Promoting public sector innovation: who does what,when and how?

Abstract

A strong and prevailing innovation imperative is sweeping across the public sector and despite a growing literature on public sector innovation (PSI), the actors driving these processes tend to end up in the background of analysis. Based in an analytical framework of narrative theory and organization studies, and the efforts to introduce Social Impact Bonds (SIB) in Sweden as empirical case, the aim of this article is to unpack and analyze the neglected initial stages of PSI. Building on a 4-year qualitative study, the analysis shows that actors promoting PSI narrate the public sector as in need to “open up” for (1) new actors; (2) new services and solutions; and (3) new forms of knowledge. Our findings suggests that the initial stages of PSI are substantially more formative than previously indicated. We show how the innovation at hand function as a discursive node towards which the actors’ storylines gravitate. Despite differences, the actors involved narrate their world similarly constituting discourse coalitions that connects and aligns their interests and objectives. We argue that the early stages of PSI are to be understood as cognitive and narrative struggles, or negotiations. The potentially good news here is that change continuously takes place in processes of PSI, despite narratives of inertia. The potentially bad news is that the same change is difficult to predict, control and govern.

Introduction and aim

Public sector organisations are currently swept up in a “global innovation movement” (Lavén, 2008: 12; cf. Sveiby et al., 2012). The scholarly interest in this movement has grown the past two decades, and with that an accumulation of a significant body of knowledge (Cinar et al., 2022; Osborne and Brown, 2011; Wirtz et al., 2021). Public sector innovations (PSI) differ widely in their characteristics but are often assumed to, or presented as if they, provide a solution to intricate, complex, societal problems (Korac et al., 2017). The literature talks about different ‘types’ of innovations such as new services, new administrative models, technological processes, governance-, and social innovations (De Vries et al., 2015; Mulgan, 2006). PSI scholars have devoted much attention to these ‘types’ of PSI (see Chen et al., 2019), their business models (Wirtz et al., 2021), how they are diffused (Qiu and Chreim, 2021), and the implications of difference in context (Cinar et al., 2022). A great portion of the literature is also devoted to the implementation or adoption of PSI (Di Giulio and Vecchi, 2021; Fariborz and Schneider, 2009; Fraser et al., 2018), often with a specific interest in factors contributing to PSI success or failure. However, Hjelmar (2021) argues that PSI is to be regarded more as a process that goes beyond a unique idea or individual organization, and as something that is embedded in larger and shared structures. It is, as such, of key importance to understand the nature of the institutional and organizational environment in which PSI is introduced and embedded (see De Vires et al., 2015). Even though the environment of PSI processes has been studied, little attention has been paid to the very early phases of PSI, before implementation and adoption, when processes, actor roles and networks are initiated and just starting to take form. This gap includes a shortage of in-depth studies mapping and investigating the actors involved in the advocacy for and launching of innovations (see De Vries et al., 2015), as well as an insufficient exploration of the specific ventures undertaken during these processes of attempted organizational and/or institutional change (Fred and Mukhtar-Landgren, 2022; Larner and Laurie, 2010).

The over-arching aim of this study is to contribute to the literature on PSI by unpacking and illustrating the formative role of its initial stages. This is done through an analysis of how actors such as consultancy firms, business actors and research institutes, often with the support of public actors (Füg and Ibert, 2020: 558), promote innovations in a local public sector context. Applying an interpretive approach that combines narrative theory (Hajer 1995, 2006) with organisation studies (Clarke et al., 2016; Czarniawska and Sevón, 2005; Lavén, 2008), we argue that actors engaged in launching PSI continuously narrate the necessity of change though storylines and the formations of new roles. In these ventures, coalitions of actors are created in and around the public sector. Based on our theoretical framework, the analysis is guided by the following questions, which also operationalize our purpose: How do actors promote innovations in the public sector? Which stories do they tell in these endeavours? And finally, which roles and coalitions are formed as a result of these processes?

The case providing the empirical basis for our analysis is the efforts to introduce social impact bonds (SIB) in Sweden. By closely following, through interviews and observations, the efforts to launch this specific innovation over a period of 4 years, the interpretive approach permits an in-depth analysis of PSI as a multifaceted and in many ways unpredictable process, which unfolds in many different places at the same time, both within and outside the public sector.

SIB is a financing mechanism aimed at funding preventive interventions. It relies on an outcome-based contract between a public actor, investors and a (public or private) service provider, all coordinated by an intermediary actor (Arena et al., 2015; Chiapello and Knoll, 2020; Nicholls and Teasdale, 2021). SIB has been described as an innovation in several respects, including the model promoted (evidence-based policy initiatives and outcome-based contracts with external service providers), and the introduction of venture capital into local government (Maduro et al., 2018; Whitfield, 2015). Since its introduction in the UK in 2010, the SIB model has travelled to countries such as India, the US, Peru, Australia, and others. It has also been applied to different policy domains, including but not limited to, crime (Williams and Treffers, 2021), homelessness (Cooper et al., 2016), and unemployment (Lavee et al., 2018). While the number of completed and evaluated SIBs remains limited (Millner and Meyer, 2021), numerous studies indicate that most SIBs only partially or marginally adhere to the SIB prototype (Arena et al., 2016; Carter, 2020; Fred and Mukhtar-Landgren, 2022).

