How to explain social innovation in elderly care services: The role of for‑profit and non‑profit social enterprises

Vol.:(0123456789) International Entrepreneurship and Management Journal https://doi.org/10.1007/s11365-023-00942-6 1 3 How toexplain social innovation inelderly care services: The role offor‑profit andnon‑profit social enterprises CarmenGuzmán1 · Francisco J.Santos1 · TeresaSavall2 Accepted: 19 December 2023 © The Author(s) 2024 Abstract Social innovation and social enterprise are two major factors in addressing the challenges of population ageing since both are aimed at solving social problems. One of these challenges involves providing quality care services for the elderly. However, few studies have analysed how social enterprises can promote or manage social innovations in this sector. This research therefore studies said relationship, paying particular attention to the for-profit and non-profit nature of social enterprises. Specifically, to test the hypotheses, we use data from a survey of nursing homes in southern Spain, where care services are expanding with the support of welfare state social policies. The results show that non-profit social enterprises tend to develop more social innovations in care services, and that the social mission and participative governance positively influence the implementation of social innovations in this activity sector. Consequently, implications for social policies are suggested to better meet the needs of the elderly. Keywords Social innovation· Social enterprise· Elderly care services· Non-profit organisations· Social policies * Carmen Guzmán [email protected] Francisco J. Santos [email protected] Teresa Savall [email protected] 1 Department ofApplied Economics I, University ofSeville, Faculty ofEconomics andBusiness Sciencies. Avenida Ramón y Cajal, 1., 41018Seville, Spain 2 Department ofApplied Economics, University ofValencia. Facultat d‛Economia, Edifici Departamental Oriental. Av. dels Tarongers s/n, 46022Valencia, Spain International Entrepreneurship and Management Journal 1 3 Introduction Population ageingis one of the most important demographic trends worldwide since people over 65 represent the fastest-growing age group (United Nations, 2019). This trend is more robust in highly developed regions, such as in European countries, where one in four inhabitants will be aged 65 or over by 2050, and the share of people over 80years old will reach 13% of the whole population by that year (Eurostat, 2019). Population ageing is a process that results from the combination of current low fertility rates and increasing longevity (United Nations, 2019). The analysis of the consequences of this process is usually considered from two contrasting perspectives. On the one hand, it is seen as a ‘triumph’ of our times, mainly due to improved public health, sanitation, and overall development (Powell & Khan, 2014). On the other hand, it is connected to significant societal challenges, such as its negative impact on labour productivity, output growth, and the financial sustainability of the public pension system (Herrmann, 2012; Powell & Khan, 2014). Nevertheless, an additional and relevant challenge of this process due to its broad socioeconomic consequences involves the necessary provision of high-quality care services for the elderly (Grohs etal., 2015; Heinze & Naegele, 2012; Huarng, 2018; Verleye & Gremmel, 2011). Specifically, this research focuses on elderly care services and how to provide a high quality thereof, for which the two principal elements considered are social innovation and social enterprise. On the one hand, social innovations imply the development and implementation of new ideas (products or services) to meet social needs (Mulgan, 2006, 2012; Mulgan etal., 2007). Social innovations can be explained from a functionalist approach as new social solutions (product- and process-based) or from a transformationalist approach as the creation of social change (Anheier etal., 2014; Nicholls & Murdock, 2012). Like business innovation, social innovations need an enabling environment and favourable institutional conditions for their development (Diaz-Carrion & Franco-Leal, 2022; Medina-Molina etal., 2022). In the specific sector of care services for the elderly, social innovations are a key factor since they can help improve the quality of life of senior citizens through the introduction of new social and household-oriented services, new environmental support, and new design and construction (Djellal & Gallouj, 2006; Heinze & Naegele, 2012; Merkel etal., 2019; Rey-García etal., 2019a). On the other hand, social enterprises, unlike commercial enterprises, are organisations characterised by creating social value and seeking sustainable solutions to social problems (Santos, 2012). These enterprises possess a “hybrid” nature since they pursue social objectives through market mechanisms (Alvarez de Mon etal., 2022; Battilana & Lee, 2014; Doherty etal., 2014). In this way, the three main internal dimensions (according to the European school of thought on social enterprises, which habitually characterises them) are their social mission, their commercial business model, and their participative governance (Bacq & Jenssen, 2011; Defourny & Nyssens, 2010, 2017; Galera & Borzaga, 2009; Savall etal., 2023) In the case of care services, the majority of the private organisations that provide them are social enterprises (Caló etal., 2018, 2021; Chandra etal., 2021; Hall etal., 2016). This is especially relevant in Europe, where the State 1 3 International Entrepreneurship and Management Journal promotes the creation of these organisations through financial schemes and specific legal conditions to operate in the sector (Blomqvist & Winblad, 2019; Grohs etal., 2015; Roy etal., 2013). In this context, a growing number of studies analyse the link between social innovations and social enterprises (Audretsch etal., 2022; Nogales-Muriel, 2023; Phillips etal., 2019; Sanzo-Pérez etal., 2022; Sinclair etal., 2018; Tortia etal., 2020). The most common argument to explain this link is that the interests of social enterprises lie in finding innovative solutions to social problems (Klarin & Suseno, 2022; Ko etal., 