Navigating network governance: the role of social enterprise in local employment services

ABSTRACT

Neoliberalisation of welfare has stimulated growth of hybrid organizational forms – including social enterprises – that bridge welfare objectives and market models of service provision. However, the role of social enterprises in governance networks remains underexplored. Drawing on a comparative case analysis of four work integration social enterprises (WISEs) in Australia, this paper examines how WISE operate within local employment services systems and labour markets. We find WISEs both attract non-traditional resources and generate social value in new ways as an effect of their hybrid organizational arrangements. However, their effectiveness is constrained by lack of legitimacy within supralocal governance systems.

KEYWORDS:

• Work integration social enterprise
• network governance

Introduction

The neoliberalisation of the welfare state has institutionalized new functions for community services organizations (Carmel and Harlock 2008; Garrow and Hasenfeld 2014; Maier and Meyer 2011), and stimulated the growth of hybrid organizational forms – such as social enterprise – that bridge welfare objectives and market models of service provision (Gerrard 2017). Related to and extending from these changes, public policy has been inflected by network forms of governing (Hajer and Wagenaar 2003; Krogh 2020; Rhodes 1997, 2007; Stoker 2006), which increasingly involve non-government actors in the design and delivery of programmes that seek to create public value (Stoker 2006). Despite scholarly interest in social enterprise as networked organizations (Di Domenico, Tracey, and Haugh 2009; Huybrechts, Nicholls, and Spear 2013) and their formalized role in welfare services delivery in some jurisdictions (Cooney 2011; Garrow and Hasenfeld 2014; Gerrard 2017; Spear and Bidet 2005), there has been very little research to date that considers whether and how social enterprises perform as network governance actors (Barraket 2008; Park and Wilding 2014).

This paper seeks to extend the available literature through in-depth empirical analysis of the intermediating role of four Australian work integration social enterprises (WISEs) in local employment services systems and labour markets. Social enterprises are businesses that trade for a social purpose (Calò et al. 2018). WISEs are social enterprises with a particular focus on generating employment or employment pathways for people who experience barriers to mainstream labour market participation (Spear and Bidet 2005). The four case study organizations’ primary social purpose, enacted in different ways, is creating employment and employment pathways for young people (aged 15–24) who are experiencing socio-economic and place-based disadvantage. Using a comparative case study approach, the research involved engagement workshops, on-site participant observation, and 93 interviews with social enterprise stakeholders, including staff, participants, customers, funders and supply chain partners.

The research found that WISEs both attract non-traditional resources and generate social value in new ways as an effect of both their hybrid organizational arrangements and the impacts of these on their networked activities. In addition to contributing to the literature on social enterprises as policy actors, our paper offers new insights to policy studies by incorporating observations – to date not widely considered in network governance literature – on the link between service users and social enterprises as service network representatives.

Before considering our methods, findings and their implications, we first explain our conceptual approach and how this guides our analysis and contribution, and canvas the existing literature on social enterprise as network governance actors.

Network governance and hybridity – a conceptual approach

This paper is both informed by, and seeking to contribute to, theoretical developments in network governance and hybrid organizing within social services systems. Since the late 1990s, the manifestation of policy in and through networks has been a source of scholarly attention (Hajer and Wagenaar 2003; Kooiman 2003; Rhodes 1997, 2007). As noted by Blanco, Lowndes, and Pratchett (2011) and Krogh (2020), the concept of networks is squarely embedded in current conceptions of policy making and governance, and encompasses both informal and formal interactions between diverse policy actors and the policy process. In broad terms, the concept of network governance shifts attention from governments and top-down only regulation in the policy process, to ‘ … ideas about a decentred governance based on interdependence, negotiation and trust’ (Sørensen and Torfing 2005, 196).

The literature on network governance is typically applied to the analysis of innovation in modes of governance, in empirical settings that involve wicked or emergent policy problems (Blanco, Lowndes, and Pratchett 2011; Hansen et al. 2021). Specifically, the network governance ‘analytic lens’ invites consideration of: the democratic implications of governing through networks; whether policy networks drive new efficiencies in service delivery; whether and how network governing mobilizes new resources in support of public value creation; and whether cross-sector service networks are more or less effective than traditional forms of public service delivery.