Empirically, the article contributes to the growing literature on SIB (Broccardo et al., 2020; Fraser et al., 2018; Walker et al., 2023) specifically addressing the dearth of studies within a Nordic welfare state context. Theoretically, the study contributes to current discussions of opportunities for and barriers to PSI by looking at the often-ignored initial stages of PSI and the actors who we argue have key formative roles here. Despite an increase in innovation efforts, the capacity to “achieve innovation” is, as noted by Callens et al., “far from obvious for public sector organisations” (2022). Second, the application of an interpretive narrative approach, using insights from organisation studies and translation studies, also contributes to current discussions of the relation between narratives, actors and change (see Guenduez and Mettler, 2022; Gullmark and Clausen, 2023).

The paper is organised as follows: the next section outlines our theoretical approach after which the methods and materials comprising the basis for the analysis are described; this is followed by the analysis (structured in accordance with the three narratives found in the empirical material); and finally, the results are summarised in a concluding section.

Analysing PSI narratives and coalitions

As previous studies indicate, PSIs are rarely completely new ideas but the result of already existing ideas, services or models applied or adopted in new institutional contexts (Gieske et al., 2019; Rogers, 2003). This resonates well with what we see in relation to social impact bonds. SIB is often advocated for as an innovation that can travel across geographical boundaries, but the literature also show us that the idea of SIB, as it travels, changes depending on institutional and organizational context (see Arena et al., 2016). To capture this somewhat illusive characteristic of SIB as a PSI on the move, we combine Hajer’s actor-centred discussions of narratives, storylines and discourse coalitions (1995) with theories on translation and mediators from organisation studies (e.g., Söderholm and Whilborg, 2012). Taking the initial stages of PSI as our empirical point of departure, we analyse how a group of – rather disparate – actors coalesce around an issue that they try to influence, while simultaneously framing the issue at hand. These innovation-promoting actors narrate the world in a similar fashion we argue, and they combine discourses, or ensembles of ideas and concepts, “into a more or less coherent whole” (Hajer, 1995: 47, 45). This particular focus on the discursive elements of PSI and their constitutive effects are “largely absent from the field of public sector innovation” (Langergaard, 2022: 38).

Broader narratives, in our case of PSI, are often comprised by several “storylines” (Hajer, 1995; cf. Fischer and Forester, 1993) that are produced by proficient “policy actors” to advance their goals. Through the (re)production of storylines, these actors are able to communicate and act in tandem, even when they come from completely different backgrounds. Taken together storylines merge into broader narratives that actors not only reproduce and communicate - but also adapt to, translate, change or adjust. Storylines are often presented by actors in their capacity as “experts” drawing from various knowledge fields in efforts to persuade others to accept them. As such, narratives not only allow actors to make sense of the world around them – it also aids in the mobilisation of support for specific projects (cf. Palm et al., 2022). The construction of narratives through storylines eventually also conceals potential contradictions, tensions and complexities. Hence, the construction of narratives is a matter of power relations between (competing) actors and interpretations where actors may “use their position to persuade or force others to interpret and approach reality according to their institutionalised insights and convictions” (Hajer, 1993: 46). Over time, a common terminology is established (cf. Hajer, 1993) together with common resources such as service designs, measurement tools or organisational models (Füg and Ibert, 2020: 551).

Narrating organisational change

Narratives are also linked to organisations in highly concrete manners and may manifest as institutional as well as organisational change (see Hajer, 1993: 46). When several organisations adhere to the same narrative and conceptualise the world accordingly “it will solidify into an institution [and…] organisational practices” (Hajer, 1995: 46). These performative aspects of narratives can also be found in organisation studies, where narratives are described as constitutive of organising (Cooren et al., 2006; McPhee and Zaug, 2009; Smith, 2022), and described as having the “capacity to open up space and to change the practices in organisations” (Jørgensen, 2022: 52; cf. Tassinari et al., 2017). To exemplify, the “evaluation society” (see Dahler-Larsen, 2012) or the “audit society” (Power, 1997) are not mere narratives about how something can be understood or described. These narratives translate into, or constitute, concrete auditing or evaluative practices, institutions, expertise, roles and markets.