2019; Phillips etal., 2015; Saebi etal., 2019; Schöning, 2013; Testi etal., 2019; Zahra etal., 2009). Nevertheless, the literature recognises that social enterprises are not the only source of social innovations (Carberry etal., 2019; Phills etal., 2008). It is therefore necessary to carry out in-depth empirical studies to better explain how said relationship takes place (João-Roland & Granados, 2020; Phillips etal., 2015). In the specific case of elderly care services, these particular studies are of great interest since the social enterprises which provide these services have to implement social innovations to improve their quality (Goldstein etal., 2010; Krlev etal., 2019; Rey-García etal., 2019a, b). Accordingly, a first research question arises: To what extent are social enterprises important for social innovations in the specific sector of elderly care services? Or, more specifically: Are the main dimensions of social enterprises, such as their social mission, commercial business model, and collaborative governance structure, sufficient to explain social innovations in this sector? Another issue that requires further study, related to the link between social innovations and social enterprises, is the role that specific types of social enterprises play in the development of social innovations (Klarin & Suseno, 2022). In this regard, this study considers the difference between non-profit and for-profit social enterprises (Defourny & Nyssens, 2017; Defourny etal., 2021). On the one hand, for-profit organisations have a more hybrid nature since they are more commercially oriented, while on the other hand, non-profit organisations follow purer altruistic behaviour and a more collaborative structure in their decision-making (Anheier, 2014; Dees, 1998; Do Adro etal., 2021; Krlev etal., 2019; Lepoutre etal., 2013). In contrast to for-profit organisations, it is acknowledged that non-profit social enterprises are an innovation in themselves (Széll, 2012). They are created to specifically solve social problems through their advocacy and service-providing role (Anheier, 2014; Do Adro etal., 2021; Krlev etal., 2019; McDonald, 2007), and they have to develop different types of social innovations to carry out these two missions (Krlev etal., 2019; Rey-García etal., 2019a; Shier & Handy, 2016). In this regard, several studies have pointed out that non-profit social enterprises tend to be more innovative since they have a clear motivating mission to address growing and complex social needs (McDonald, 2007; Svensson etal., 2020). However, other studies claim that non-profit organisations must be more innovative due to their lower risk-taking propensity (Hull & Lio, 2006). Therefore, a second research question arises: Are non-profit organisations the form of social enterprise that can contribute the most towards finding innovative solutions to the needs of the elderly? In summary, to fill the existing literature gaps and answer the research questions, the main objective of this article is twofold. On the one hand, we analyse whether the main dimensions of social enterprises of elderly care services significantly influence International Entrepreneurship and Management Journal 1 3 their social innovations, while on the other hand, we study whether non-profit social enterprises tend to be more socially innovative than for-profit social enterprises. To this end, we begin with a literature review in which the links between the challenges of an ageing society, social innovations and social enterprises are explained. This enables us to establish our research hypotheses and subsequently conduct an empirical study to test these hypotheses. This empirical study consists of a survey covering process-based and product-based social innovations of collective nursing homes (private day-care centres and senior residences) located in Andalusia, southern Spain. This autonomous community has developed a public policy that promotes the role of social enterprises in providing formal care for senior citizens under the rules of the Spanish Dependency Law. It is also the most populated Spanish region, with more than 8 million inhabitants, 1.5 million of whom are over 65. The contribution of this research responds to three relevant calls of several previous studies. Firstly, there is the need to analyse how social innovations can be encouraged by social enterprises (João-Roland & Granados, 2020; Lortie & Cox, 2018; Phillips etal., 2015). Secondly, the role that different types of social enterprises play in outcomes needs to be addressed (Klarin & Suseno, 2022), just as this research analyses the different roles of non-profit and for-profit social enterprises in social innovations in elderly care services. And thirdly, linkages between various aspects related to the behaviour of social enterprises need to be established, that is, context, processes, and outcomes (Klarin & Suseno, 2022; Saebi etal., 2019). Specifically, the context is determined in this research by the ageing process and the role that welfare state social policies play therein through the imposition of conditions on social enterprises in providing care services. The processes are related to the role played in providing care services to the elderly by the three main dimensions of social enterprises. Lastly, the outcomes are product-based and process-based social innovations in care services for senior citizens. Theoretical framework Elderly care services andsocial innovations During the two first decades of the twenty-first century, predictions regarding population ageing have shown that this demographic phenomenon is occurring worldwide (United Nations, 2019). Specifically, it is expected that in developed regions, such as the European Union, the proportion of people aged 80years and over should more than double by 2050 to reach 13% of the whole population (Eurostat, 2019). The lower fertility rates and a higher life expectancy at birth explain this demographic trend (United Nations, 2019). Population ageing poses a significant challenge to our societies. With its negative impact on output growth and on the financial sustainability of the public pension system (Herrmann, 2012; Powell & Khan, 2014), the provision