633–648). Springer Fachmedien. https://doi.org/10.1007/978-3-658-21308-4_42
Millner, R., & Meyer, M. (2022). Collaborative governance in Social Impact Bonds: Aligning interests within divergent accountabilities? Public Management Review, 24(5), 729–751. https://doi.org/10.1080/14719037.2021.2000253
Millner, R., Moder, C., & Resch, N. (2017). Social Impact Bonds – Möglichkeiten und Grenzen des Konzepts im korporatistischen Wohlfahrtsstaat (pp. 277–286). https://doi.org/10.1007/978-3-658-18706-4_25
Muhr, A., & Bahlmann, J. (2022): Welfare states between tradition and innovation: Opportunities and challenges of establishing innovative financing instruments using the example of Social Impact Bonds. Paper presented at the 20th Annual ESPAnet Conference, Vienna [unpublished].
Olson, H., Painter, G., Albertson, K., Fox, C., & O’leary, C. (2022). Are Social Impact Bonds an Innovation in Finance or Do They Help Finance Social Innovation? Journal of Social Policy, 1–25. https://doi.org/10.1017/S0047279422000356
Pittz, T. G., Intindola, M. L., Pittz, T. G., & Intindola, M. L. (2021). Introduction. In Scaling Social Innovation Through Cross-sector Social Partnerships: Driving Optimal Performance (pp. 1–5). Emerald Publishing Limited. https://doi.org/10.1108/978-1-80043-538-420211001
Schaefer, H., & Bauer, F. (2015). Wirkungsorientiertes Investieren in Deutschland—Aktueller Stand Und Zukunftspotenziale Privat Finanzierter Gesellschaftlicher Leistungen Durch Banken Und Sparkassen (Social Impact Investing in Germany—Current Status and Future Potential of Privately Financed Social Services by Banks and Savings Banks) (SSRN Scholarly Paper ID 2774827). Social Science Research Network. https://doi.org/10.2139/ssrn.2774827
Sinclair, S., McHugh, N., Huckfield, L., Roy, M., & Donaldson, C. (2014). Social Impact Bonds: Shifting the Boundaries of Citizenship. Social Policy Review, 26, 119–136. https://doi.org/10.1332/policypress/9781447315568.003.0007
Social Finance. (2009). Social Impact Bonds: Rethinking finance for social outcomes. Social Finance. https://www.slideshare.net/nffgroups/social-impact-bonds-rethinking-finance-for-social-outcomes
Then, V., & Schmidt, T. (2020). Debate: Comparing the progress of social impact investment in welfare states—a problem of supply or demand? Public Money & Management, 40(3), 192–194. https://doi.org/10.1080/09540962.2020.1714302
Thornton, P. H., Ocasio, W., & Lounsbury, M. (2012). The institutional logics perspective: A new approach to culture, structure and process. Oxford Univ. Press.
von Schnurbein, G., Fritz, T., & Mani, S. (2015). Social Impact Bonds (Vol. 13). CEPS, Centre for Philanthropy Studies, Universität Basel. http://edoc.unibas.ch/40867/
Yin, R. K. (2018). Case study research and applications: Design and methods (Sixth edition., pp. xxx, 319 Seiten). SAGE.

Authors

• Antonia Muhr, WU Vienna University of Economics and Business

• Julia Bahlmann, University of St. Gallen