An important conclusion from organisation studies is that narrated ideas change into something new when moved to a new context (see e.g., Clarke et al., 2016; Czarniawska and Sevón, 2005; Lavén, 2008). From this perspective, actors involved in PSI cannot be reduced to mere conduits for narratives passing from one actor or context to another. Instead, they both influence the innovation and are themselves influenced (Söderholm and Whilborg, 2012; Latour, 2005). As such, these processes affect the actors involved in “moving” the ideas (Mukhtar-Landgren and Fred, 2019). In the words of Latour (2005: 39) this is the difference between intermediary actors, who presumably transport meaning from point A to point B without changing the essence of the narrative or their own role, and mediators – actors who inevitably “transform, translate, distort, and modify the meaning or the elements they are supposed to carry.” From the perspective of the mediator, PSI is a process where both new and old ideas are assembled in new and “often surprising ways” (Clarke et al., 2016: 9).

Translation thus entails the evolution of new roles, expectations and work descriptions, which change as they are combined and interpreted anew (cf. Czarniawska and Joerges, 1996; Latour, 2005; Lavén, 2008: 32). Actors and roles are developed and constructed through narratives, and are “communicated into being” (Heritage, 1997). Returning to Hajer, this can be understood as the formation of specific discourse coalitions, here understood as “a group of actors that, in the context of an identifiable set of practices, shares the usage of a particular set of storylines over a particular period of time” (2006: 70). The narratives are ways for actors to promote, legitimise and comprehend not only the innovation at hand, but also their own role - and the roles of others - in the emerging network and landscape of PSI in general and – for the purposes of this study – in the context of SIB in particular.

Summing up, the analytical framework employed to make sense of PSI narratives and actors consists of a few interrelated key concepts: narratives, storylines, discourse coalitions, translation and mediators. We treat narratives as an overarching concept that encapsulates storylines under continuous construction in relation to specific problems (sick leave, homelessness, unemployment etc.) together with various mediating actors or actor roles (public, private, not-for profit, consultants, funding agencies, researchers etc.). The storylines and the narratives are crafted by expert actors who use the available information to make sense of the problems before them. In addition, storylines are used by actors to make sense of themselves and their environment, and to persuade others to accept their particular construction of reality. As the storylines are translated from one context to another and are picked up by various actors, they become part of larger narratives linking organisations and sectors. As a result, actors with very different backgrounds, aims and motivations share storylines and narratives and form discourse coalitions that encourage some actions while at the same time discouraging others.

Case and research design: introducing SIB to Swedish local government

Our analysis is based on a case study of the efforts to launch a specific PSI, namely social impact bonds (SIB), in Swedish local government. The idea of a social impact bond (as presented and promoted by Social Finance in the UK) is that a public sector actor specifies a desired social impact related to a specific target group; an investor shoulders upfront costs for a service provider to carry out an intervention intended to generate the desired social impact. The intervention is evaluated and, if deemed successful, the public actor repays the investor’s principal investment plus an additional return based on the monetary gains achieved through the SIB intervention. If the intervention fails to meet the objectives, the investor loses the investment, and the public actor pays nothing. So, already from the outset the model stipulates several actors (the investor, the public actor, the service provider) of interest to our research. However, our research approach also makes us sensitive to the specific (organisational and societal) context in which the SIB efforts occur. The Swedish context is interesting both because of the country’s strong tradition of local self-government and substantial local discretion in adopting innovations and in the strong pressure for and high incidence of innovative schemes in the welfare sector. Innovation policies are currently placed high on the agenda of local governments, which is evident not least in the plethora of funding opportunities available for innovation projects (Mukhtar-Landgren, 2021).

The first effort to introduce SIB in Sweden was made by a collective of representatives of large consultancy firms, a Swedish bank and the Swedish Association for Local and Regional Government (SALAR) – an employer organisation that represents and advocates for local and regional governments. At the same time, in 2015, a non-profit organisation received funding from a large lottery fund to pilot SIB in a Swedish context. Neither of these initiatives resulted in any actual SIBs, but they did spawn several storylines about SIB and its necessity. This work also generated a wide range of activities and the construction of several new actor roles (e.g., intermediaries) and networks across Sweden and the Nordic countries, constituting what we will describe below as new discourse coalitions. These actors and their actions and storylines have been the main source of our empirical material.

Gathering empirical material

We have conducted a 4-year case study based on interviews with key actors, participatory observations and desktop studies of documents. Participatory observations can be described on a scale ranging from “participatory” to “observational” (Gustafsson, 2016: 49), with our study closer to the latter. We attended 10 to 15 local and national seminars, webinars and conferences on SIB, social innovation, impact assessment and PSI to make sense of the efforts to introduce SIB in Sweden. Throughout these events, we listened, but occasionally also asked questions and interacted with SIB promoters. In addition, we conducted semi-structured interviews (cf. Devault and McCoy, 2006). Unrestricted by organisational boundaries, we used a snowball procedure where our informants supplied the referrals (Noy, 2008). As we explored emerging coalitions, we also made note of actors reappearing at events or actors often referred to by others. Some of our informants seemed to be “everywhere”. These actors, who “in snowball stemma […] are depicted as inhabiting network junction [s]” (Noy, 2008), were interviewed two or three times over the 4-year period. Our ambition was to interview everyone involved in the initial stages of SIB efforts in Sweden, an ambition largely achieved. In the interviews we asked questions related to how each actor made sense of SIB, why they endorsed it, who they thought were important in getting SIB going in Sweden, what resistance they came across and what kind of problems they saw that SIB could potentially solve. In total we interviewed 41 different actors: municipal civil servants and project managers (n = 29, from 8 municipalities), state civil servants and project managers (n = 6), consultants or private capital investors (n = 6). The interviews lasted from 30 to 90 min and were recorded and transcribed. Each interviewee was asked verbally as well as in written form about their consent to participate in our research and be quoted in texts when applicable.