of care services for the elderly has become a crucial issue (Verleye & Gremmel, 2011). Since people live longer and have fewer children, family structures are experiencing significant transformations. In this way, intergenerational conflicts between the needs of the elderly 1 3 International Entrepreneurship and Management Journal and the young may emerge, especially when senior citizens become physically or psychologically unwell and, therefore, need special attention through social services (Hess etal., 2017). Furthermore, the problem of the “social division” among the elderly cannot be forgotten since those with lower socio-economic status experience difficulties accessing social services, thereby opening the door to social segregation (Merkel etal., 2019). Today, these social challenges are addressed through various care services, which can either be informal, primarily via family support, or formal, such as through care services provided in collective nursing homes (Fernandez-Carro, 2016; Huarng, 2018). In this context, social innovations constitute a principal factor in tackling the multiple challenges of an ageing society, such as the employability of an ageing workforce, the adaptation of housing conditions, and the reconstruction of health and long-term care systems (Heinze & Naegele, 2012). Specifically, long-term care in collective nursing homes constitutes a crucial service for those elderly who need permanent assistance due to severe psycho-physical health problems (Casanova etal., 2020). Unlike business innovation, social innovation is not motivated by profit maximisation but instead by social goals (Mulgan, 2006, 2012; Phills etal., 2008). Social innovation satisfies new needs not yet catered for in the market although the market may indeed intervene at a later date (Spear, 2011). However, despite the consensus regarding its relevance in addressing social problems, no generally accepted definition of social innovation is currently available (Testi etal., 2019). According to the Guide to Social Innovation of the European Commission, social innovation is defined as the development and implementation of new ideas (products or services) to meet social needs and to create new social relationships and collaboration (European Commission, 2013). More specifically, social innovation involves new social processes and outputs by bringing about social inclusion and the well-being of excluded groups by addressing market failures and supplying public goods (Grabbe etal., 2018). In this way, social innovation implies improving social relations and satisfying the needs of humans (Moulaert etal., 2013). Furthermore, social innovations also involve “a process of recontextualisation within socially reconstructed norms of the public good, justice, and equity” (Nicholls & Murdock, 2012, p. 2). By synthesising various views on the concept, Anheier etal. (2014) point out that social innovations can be explained from a functionalist approach as new social solutions or a transformationalist approach as creating social changes. In this way, a classification of social innovations proposes three specific types: product-based, process-based, and socially transformative (Shier & Handy, 2015a). Product-based and process-based social innovations are related to the Schumpeterian view of innovation, which is inspired in part by that proposed by the OECD’s Oslo Manual for the case of business innovations (OECD, 2005). Product-based social innovations include new goods or services to meet emerging social demands, while process-based social innovations include changes in the structure and procedures of the providers of social goods and services, which enable them to adapt to new social demands. In this way, process-based social innovations can include the non-technological innovations specified in the Oslo Manual. As for transformative social innovations, these aim to create social change within the community, such as promoting public awareness. International Entrepreneurship and Management Journal 1 3 In the specific case of elderly care services, the role played by various technological developments deserves special attention, such as telemedicine, remote surveillance, alarm technologies, aid technologies, equipment for transporting individuals, and architectural technologies (Djellal & Galloug, 2006; Merkel etal., 2019). Nonetheless, we cannot identify innovation in services, as with elderly care services, exclusively using or adopting a specific technology (Aksoy etal., 2019; Gallouj & Savona, 2009; Spear, 2011). Specifically, when we refer to innovations in this sector, we mainly refer to the provision of new services and processes that can improve psycho-physical health and well-being and improve the quality of life of the elderly (Casanova etal., 2020; Djellal & Galloug, 2006). Hence, in the specific case of residential provision, such as day-care centres and senior residences (nursing homes), if we follow a functionalist approach to social innovations, they can include social and household-oriented services, environmental support, design and construction, and of course, provision to the users of new high-tech products (Heinze & Naegele, 2012). Elderly care services andsocial enterprises Several types of organisations and actors can be the providers of these social innovations for the elderly: the State, non-profit organisations, and for-profit organisations (Casanova etal., 2020; Djellal & Gallouj, 2006; Verleye & Gemmel, 2011). Among these three actors, the State holds a central position, especially in developed countries, by promoting the role of private organisations (for-profit and non-profit) in health and care services (Anderson, 2012; Chandra etal., 2021; Grohs etal., 2015; Hall etal., 2016; Henderson etal., 2020; Roy etal., 2013). In addition to public pensions for retirees, the State creates public-owned care service companies and regulates the activity of the other two actors that provide social services (Blomqvist & Winblad, 2019). Furthermore, the State, directly or indirectly, transfers to those private companies increasing financial support due to the process of marketisation of social policies, that is, a strategy of outsourcing public