Klijn and Koppenjan (2012) observe that network governance – or what they call governance network theory – has evolved into a fully-fledged theory of governance in response to the conceptual and empirical limitations of earlier constructs such as new public management. They identify three strands that have emerged within this theoretical framework, one of which – interorganizational service delivery and policy implementation – we take up in this paper. Klijn and Koppenjan (2012) find that the primary empirical focus of this strand of network governance theory is complex services and the driving assumption is that networks emerge because organizations need resources from each other in order to survive.

Governance networks may be formal or informal, fixed-term or ongoing, and can be initiated from the top down or the bottom up (Sørensen and Torfing 2005). For the purpose of this paper, we refer to governance networks as the network of interdependent but autonomous actors working both together and individually around a particular policy issue, as distinct from formally mandated coordinative arrangements prescribed by governments. In this study, the policy issue in question is the participation in employment and education of young people who have experienced systemic disadvantage.

In addition to being diverse in structure and focus, network governance also occurs at all levels of societal systems. Our empirical attention in this study is on local systems of welfare services. Local welfare systems can be understood as geographically-bound forms of network governance with a particular focus on welfare policy implementation. Like other manifestations of network governing, local welfare systems can be characterized as dynamic arrangements of state and non-state actors (Andreotti, Mingione, and Polizzi 2012; Evers and Brandsen 2016). Such systems are characterized by loose connections and interdependence based on common goals rather than centrally controlled as public service networks are (Kinder et al. 2021).

As Andreotti, Mingione, and Polizzi (2012) observe, the growing emphasis on local welfare systems in both policy and research does not position welfare policies as ‘local products’. Rather, it highlights the changing configurations of planning, financing and implementing macro-level policies at specific territorial levels. Thus, local welfare systems can be understood as open systems that operate at the intersection between local and supralocal conditions (Andreotti, Mingione, and Polizzi 2012). In addition to the four WISEs that are our empirical starting point in this study, key network governance actors in their local welfare systems include: government-funded employment services providers; schools and post-secondary training providers; third sector agencies providing support for young people to access public and philanthropic services; state government departments supporting specific employment and education programmes; and local employers.

Alongside considerations of networks in governance typified by the ‘interpretive turn’ in policy studies (Rhodes 2007), has been a growing consideration of the emergence of hybridity – both within and across organizations – in contemporary governance regimes (cf Skelcher and Smith 2015). As Anheier and Krlev (2014) summarize, hybridity is an umbrella term that has been applied to diverse organizational phenomena that combine previously distinct elements in new organizational forms. Our focus in this paper is on social enterprises, which are typically understood as hybrid organizations that combine social and economic objectives (Anheier and Krlev 2014).

There is a substantial literature that examines the ‘internal network properties’ of social enterprises as hybrid organizations. Consistent with Skelcher and Smith’s (2015) theorization of organizational hybridity, many of these studies conceptualize social enterprises as managing competing rationalities, or institutional logics, that shape organizational practice and performance within social enterprises (see, for example, Battilana et al. 2015; Pache and Santos 2013; Vickers et al. 2017). Building out from this work and integrating considerations of both network governance and hybrid organizing, our goal here is not to trace how hybridity manifests within WISES, but whether and how their hybrid organizational cultures and relationships affect local welfare networks and service users’ experiences.

The manifestation of network governance within local welfare systems and the influence upon this of hybrid organizational forms drives our research aims and analytic approach. Thus, our overarching aim in this paper is to extend both empirical and conceptual understandings of the role of hybrid organization in governing through networks. Our questions – detailed below – are informed by this conceptual aim as well as the existing empirical literature on social enterprise, public services and network governance, to which we now turn.

Literature review – social enterprise, public services and network governance

Social enterprises’ characteristics and functions are informed by different policy regimes and socio-political institutional conditions in different countries (Defourny and Nyssens 2010; Kerlin 2013) and they have become increasingly recognized actors in public policy frameworks across many jurisdictions in recent years. The literature to date has traced both the public service delivery functions and effects of social enterprise, and – to a lesser degree – the role of social enterprises in policy networks.