Finally, we also gathered written material such as reports, handbooks, evaluations, procurements and policy documents. Through our material, we have teased out not only the actors involved in the introduction of SIB but also how SIB and the actors have been narrated throughout the years.

Analysing the empirical material: an interpretive approach

As noted by Hugh Miller, “[n]arrative inquiry is an inherently interpretive activity” (2020: 489). This is in line with the social constructivist perspective of organisation studies and translation theory, where the emphasis is placed on interpreting material with sensitivity to context (Miller, 2020: 489). The narratives are unavoidably interpreted by us, and we are curating them by delimiting and organising them (Miller, 2020: 489).

In order to identify the narratives surrounding efforts to introduce SIB in Sweden, we approached the field of relevant SIB actors with an abductive logic of inquiry, where elements of language, including specific words, key concepts, phrases or storylines, were recovered, described, and categorised (cf. Thomas, 2010: 578). The empirical material was read and coded by both authors individually, and the results were then compared and discussed between us. The coding was done through a set of questions posed to the empirical material: Who are the actors involved in the introduction of SIB? What arguments are used to introduce SIB? What are these arguments based on? What is described as barriers to SIB? How are these described, using which words or phrases? We placed emphasis on commonalities in how different actors made sense of, described and advocated for SIB, or framed problems and arguments. As example we found (in interviews as well as in observations) several references to a malfunctioning public sector, to “language barriers” between organisations and to ideas about “what works.” We also found storylines related to a need of new roles in public service delivery. Even though each interviewee tells a unique story, what constitutes a narrative and discourse coalition is how the individual actors use storylines and references to wider discourses and their relation to what other actors are saying. As an example, we observed representatives from a funding agency, an NGO and a consultancy firm all refer to the “silo mentality” of the public sector, a division between “separate worlds” with different languages and a need to focus more on the ‘impact’ of social services. Storylines are thus actively used by actors to create meaning, persuade and convince, and we have focused more on the explicit and actual wordings than on the underlying messages (Hajer, 1995). We also analysed the narratives that these storylines are embedded in, keeping in mind that they did not arise out of thin air but have sprung out of historical discourses or dominant assumptions. Here, the written material, including earlier research on PSI, was of great use for relating storylines to broader societal trends and discourses – seeing how seemingly very different actors related to, or made use of, similar descriptions of reality. In the next step, we analysed how the actors, roles and discourse coalitions were narrated into being (cf. Heritage, 1997) by mapping how actor roles and coalitions materialised through the construction and use of these narratives. The most explicit example of this is probably the role of the intermediary actor, expressed by several actors as a perceived necessity, a necessity that also materialised in actors taking on that role.

Through this iterative process of coding, analysing and comparing observations and interviews (cf. Alvesson and Sköldberg, 2013), a number of narratives and roles started to emerge. Quite early in the process we came across storylines of the public sector being too “closed” – and the adjacent notion that public sector organisations needed to “open up.” This was expressed with reference to, for instance, “language barriers between sectors” and found in interviews, at SIB related conferences as well as in various documents. This also resonate with broader discourses and previous research (cf. Ansell and Torfing, 2016; Ek-Österberg and Qvist, 2020; Eriksson et al., 2020). However, we found variations regarding what needed to be opened up and how, and we arranged the empirical material accordingly. When synthesized that way, three narratives were outlined: local governments need to open up for (1) new actors, (2) new services and solutions, and (3) new forms of knowledge. These narratives, the storylines they are comprised by, and the roles and discourse coalitions that merge through and in them, are presented below.

Three narratives of a perceived necessity to “open up” public sector organisations

Here we describe three narratives – all of which allude to the broader prevalent idea of “opening up” the public sector. The notion of “opening up” indicates both a change of ideas and a change in roles, including the construction of entirely new actors and roles. Through the formation of storylines and roles new discourse coalitions emerge and new organizations eventually materialise. Even though the actors, roles and coalitions generally appear in all narratives, we introduce them gradually for clarity. The narratives are not linear monologues, but rather fragmented and with contradictions (cf. Brown, 2006). All three narratives were formulated at a time when several efforts were made to introduce SIB in Sweden and are therefore argumentative in character and framed to persuade an audience and generate organisational impact.