services through public tendering or privatisation and the users’ free choice of providers (Deusdad etal., 2016a). Due to such support provided by the State, an increasing number of for-profit and non-profit organisations have logically emerged in the provision of elderly care services as state-assisted private centres (Blomqvist & Winblad, 2019; Caló etal., 2018; Henderson etal., 2020; Krlev etal., 2019; Roy etal., 2013). In this context, although a number of these private companies are large corporations seeking profit maximisation (Bos etal., 2020; Blomqvist & Winblad, 2019; Grohs etal., 2015), a significant proportion of small and medium-sized companies are considered social enterprises since they pursue social goals with market mechanisms (Caló et al., 2018, 2021; Chandra etal., 2021). In this case, the State establishes public standards in providing care services in order to receive financial support, thereby encouraging these companies to follow the social mission (Anderson, 2012; Choi etal., 2020; Hall etal., 2016). Unlike commercial enterprises, social enterprises are organisations characterised by creating value and seeking sustainable solutions to social problems (Santos, 2012). The European school of thought on social enterprise establishes three essential dimensions 1 3 International Entrepreneurship and Management Journal of social enterprises: a social mission, a commercial business model, and a participative governance structure (Bacq & Janssen, 2011; Defourny & Nyssens, 2010, 2017; Galera & Borzaga, 2009). Firstly, the social mission is usually identified not only through the aims of the social enterprise but also via the types of their users or customers. However, how social enterprises distribute their profits is also crucial since they are expected to limit profit distribution and prioritise reinvestment to uphold the primacy of their social aims (Defourny etal., 2021; Saebi etal., 2019). Secondly, the business model implies that social enterprises assume an economic risk by selling their goods and services on the market, and attain a significant part of their revenues from the users, which allows these social initiatives to be more independent of public aid and philanthropic funds and, therefore, to be financially self-sufficient (Dees, 1998; Saebi etal., 2019). This second dimension involves a marketisation of social organisations that have become more business-like (Maier etal., 2016). Thirdly, the dimension of governance structure refers to how decisions are made (Defourny & Nyssens, 2010). In this respect, two pure models can be established in social enterprises, from one more individualistic to another more collective and participative (Bacq & Janssen, 2011; Defourny & Nyssens, 2017). Nevertheless, it is assumed in general terms that decisions in social enterprises tend to be participative (Doherty etal., 2014), and pay attention to teamwork and communication between the stakeholders (Gupta etal., 2020), especially in the case of non-profit social enterprises (Shier & Handy, 2016). Most definitions agree that social enterprises focus not only on the creation of social value, that is, promoting improvements in health, well-being, and quality of life, but also on economic value (Bacq & Janssen, 2011; Henderson etal., 2020; Zahra etal., 2009). In this respect, a social enterprise is considered a hybrid form of enterprise since not only does it give priority to social objectives concerning financial rewards, but it also combines common traits of non-profit, public, and forprofit organisations (Alvarez de Mon etal., 2022; Battilana & Lee, 2014; Doherty etal., 2014; Solorzano etal., 2018). This hybrid behaviour allows social enterprises to be identified along different points of a continuum, the social entrepreneurship spectrum, according to which, at one extreme, purely philanthropic and non-profit enterprises are located, while at the other end, purely commercial enterprises preside (Dees, 1998; Defourny etal., 2021; Santos etal., 2013). In this regard, a typology of social enterprises proposes three different models, excluding public social enterprises (Defourny & Nyssens, 2017; Defourny etal., 2021). Firstly, social businesses are for-profit social enterprises, with market-oriented behaviour, which serve the interest of the shareholders; secondly, social cooperatives are for-profit companies also with market-oriented behaviour but which serve the interests of their members (for instance, the workers in the case of worker cooperatives) and, lastly, entrepreneurial non-profit social enterprises are less market-oriented than the other two models and pursue the general interests of the community where they work. Indeed, in the case of elderly care services, and especially those provided by nursing homes, it is possible to find cases halfway along this spectrum, with differences between countries depending on the care regime provided by the welfare state (Bos etal., 2020; Blomqvist & Winblad, 2019; Chandra etal., 2021; Deusdad etal., 2016a; Grohs etal., 2015; Henderson etal., 2020; Roy etal., 2013; Testi etal., 2019). International Entrepreneurship and Management Journal 1 3 Development ofthehypotheses Despite the consensus that the source of social innovations is not restricted to social enterprises (Carberry etal., 2019; Phills etal., 2008), many researchers consider the role of these enterprises to be highly significant (Lortie & Cox, 2018; Phillips etal., 2015, 2019; Phills etal., 2008; Testi etal., 2019). As the Social Innovation school of thought on social entrepreneurship points out, innovation is a central element of the social entrepreneurship domain because social entrepreneurs are those who find innovative solutions to social problems of their community (Bacq & Janssen, 2011; Dees, 1998; Saebi etal., 2019; Zahra etal., 2009). To this end, social entrepreneurs create new ventures or manage existing organisations innovatively (Zahra etal., 2009) through creativity (Ko etal., 2019). Furthermore, social enterprises must develop social innovations if they want to exert both a social and an economic impact (Goldstein etal., 2010). In the case of the elderly care sector, social innovation is also crucial for social