Social enterprise and public service delivery

In the context of health services in the United Kingdom, the spinout from the National Health Service of health-focused social enterprises has attracted the greatest attention from researchers of social enterprise as quasi-public sector actors to date (Calò et al. 2018; Hall, Miller, and Millar 2012, 2016; Millar 2012; Sepulveda, Lyon, and Vickers 2018). This research finds that the hybridity created by spanning different sector models while being led by social purpose provides some potential for public sector innovation through social enterprise (Sepulveda, Lyon, and Vickers 2018). It also finds that social enterprise practitioners of this model align themselves with public, private or third sector logics depending on the specifics of different organizational constraints and opportunities (Hall, Miller, and Millar 2016). A systematic review of the outcomes of social enterprise in health services delivery by Calò et al. (2018) finds, however, that such enterprises generate improved outcomes for service users where they operate in collaborative multi-service provider contexts rather than where they seek to simply substitute existing public services.

Another emerging vein of literature that offers insights into the interaction between social enterprise and public policy agendas focuses on the implementation of social procurement – that is, using purchasing power to generate social value above and beyond the goods being procured (Barraket, Keast, and Furneaux 2016) – and its implications for social enterprise. Both the practice and study of social procurement explore social value creation in non-traditional areas of public policy, such as major infrastructure developments. Relevant studies have found that social enterprises generate social value in distinct ways because of their hybrid structures and their cross-sector relationships (Loosemore 2015). However, research also finds that social enterprises involved in social procurement bear disproportionate risk for public value creation as a result of being at the end of procurement supply chains (Loosemore 2015).

In the specific context of welfare services provision, the Italian social cooperative model has received substantial academic attention as a community-led response to gaps in local welfare systems (Borzaga and Galera 2016; Campopiano and Bassani 2020; Mancino and Thomas 2005; Thomas 2004). These studies suggest that social cooperatives provide efficient and effective responses to service gaps created by government failures, and that their hybrid social business nature makes them more effective than traditional not for profits at stimulating services innovation and integrating with local socioeconomic development projects involving multiple actors (Borzaga and Galera 2016; Campopiano and Bassani 2020; Thomas 2004).

In aggregate, studies of health services social enterprise, the role of social enterprise in government-driven social procurement, and the welfare responses of Italian social cooperatives suggest that the hybrid social-commercial nature of social enterprise stimulates innovation within services systems by facilitating connections between different stakeholders and mobilizing non-traditional resources in support of welfare objectives. They also suggest that issues of risk distribution and legitimacy may both guide social enterprises’ behaviours and weaken their contributions to the fulfilment of policy objectives.

The main model of social enterprise engaged in employment services delivery is WISEs, and these are the focus of our study. They play specific roles in the delivery of education, training and employment services intermediation (Spear and Bidet 2005), which in many jurisdictions have been historically delivered by public sector organizations. Within welfare regimes, Garrow and Hasenfeld (2014) argue from a critical theory standpoint that WISEs embody neoliberal welfare logics. These authors theorize that the relative nature of WISE embeddedness in social service or market logics affects their likelihood to engage in mission drift or commodify their service users, suggesting that those principally embedded in market logics are more likely to do both. From a market theory perspective, Beaton and Kennedy (2021) suggest somewhat differently that WISEs seek to rehabilitate flawed labour markets by inserting themselves into these markets and competing for resources within them.

While there is a fairly well-established body of research focused on the social value produced by WISEs in relation to employment creation, welfare provision, and health and wellbeing (Dai, Lau, and Lee 2017; Elmes 2019; Hazenberg, Seddon, and Denny 2014), almost nothing has been published on the role of WISEs within governance networks.