Narrative nr 1: local governments need to open up for new actors

In broader debates on PSI, actors often unite around narratives about the inefficient and sluggish public sector. These narratives, together with austerity policies and broader privatisations trends, form a backdrop to the perceived necessity to open up and enable new actors to take part in public service delivery. A core assumption in this context is that innovation is “expected to emerge from working together with external partners” (cf. Hartley et al., 2013; Huxham and Vangen, 2004, Kattel et al., 2019: 1654), often embodied in concepts (and organisations) such as partnerships or co-creation (cf. Torfing, 2019; Torfing and Trantafillou, 2016).

These narratives, which are highly prevalent in our empirical material, are based on a number of storylines and the formation of different roles. One of these storylines are on the necessity to collaborate (which will be discussed below), another storyline relates to conceptualisations of the world as fundamentally divided into two spheres: the public and the private. In conceptual pairings such as open/closed, efficient/inefficient, risk/stability and outside/inside show how the public sector and the private sector are narrated in contrast to each other (see Styhre, 2007; du Gay, 2000). These dichotomies are brought to life through metaphors such as “different worlds” or “different languages, frequently found in our empirical material. In the words of Mika, who promoted SIB first as a university employee and later as a consultant and expert working in networks and advisory groups:

...the biggest barriers are the language barriers between sectors... when you put a private actor and a public actor or a municipality and the NGO sector at the same table, they do not understand each other when they talk (interview, Mika, 2018).

This is also evident in a final report from a SIB pilot, which describes how “private or ideas-driven financiers use a language foreign to the public actors and vice versa” (Institutet för sociala effekter, 2018: 65).

Another aspect of this storyline is the position that non-public actors give themselves as standing “outside” the public sector. This outsider position might have been regarded as an obstacle for transparency. However, our analysis indicates that SIB promoters instead perceive themselves as impartial as a result of the position outside, as if that gave them a “neutral gaze” into the public sector. From their vantage point they were “outside observers,” looking into “the system” and identifying needs for change:

...If we know we can make a saving, we know we can reduce suffering whether it is failures in school or whatever it is ... we know it! Then we understand that it is the public sector systems that are stopping us! Silo-mentality and short-sightedness ... (interview, Ellis).

The actor quoted here is a leading representative of one of the organisations promoting SIB. This organisation has worked for years to introduce SIB and has received funding to pilot it. Frustrated over the lack of results and understanding from the municipalities, Ellis argues that local governments need to start thinking of themselves as part of a new – more permeable and open – “ecosystem” of actors. Yet, the distinction between the public and the private is not only fundamental to the narrative of letting “new actors in.” It also produces a need for a role that can move between sectors and act as a link between them. Enter the intermediary.

Moving between worlds: the role of the intermediary

The intermediary role is often referred to in policy debates on PSI. It is based on the perceived need for actors who can function as a link between sectors. In the literature, these have been conceptualised as intermediaries, facilitators or enablers (Howell, 2006; Hakkarainen and Hyysalo, 2016) and in organisational terms, as innovation platforms (Berglund-Snodgrass et al., 2023; Kilelu et al., 2013; Parjanen and Rantala, 2021). In the case of SIB, they are called intermediaries, and the role is “built into” the SIB model with the explicit function to coordinate the different actors and in essence enable SIB to materialize. Several actors have aspired to the intermediary role in Sweden, partly encouraged by the fact that no central agency took on, or was given, that role – unlike in Finland (SITRA) and the UK (Social Finance). In other words, several actors advocating SIB also promote themselves as intermediaries and try to carve out organisational space for themselves in the broader institutional landscape.

One example is the organisation that Ellis (as quoted above) represents, another is the Swedish research institute, RISE, and their Social and Health Impact Center (SHIC) established in 2018. SHIC often makes presentations at conferences and meetings related to SIB in Sweden and abroad and is an important constituent of the Swedish SIB narratives. SHIC’s website describes the public sector as a sector of “siloed resources […] short-termism, lack of incentives and unclear objectives,” and argues that this needs to be tackled with “developed forms of cooperation, financing models, and an improved capacity to measure effects.” They also bring out the story of themselves as an intermediary catalysing the transition from knowledge to practice and legitimise their role by describing themselves as the equivalent of the intermediaries in countries such as Finland and the UK (SHIC website, 2022).