enterprises for two reasons related to the role of the welfare state social policies. On the one hand, these policies oblige the providers of care services to meet specific quality standards, and encourage them to adopt social innovations (Anderson, 2012; Choi etal., 2020; Adro etal., 2021; Hall etal., 2016). On the other hand, those policies imply an increasing competition between social enterprises for public financial support (Anderson, 2012; Blomqvist & Winblad, 2019; Lyon, 2012), and hence these enterprises must innovate to be more competitive if they want that support (Ko etal., 2019). Nevertheless, not only can environmental and institutional conditions (such as social policies in the case of elderly care services) foster social innovations (Audretsch etal., 2022; Medina-Molina etal., 2022; Wenqi et al., 2022), but so can specific internal factors related to the behaviour of social enterprises (such as organisational and managerial factors) (João-Roland & Granados, 2020; Nogales- Muriel, 2023). Specifically, we focus on three main organisational and managerial dimensions which, according to the European school of thought on social enterprise, characterise social enterprises: their social mission, their commercial business model, and their participative governance (Bacq & Janssen, 2011; Defourny & Nyssens, 2010, 2017; Galera & Borzaga, 2009; Savall etal., 2023). On the one hand, the social mission of social enterprises contributes to social innovations through the limits imposed by such missions on profit sharing and, consequently, the priority it gives to reinvestment (Doherty etal., 2014; Gallego-Bono & Chaves-Avila, 2020). Reinvestment is fundamental for business innovation since it is a low-risk and lowcost source of funds (Wang etal., 2016). In this case, it is also essential for social innovations in any economic sector, since a broad range of human, social, and/or physical capital is needed for it to be successful (Dhondt etal., 2017; Goldstein etal., 2010). However, reinvestment becomes even more relevant for social innovation in social enterprises since they tend to have a more acute lack of financial resources than conventional enterprises due to the distrust of financial institutions in this type of enterprise (Doherty etal., 2014). A further reason that makes social mission an essential factor for social innovation is the higher intrinsic motivation of social entrepreneurs to meet social goals (McDonald, 2007; Tortia etal., 2020). Due 1 3 International Entrepreneurship and Management Journal to these motivations, social entrepreneurs devote more interest and passion to their work, related to creativity and social innovations (Braga etal., 2014). Regarding the commercial business model, social enterprises as hybrid organisations must raise a significant portion of their revenue from service users (Alvarez de Mon etal., 2022; Doherty etal., 2014; João-Roland & Granados, 2020; Savall etal., 2023; Shier & Handy, 2015b; Zainol etal., 2019). Although the State provides financial support to these social enterprises of elderly care services, it is seldom sufficient to cover the cost of services, mainly due to cost containment and austerity measures of the public sector (Deusdad etal., 2016a; Gori, 2019). Therefore, social enterprises need such income from users, not only to be financially self-sufficient, but also to invest in the greater number of resources that social innovations require (Zainol etal., 2019). Thirdly, as far as the governance structure is concerned, it should involve greater internal collaboration between stakeholders, that is, social entrepreneurs, managers, workers, and users of care services (Phillips etal., 2015; Tortia etal., 2020). If we agree that internal and external collaboration is essential for business innovation (Bougrain & Haudeville, 2002), then it can be assumed that it is also necessary for social innovations (Gupta etal., 2020; Krasnopolskaya & Korneeva, 2020; Phillips etal., 2019; Rey-García etal., 2019b; Shier & Handy, 2015b). Specifically in care services, different studies have shown that an internal and external collaborative environment supports social innovation for the elderly (Heinze & Naegele, 2012; Krlev etal., 2019; Rey-García etal., 2019b; Roy etal., 2013). In this way, the dimensions of social enterprises contribute towards the quality of care services and, consequently, to a better quality of life for senior citizens (Caló etal., 2018; Choi etal., 2020; Do Adro etal., 2021; Krlev etal., 2019; Roy etal., 2013; Széman & Trobert., 2017). As stated earlier, these services are provided in different areas, such as housing, transport, health, mobility, and, more recently, in digitalisation (Djellal & Gallouj, 2006; Merkel etal., 2019). According to Shier and Handy’s classification (2015a), these are service innovations in products and processes. Therefore, three hypotheses can be established regarding the positive relationship between these three characteristic dimensions of social enterprises and social innovation in elderly care services: H1: The greater the profit reinvestment within social enterprises of elderly care services, the greater the social innovation in those services. H2: The higher the earned revenues from users within social enterprises of elderly care services, the greater the social innovation in those services. H3: Participative governance within social enterprises of elderly care services positively influences the social innovation in those services. Moreover, if social innovations are mainly motivated by social goals, then non-profit social enterprises necessarily play a central role with respect to social innovations in comparison with for-profit social enterprises (Krlev etal., 2019). Certain scholars point out that focusing primarily on a social mission while not pursuing a profit means creating a favourable climate for social innovation to succeed (McDonald, 2007). Moreover, other authors point out that non-profit social enterprises constitute social innovation themselves (Széll, 2012). International Entrepreneurship and Management Journal 1 3 & Romero, 2017). To be precise, this variable is called “Size” and refers to the commonly accepted classification