Increasing societal problems in social welfare, governmental and state systems, and recent cuts in public spending, have raised interest in the role of social innovation as a means of providing potential solutions. Social innovation is defined as the innovative activities derived by organisations with a primary goal to address unmet social needs. The thesis examines how this distinct form of innovation can be fostered through a unique organisational form – the social enterprise.  Adopting a dynamic capabilities perspective, the study investigates the role of external relationships in supporting social enterprises engaged in social innovation.\ud
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The thesis commences with a review of the literature and finds that, in contrast to extensive research into technological innovation, few empirical studies of social innovation exist, highlighting a need for research into the process of social innovation, how it is undertaken by organisations. Drawing on the literature review, a conceptual model is presented that illustrates the social innovation process in two stages: “Seizing and Selection” and “Scaling and Implementation”, and depicts the external relationships engaged by social enterprises to harness the capabilities necessary for social innovation.\ud
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Using data from a large-scale survey with respondents from 262 UK social enterprises combined with 31 semi-structured interviews in a mixed method design, the study supports the conceptual model and finds that the process of social innovation occurs in two distinct stages. Further, the research identifies a diverse range of external organisations that are key to accessing the capabilities necessary for social innovation, and maps these external relationships to each stage of the innovation process. The study goes on to identify the barriers social enterprises face during the pursuit of social innovation. The thesis concludes with policy and managerial recommendations on fostering social innovation in social enterprises