Another actor opting for the role of intermediary is Alva, a consultant who describes herself as a link between potential investors, service providers and local governments. Alva is involved in several networks and advisory boards related to SIB but is also frequently engaged as a speaker and is an important co-constituting part, and disseminator, of the Swedish SIB narratives. In addition, Alva also visits many local governments “to talk about opportunities to increase awareness of the fact that it is possible to think differently, but also to develop concrete tools for how to do this in practice” (interview, 2019). Alva describes this as “solid field work”, which has been needed not only in relation to local governments but also to other SIB actors, such as investors: “an investor cannot sit back and just cherry pick the best ideas or projects and build a portfolio out of it” (interview, Alva, 2019). Alva describes the need for someone that can link together actors, someone who possesses knowledge about SIB and how to set one up in practice and who is able to persuade different audiences about the values of SIB work. Sasha, an investor, shares this view:

if I run around like a private-sector muppet and try to sell stuff to the municipalities… it wouldn't really work, it requires a certain aptitude and so and like you really need that intermediary function… (Interview, Sasha, 2019)

Here we return to the juxtaposition of different storylines and narratives: how public and private actors exist in different worlds, the need for the former to open up to the latter, and the creation of the intermediary as a role that inhabits the space between the worlds and facilitates collaboration between them. The intertwining of ideas, roles and organisational solutions can be exemplified by a final report from one SIB pilot, where the intermediary actor is described as having “an enormously important role to play by acting as a diplomat and translator to avoid misunderstandings and instead seek a common language for the parties” (Institutet för sociala effekter, 2018: 65ff). In these storylines, the intermediary appears almost as an editor who, taking on board discursive and cultural differences, edits together a coherent narrative with a beginning, middle and end. Through storylines of different worlds and mindsets, the role of the intermediary is both narrated as a necessity and conceptualised as a link. It is “neutrally” positioned between sectors or organisations and interestingly enough, it is often assumed by the SIB-promoting actors themselves.

In summary, we see how seemingly different actors, including NGOs, investors, consultants and researchers, jointly construct and maintain a narrative about a malfunctioning local government that needs to open up for new actors. Stories of a world based on differences between public and private sectors - and the perceived need for a seemingly neutral party moving between them - creates the foundation for new roles to take shape but also unexpected alliances to emerge through discourse coalitions.

Narrative nr 2: local governments need to open up for new services and solutions

Closely related to the first narrative is the perceived need for local government to go beyond “business as usual” and open up for new services and solutions. This narrative is related to austerity measures, broader discourses about wicked problems, but also the necessity of finding new, more efficient, ways to organise welfare services (Ek-Österberg and Qvist, 2020; Walker et al., 2016). Discourses about public sector renewal are promoted by powerful economic actors, such as the EU, the World Bank and the OECD, but they are also found in the grey literature, or in prescriptive research on PSI as well as SIB (De Vries et al., 2015). Even though the “solutions” are often aimed at public sector organisations, the actors promoting them are often private firms, consultants, network organisations or NGOs.

An important storyline in this narrative is that of an emerging “ecosystem,” a metaphor often used in the context of PSI. It refers to the idea of a system in which all necessary actors and resources have designated roles and are connected to each other. The intermediary role is a clearly defined role in this ecosystem, and intermediaries use the metaphor themselves to narrate their own role as someone “at the heart of things.” In the case of the Swedish SIB, the ecosystem metaphor involves not only roles that are new in a Swedish public sector context – intermediaries, investors – but also a re-conceptualisation of traditional roles. One example to this end is the role of public actors: These now need to think of themselves as strategic commissioners procuring impact, something that affects not only how they work but also their relation to other actors. We consider two types of actors of particular interest in this regard: (1) the actors coming up with new ideas, and (2) the actors taking on the financial risk.

Taking risks and thinking outside the box: the roles of the SIB champion and the investor

Closely related to stories on the necessity to “go beyond business as usual,” we find the actors who describe themselves as “thinking outside the box.” These actors are found in different types of organisations, from NGOs to investors or research institutes and, like the intermediaries, they are often found “outside” the municipal organisations. Many of them describe themselves, or are referred to by others, as “social entrepreneurs” or actors working with “social innovations,” delivering specific services or “solutions” to societal problems, while others work on organisational renewal in a broader sense. One example of the latter is Nico, a consultant, former researcher and former local government employee who has advocated for SIB in several different roles during the last couple of years, as there is – in her words – a “huge need to innovate” (interview, Nico, 2019).

Despite similarities in their engagement, our material shows that stories of different actors differ in terms of what motivates them to champion SIB, from commitment to specific target groups, to organisational renewal or the will to combine profit with making a positive impact. The last of these examples is derived from the investor. The investor is often described as pivotal for the SIB model. It is an actor, a venture capitalist, fund manager or bank, who invests in initiatives in order to be eligible for a possible “profit” that arises as a result of reduced public costs. In our case, these actors have described themselves as more than passive investors – they have invested both energy, time and money in SIB efforts. Beyond the fact that investors see the public sector as an untapped market, they also express a desire to “make a difference that is visible and noticeable and is scalable and can lead to lasting and significant societal change” (interview, Sasha, 2018).