of the European Union according to the number of employees. It takes values from 1 to 3, depending on whether the company is a micro (1–9 employees) (value 1), a small (10–49 employees) (value 2), or a medium-sized company (50–249 employees) (value 3). As was pointed out, large companies (250 employees or more) were excluded from the study. Results The sample characteristics (frequencies and descriptive indicators of the variables included in the analysis) are presented in Table3, and the correlation matrix is set out in Table4. As can be observed, there are statistically significant correlations between many of these variables. Despite these connections, the necessary tests have been carried out, and it can be stated that no multicollinearity problems exist since the highest variance inflation factor lies below 10 (1.194) and the highest condition number is below 20 (15.853). The result of the ordinal regression model (Table5) reveals a high model fit, whereby the final model is significant at 99% (X2(12) = 32.378, p = 0.001). Furthermore, outputs for Pearson’s chi-squared test (X2 (68) = 81.284, p = 0.130) and the deviance test (X2 (68) = 77.431, p = 0.203) were both non-significant, which suggests that the model suitably fits the data. For the predictors, the control variable is negative for value 1 and positive for value 2, which means that larger sizes have a higher probability of innovation. However, this variable is not significant. Moreover, it can be observed how higher levels of the Reinvestment of Profits exert a more positive influence on the levels of social innovation considered, thereby supporting Hypothesis H1. Regarding Revenues from users, although positive estimations are obtained, they are not significant and, hence, Hypothesis H2 cannot be confirmed. Furthermore, level 0 of the Participation variable negatively affects social innovation levels, which means that firms where the decisionmaking is participative, tend towards socially innovative behaviour. Thus, Hypothesis H3 is supported. Finally, it can be observed that lower levels of non-profit organisations (i.e., higher levels of for-profit organisations) negatively affect Social Innovation, or, equally, non-profit organisations are more inclined to develop social innovations (i.e., they are more likely to innovate), thereby confirming Hypothesis H4. A summary of the confirmation of the hypotheses is shown in Table6. Discussion According to the results obtained, with most of the hypotheses supported, a relationship between social enterprises and social innovation can be observed in the elderly care sector. Therefore, these findings could explain why this kind of enterprise constitutes an option when fostering social problems such as that of population ageing, since they represent support for the different Public Administrations, which in 1 3 International Entrepreneurship and Management Journal Table 3 Sample characteristics: Frequencies and descriptive statistics (N = 112) Source: Authors’ own Variable Value Meaning Frequencies (%) Minimum Maximum Mean SE Social Innovation 0 No new products or processes 26.8 0.00 2.00 1.01 0.74 1 New products or processes 46.4 2 New products and processes 26.8 Size 1 Micro (1–9 employees) 6.3 1.00 3.00 2.14 0.50 2 Small (10–49 employees) 73.2 3 Medium-sized (50–249 employees) 20.5 Reinvestment of profit 0 The residence or day-care centre does not reinvest profits 0.9 0.00 4.00 3.57 0.92 1 An amount between 1 and 25% of profits is reinvested 4.5 2 An amount between 26 and 50% of profits is reinvested 10.7 3 An amount between 51 and 75% of profits is reinvested 4.5 4 An amount between 76 and 100% of profits is reinvested 79.5 Revenues from Users 0 The residence or day-care centre has no revenues earnt from users 6.3 0.00 4.00 2.88 1.31 1 It receives between 1 and 25% of profits from users 11.6 2 It receives between 26 and 50% of profits from users 19.6 3 It receives between 51 and 75% of profits from users 12.5 4 It receives between 76 and 100% of profits from users 50.0 Participation 0 Decision-making not in a participative way 86.6 0.00 1.00 0.13 0.34 1 Decision-making in a participative way 13.4 Non-profit 0 Being a for-profit organisation 50.9 0.00 1.00 0.49 0.50 1 Being a non-profit organisation 49.1 International Entrepreneurship and Management Journal 1 3 turn use these enterprises to develop their welfare state social policies (Blomqvist & Winblad, 2019; Hall etal., 2016; Roy etal., 2013). Considering that the objective of collective residences is to improve the quality of life of the elderly, these organisations develop their innovative capacity to this end, thereby constituting an Table 4 Correlation matrix (Spearman) Source: Authors’ own a Correlation is significant at the 0.10 level (2-tailed) b Correlation is significant at the 0.05 level (2-tailed) c Correlation is significant at the 0.01 level (2-tailed) Social Innovation Size Reinvestment of Profits Revenues from Users Participation Non-profit Social Innovation 1 0.043 -0.184a-0.161a0.287c0.244c Size 0.043 1 0.025 0.002 0.048 0.179a Reinvestment of Profits -0.184a0.025 1 -0.119 0.198b0.306c Revenues from users -0.161a0.002 -0.119 1 -0.125 -0.281c Participation 0.287c0.048 0.198b-0.125 1 0.191b Non-profit 0.244c0.179a0.306c-0.281c0.191b1 Table 5 Ordinal Regression. Predictors of Innovation Source: Authors’ own Significant values are shown in bold *p < 0.10;**p < 0.05;***p < 0.01 β Wald S.E Control variable Size = 1 (micro: 1–9 employees) -0.344 0.149 0.890 Size = 2 (small:10–49 employees) 0.234 0.244 0.474 Independent variables Reinvestment of profits = 0 (0%) 20.331 0.000 Reinvestment of profits = 1 (1%-25%) 1.592* 2.784 0.954 Reinvestment of profits = 2 (26%-50%) 1.862*** 7.962 0.660 Reinvestment of profits = 3 (51%-75%) 1.881** 3.930 0.949 Revenues from users = 0 (0%) 0.563 0.487 0.807 Revenues from users = 1 (1%-25%) 0.006 0.000 0.662 Revenues from users = 2 (26%-50%) 0.798 2.427 0.513 Revenues from users = 3 (51%-75%) 0.696 1.115 0.659 Participation = 0 (No Govern. particip.) -1.940*** 9.960 0.615 Non-profit = 0 (For-profit social form) -1.104** 6.042 0.449 Model Fit: X2 (12) = 32.378***, p = 0.001 Pearson’s chi-squared test: X2 (68) = 81.284, p = 0.130 Deviance test: X2 (68) = 77.431, p = 0.203 R2 of Cox and Snell: 0.251 R2 of Nagelkerke: 0.285 1 3 International Entrepreneurship and Management Journal Table 6 Summary of the results of the hypotheses Variables Hypotheses Results Reinvestment of Profits H1: The greater the profit reinvestment within social enterprises of elderly care services, the greater the social innovation in those services Supported Revenues from Users H2: The higher the revenues from users within social enterprises of elderly care services, the greater the social innovation in those services No supporting evidence Participation H3: Participative governance within social enterprises of elderly care services positively influences the social innovation in those services Supported Non-profit H4: Non-profit social enterprises of elderly care services tend to introduce more social innovations than do other social enterprises Supported International Entrepreneurship and Management Journal 1 3 infrastructure upon which governments depend to guarantee the provision of elderly care services (Caló etal., 2018; Chandra etal., 2021; Krlev etal., 2019; Winblad etal., 2017). Moreover, these links between social enterprises and the State also provide evidence that not only do social innovations depend on the providers (Aksoy etal., 2019), but also on certain institutional conditions (Audretsch etal., 2022; Medina-Molina etal., 2022), such as welfare state social policies in the case of elderly care services (Krlev etal., 2019; Rey-García etal., 2019a). Regarding the three dimensions of social enterprises selected to explain social innovations, this study finds that, in terms of attaining revenue from users, the reinvestment of profits and a participative character of governance represent factors of greater influence for social innovations than the existence of a commercial business model. Concerning the reinvestment of profits, this research reinforces that part of the literature which emphasises the importance of this characteristic for the creation of social innovation and social value (Defourny et al., 2021; Murray et al., 2009). Regarding participative governance, this dimension is also considered highly relevant for the development of social innovations in the specific literature (Anheier etal., 2014; Doherty etal., 2014; Gupta etal., 2020). However, this literature indeed considers both participative governance and social innovation from a macro-economic perspective through the interaction of various stakeholders and the combination of various types of resources for the solution of societal problems in a specific territory (Moulaert etal., 2013; Phills etal., 2008). Our article, however, highlights the importance of participative governance from a meso-economic perspective, that is, at the business level (Guzmán etal., 2020; Klarin & Suseno, 2022). The results herein obtained, therefore, suggest that participative governance in the entrepreneurial decision-making process helps to build a forum for the proposal and development of new ideas, the improvement of the service provided by the residences and day-care centres, and for the enhancement of the quality of life of their users. Lastly, it also helps towards addressing the social problem of population ageing. In this respect, this finding coincides with the contribution of Casanova etal. (2020), since social innovation for the elderly exerts impacts at both meso and macro levels. Regarding the apparently lower influence of revenue from users (as indicative of a commercial business model) on social innovation, this may be related to the fact that the study is focused on those care centres that have state-assisted places for the elderly, which means that they receive financing from the public sector for their provision of care services for senior citizens. That is to say, for those social enterprises, social innovation holds no importance, since no specific demands regarding these issues exist from the public sector and, at the same time, people in charge of such social businesses can feel that their revenues are sufficiently guaranteed, and hence no innovation needs to be introduced (Uyarra etal., 2014). In this respect, this situation would suggest a lack of “vocational spirit” for the creation of social value. In fact, certain authors have pointed out that the Dependency law in Spain has constituted a business opportunity in many cases and that the people involved in these initiatives have not always been aware of what a social business implies. This means that, despite meeting the minimum legal requirements to receive public funds, these social enterprises have failed to consider the creation of social value and to expand their social mission through social innovations (Bayter etal., 2018). Along these lines, the recent pandemic experience of COVID-19 has underlined the 1 3 International Entrepreneurship and Management Journal lack of this engagement in this sector in Spain (Gallego etal., 2021; García, 2020). It could be said that these social enterprises would be more concerned with seeking profit than solving social needs. Public sector containment and austerity measures since the financial crisis in 2009 could be behind this behaviour, since both the financial support for elderly care services and the quality control of these services have decreased (Deusdad etal., 2016b; Gallego etal., 2021). Nevertheless, it is found that non-profit social enterprises innovate more in the elderly care sector than do for-profit social enterprises. This research, therefore, supports all the literature that states that non-profit organisations are more concerned than for-profit organisations regarding solving social needs since non-profits have neither economic motivation nor profit distribution possibilities (Anheier etal., 2014; Krlev etal., 2019; McDonald, 2007; Moore etal., 2015; Shier & Handy, 2015a). Therefore, in the case of non-profit social enterprises, a “vocational spirit” is more visible for social value creation (Do Adro etal., 2021). Especially in the specific sector of the elderly, the introduction of new products or processes could address the problems arising from population ageing by improving the autonomy of senior citizens through