The investor is neatly situated in previously mentioned storylines on the difference between public and private actors. Public actors are often described as risk averse, or simply not prone to “adventure” and risk-taking (Torfing, 2019), a role which is developed in contrast to private actors that are depict as used to and prone to risk-taking. Here a storyline emerges on the importance to take risks in PSI. In the context of SIB, the investor is narrated as an actor capable and willing to take risks by shouldering the financial risk that others (i.e., local government) cannot take or simply avoid taking. Yet a challenge for the actors launching this storyline is that the presumed role of the investor is controversial in a Swedish local government context, especially when it comes to the introduction of private, or venture, capital. One of the consultants describe the introduction of private capital into local government as an obstacle for SIB, noting how “this has slowed us down enormously.” Here we find another example of how storylines and concept are modified, or translated, as a way to create unity. In these processes the phrase “social impact bond” was changed into “social outcome contract,” “as a local adaptation of the Anglo-Saxon innovation” (Stjernqvist and Leksell, 2017). This translation was initiated and communicated by SALAR and was quickly adopted by the actors around SIB in Sweden. They all gradually started to refer to SIB as a contract, which is more attuned with local government practice than a bond (which connotates the financial markets and the banking world).

In summary, this narrative is based on storylines about an emerging ecosystem, going beyond business as usual, and the importance of risk-taking. These stories are often formulated against broader discourses of wicked problems and the need to re-think the status quo. This requires actors who can think outside the box, and both risk-taking and dealing with austerity measures require investors. Taken together, we end up with a range of actors forging stories of themselves and others in relation to SIB, while at the same time building a common perception of SIB. Their shared aim is to persuade local public sector actors to join in the ventures. While the narratives originate from different types of actors with differing motivations, they co-construct common narratives, and over time coalesce in discourse coalitions.

Narrative nr 3: local governments need to open up for new kinds of knowledge

This narrative is connected to broader discourses and trends related not only to the evidence movement but also to a more general emphasis on the “output side” of the social apparatus, especially prevalent in the context of New Public Management in Swedish local government. This includes an increasing use of, and reliance on, ex-post audits (Power, 1997), evaluations (Dahler-Larsen, 2012), documentation and an increasing emphasis on the importance of ensuring that scientifically credible evidence should guide the way forward (Boaz et al., 2019; Mosley et al., 2019). This requires new forms of knowledge and expertise.

The role of experts and knowledge producers

Scientific evidence and knowledge are central in narratives about SIB, and as a result experts or knowledge producers are of particular importance in the formation of this discourse coalition. Our study shows that knowledge production is mainly the work of consultants, universities and what has been described as “consultant-like academics” (Hall, 2020: 191). In an interview, a researcher prominent in the context of social investments and SIB in Sweden points out that “we need to work towards bringing the impact culture that is so obvious in road safety, into the realm of welfare investments.” The researcher continues:

… we know that many municipalities implement social investments that generate some good. But since they lack the tools to relate the benefit to the costs, we cannot say whether the efforts are financially justified” (Kommuninvest, 2019: 6).

These particular narratives on evidence - including storylines of the need to measure impact through expertise – have also materialised in “platforms” around social innovations, impact and the search for solutions “that work.” These are found at certain universities (e.g. Malmö University) or research institutes (e.g. RISE), and are frequently used as reference points by SIB advocates. The universities have also been active in initiating networks, courses, seminars and projects of SIB relevance, including the production of reports on issues such as impact measurement and social innovation methodologies. In addition, SIB knowledge is also communicated at conferences, workshops and webinars. One example was a webinar on impact measurement held by the Alliance for Social Innovation and Change at Malmö University. The webinar was organised by the university, but the entire presentation was made by Mika, a consultant. The consultant’s close connection to the university strengthens her credibility as well as her position as an expert. Mika is also frequently hired by municipalities, universities and investors as an expert and to forge connections between sectors and actors.

Another actor narrating themselves as a knowledge producer is SALAR. Noah, a project manager at SALAR, described how they went to the Massachusetts Institute of Technology in Boston to learn about “randomised studies, so that we also teach ourselves and bring in international expertise to formulate something that works in the concrete practice” (interview, Noah, 2019). SALAR has devoted much energy to construct stories of what works in practice, for instance through reports and checklists for politicians and decision makers. They have also, together with a consulting firm, developed a tendering model applicable to impact.

In addition to universities and SALAR we find the formation of different networks by and through discourse coalitions. One example is a Nordic Network for SIB, started by a university, where key SIB players in the Nordic countries are represented. Another is the Institute for Social Effects, a “knowledge platform” created by a not-for-profit organisation together with several different actors “in order to promote social innovation and social investments” (Fryshuset.se, 2020). A third example is the Swedish National Advisory Board for Impact Investing (SNABII), with representatives of banks, consultants, NGOs, universities and the Swedish innovation agency. All these actors and constellations are connected through stories and narratives of SIB knowledge, forming discourse coalitions which also took on organisational forms - which in turn continues to facilitate the creation and communication of SIB knowledge and common storylines.