various means, such as nursing care services, stimulation, and physiotherapy, thereby following the objective of the Spanish Dependence Law (Act 39/2006). Concerning the practical implications of this research, three points should be highlighted. First, the public sector could stimulate or demand that state-assisted private social enterprises implement social innovations to obtain a broader and more successful social mission. To this end, the Dependence Law could be modified by introducing new mandatory requirements for new goods or services already existing in the specific market (Bayter etal., 2018). Second, although, in the Dependence Law, the public sector prioritises non-profit organisations over all other social enterprises, the law could also include the reinvestment of a part of the profits in for-profit residences and day-care centres to facilitate the introduction of social innovations. And third, the public sector could promote the connections of these residences and day-care centres with other structures and institutions and other industries that can improve the well-being of the elderly (Heinze & Naegele, 2012). In this way, these interactions beyond the business itself could also promote the creation of social innovations in a widespread social innovation system (João-Roland & Granados, 2020; Phillips etal., 2015) and thereby attain better results regarding the situations of the elderly. Conclusions Given the increasing number of social enterprises created to address the issues surrounding population ageing, this article analyses whether the specific dimensions of such companies and their for-profit or non-profit nature affect the development of social innovations in the elderly care sector. Based on 112 responses to a questionnaire directed at state-assisted private social enterprises in Andalusia, an ordinal regression has been carried out. The results obtained lead to the following conclusions. Firstly, there is a clear relationship between social enterprises and social innovation in the elderly care sector. In this respect, this research contributes to the specific literature on social entrepreneurship and social innovation. It presents empirical evidence International Entrepreneurship and Management Journal 1 3 that social enterprises are drivers of social innovations through their specific characteristics, to be precise, through those related to the reinvestment of profits and participative governance. In this way, this study responds to the demands of several authors in this line of research that highlight the need for empirical contributions that refer to the connection between these two elements (social innovation and social entrepreneurship) (Barraket & Furneaux, 2012; João-Roland & Granados, 2020; Lortie & Cox, 2018; Phillips etal., 2015) by specifically focusing on the sector of elderly care services due to the challenges presented by population ageing (Casanova etal., 2020; Rey-García etal., 2019a). Secondly, we conclude that non-profit social enterprises tend to develop more innovations in the elderly care sector than do for-profit social enterprises. In this respect, this study responds to the need to study the role that different types of social enterprises play in outcomes (Klarin & Suseno, 2022), and contributes to the literature by showing how the lack of economic motivation and its consequent non-profit distribution constraint leads to more social innovative behaviour to cover a social need (Anheier etal., 2014; Krlev etal., 2019; McDonald, 2007; Moore etal., 2015; Shier & Handy, 2015a; Svensson etal., 2020), such as that related to elderly care. Thirdly, it is concluded that the role of the Public Administration in promoting social enterprises to meet social needs is critical, as happens in the case of Spain and the region of Andalusia through the Dependency Law. In this regard, this research contributes to the literature by providing an empirical study that analyses the characteristics and behaviour of residences and day-care centres created for elderly care after the approval of a specific law. It also shows that, despite the proliferation of such social enterprises, their improvement margins remain highly evident in social innovations to better assist these sensitive collectives (Liu, 2020; García, 2020). The role of the State should therefore be reframed regarding the type of support these social enterprises receive. Finally, this research is not exempt from limitations. Firstly, social innovations were measured by focusing exclusively on process-based and product-based social innovations, as we followed a functionalist approach proposed by Anheier et al. (2014). It would therefore also be necessary to include measures of transformative social innovations (Shier & Handy, 2015a). In the elderly care sector, the role that transformative social innovations and their providers can play holds the key to promoting social change in the way in which society deals with the challenges of population ageing (Rey-García etal., 2019a, b). Secondly, the sample size is sufficient for this research, although the survey has been conducted only in the specific field of elderly care services in residential and day-care centres. Future research plans include other types of services, which will also provide a broader view of social entrepreneurship and social innovations in this sector. Finally, one should be cautious about generalising the conclusions drawn here, as this study is applied to the specific Spanish region of Andalusia. In order to test whether these results refer to the Spanish situation of the ageing process in other regions, this study should be replicated across other territories, while paying special attention to their regional peculiarities. Given these limitations, future lines of research should be directed to overcome these issues. 1 3 International Entrepreneurship and Management Journal Funding Funding for open access publishing: Universidad de Sevilla/CBUA Declarations Conflict of interest The authors have no competing interests to declare that are relevant to the content of this article. Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. 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