In summary we see a narrative taking shape about the necessity for local governments to open up for new kinds of knowledge, that inevitably also pave the way for SIB and SIB advocates. This narrative establishes a wide range of knowledge producers, which align and form coalitions around the need for knowledge on impact, solutions that “work” and organisational solutions relating to ways of financing and testing new solutions and services in Swedish local government.

Summarising discussion and conclusion

Grounded in a synthesised framework of narrative theory and organisation studies, and using the efforts to introduce SIB in Sweden as an empirical example, the aim of this article has been to analyse the initial, formative, stages of PSI. The analysis shows that actors promoting PSI narrate the public sector as in need to “open up” for (1) new actors; (2) new services and solutions; and (3) new forms of knowledge. These narratives are fundamentally based on the idea of a world divided in two sectors: the public and the private. Our study is set in this intersection which, we argue, is currently carved out and given organisational space through innovation ventures.

In the early phases of PSI, seemingly different actors are able to come together through the construction and maintenance of narratives – narratives that paves the way, not only for certain innovations to take shape, but also new roles and unexpected alliances. In these initial processes of PSI, when almost nothing (yet) is set or decided, actors craft stories of themselves as well as others in relation to the PSI in question or what it represent – a possible solution to various problems. In the case of SIB, we found the smallest common denominators in these story lines to be the perceived malfunctioning public sector, the division between sectors and a necessity to, in various respect, open up the public sector. Although involved actors differed in their motivation or reason to engage in SIB work, they all gravitated towards these story lines and came, through them, to form discourse coalitions long before any actual SIB materialized in Sweden. In these early phases of PSI, actors use a combination of narrated challenges and desirable ways forward to promote a specific solution, but also to narrate their own roles and environment into existence cf. Heritage, 1994). As such, this study contributes to ongoing scholarly debates by describing the initial stage of PSI as a substantially more formative stage than previously indicated. In this, two main contributions to the literature can be discerned:

First, we show that launching a PSI is not a straightforward process of simply “transferring” an innovation into a new context. This insight is well noted in the translation literature (Røvik, 2023) and in debates on upscaling and learning from innovation projects (Fred and Godenhjelm, 2023; von Wirth et al., 2018). However, by combining organisation research with an actor-centred narrative theory, we are able to unpack this process in more detail and illustrate the importance of both stories and coalitions therein. We show how narratives are constructed by emerging discourse coalitions establishing a common vocabulary, allocating actor roles and making sense of one’s own role in relation to others. Were previous studies tends to focus on actors or narratives, our approach combines both, and by analytically separating the actors from their emerging roles, we show that a discourse coalition is more than mere strategic cooperation or a rhetorical measure - it is a process where actors embody the broader organisational change they narrate and want to achieve. Despite differences in sectors (and motivations), the narratives draw actors together, sometimes strategically and sometimes by chance. Here the particular innovation (in our case SIB) functions as a discursive node towards which the actors’ storylines gravitate. This might be one of the reasons why it appears difficult to pinpoint specific enablers of PSI – they are organizationally dependent. It is also a potential explanation to why the majority of SIBs around the world only partially resemble each other (Arena et al., 2016; Carter, 2020) – they are all the result of locally forged discourse coalitions.

Second, we contribute to debates on collaboration in PSI. A discourse coalition is in essence a form of collaboration - yet not intentionally constructed as such, even though discourse coalitions eventually can take on organisational forms such as platforms of networks. Scholars have been clear about the essential role of – or the need for more – collaboration (e.g. Ansell and Torfing, 2016; Torfing, 2019), but less clear about the specifics of what that entails. Here we give empirically detailed account of the formation of “collaboration” in its early stages, showing not only how it takes form through the construction and maintenance of narratives, but also highlighting the motivations and arguments of actors seeking to collaborate. Our analysis shows that collaboration is narrated by innovation promoting actors as a need to “open up” the public sector (to new actors, solutions and knowledge), and through that a necessity for collaboration is constructed in which they, themselves, plays an important or even pivotal part.

Finally, our analysis is fundamentally about the promotion of change in public sector organisations. But where previous research focus on barriers or enablers in the implementation phase, our study indicates that formative processes of change starts long before that. We suggest that the early phases of PSI – where coalitions are forged through the alignment of different story lines – are to be understood as cognitive and narrative struggles, or negotiations. Here various actors work to carve out their desirable position in the public-private landscape using storylines and (strategically and unconsciously) forming coalitions while simultaneously translating the innovation to fit into its particular context. Our analysis thus suggest that PSI initiatives are not first and foremost demarcated projects or pilots to be deemed failures or success, but formative processes that (at least bares the potential to) translate into larger movements that take shape in discourse coalitions as well as organizational restructurings that goes far beyond a local pilot. For PSI-scholars and practitioners, the potentially good news is that change continuously takes place in PSI, despite reoccurring narratives of inertia – but this change is incremental and starts much earlier than in the implementation phase. The potentially bad news is that change can be difficult to predict, control - or govern.