Social enterprises, networks and network governance

While not explicitly engaged with network governance, there is existing literature of the collaborative and connective features of social enterprises which is useful to draw on in this paper (Di Domenico, Tracey, and Haugh 2009; Di Domenico, Haugh, and Tracey 2010; Gillett and Tennent 2020; Henry 2015; Huybrechts, Nicholls, and Spear 2013; Paluch, Fossey, and Harvey 2012; Weber et al. 2021). Positioned largely within the private management literature, studies of social enterprises in networks have to date focused mainly on their relationships with corporate entities. These studies find variously that: the local embeddedness of social enterprises is a significant part of their social exchange value for corporate partners (Di Domenico, Tracey, and Haugh 2009); practical and moral legitimacy (Suchman 1995) is mobilized by social enterprises in corporate partnership arrangements (Huybrechts, Nicholls, and Spear 2013); cross-sector partnerships are central to the operational success of some forms of social enterprise (Paluch et al. 2012); and that lasting collaborations may be grounded in reciprocal economic or social exchange (Weber et al. 2021). Collectively, these studies suggest that social enterprises mobilize resources, and both confer and attract organizational legitimacy through their partnership activities.

The limited literature on social enterprises as network governance actors published thus far suggests tentatively that the hybrid nature of social enterprise lends itself to effective intermediation – or acting as ‘institutional glue’ – within governance networks (Barraket 2008; Park and Wilding 2014). Building on O’Toole’s (1997) use of the institutional glue metaphor in policy studies, Park and Wilding (2014, 120) describe this as ‘a required role to coordinate what may have been previously disconnected actors for an effective response to complex social needs’. In the context of local governance, Barraket and Archer (2010) found that the dual social and commercial functions of social enterprise resulted in examples of social enterprise practitioners forcing ‘joining up’ between government siloes within municipal governments. Drawing on desktop case analyses in the UK and South Korea, Park and Wilding (2014) suggest that social enterprises act as institutional glue in governance networks by intermediating and drawing disparate actors from the government, private for profit, and not for profit sectors closer together. They observe the key conditions that improve social enterprises’ capacity to act as institutional glue is their social know-how to effectively collaborate and diffuse knowledge across sectors, and their ability to command trust among diverse governance actors. They further conclude that the macro-institutional environment – particularly, the extent to which social enterprise is legitimized by public policies in any given jurisdiction – influences the network agency available to these organizations. Both Barraket and Archer (2010) and Park and Wilding (2014) find that social enterprises enable network governing by providing coordinative capacity. However, each of these studies also concludes that further empirical research is needed to truly explicate the network governance effects of social enterprise.

One recent study begins to address these gaps. Drawing on the work of Desmarchelier, Djellal, and Gallouj (2020), Hansen et al. (2021) have described local service systems involving social enterprises as ‘public service innovation networks for social innovation’ or PSINIs, again emphasizing multi-organization arrangements involving public and private actors in pursuit of new and improved responses to complex social problems. Through the lens of social innovation, Hansen et al. (2021) find that social enterprise leaders do not simply coordinate but actively mobilize their networks to legitimize their outreach to other local welfare system actors.

Reflecting their largely meso-level focus on organizational dynamics, these existing studies identify relationships between organizational actors and do not consider the network mediating effects of social enterprise on behalf of citizens who use welfare systems. Osborne and Strokosch (2013) have observed that excluding citizens as policy actors is characteristic of most policy studies on network governing and co-production. Drawing on the commercial services literature, they suggest that citizen participation in co-production is an inevitability of service use, and that therefore more explicit consideration should be given to the interplay between citizens, services, service providers, and other policy actors to improve understanding of how the relational dynamics of contemporary service delivery inform production and implementation.

Informed by our conceptual approach, and responding to the gaps and calls for new research directions reflected in our literature review, our study has two research questions:

1. What are the roles and effectiveness of WISEs as network governance actors in the context of local welfare systems and labour market dynamics?

2. What are the implications for individual service users of WISE involvement in local welfare systems?

Reflecting the case organizations with which the research was conducted, we apply these questions in the context of a particular demographic cohort; that is, young people aged 15–24 who experience socio-economic disadvantage.

In responding to these research questions, this paper makes two specific contributions. First, it adds empirical depth to existing understandings of social enterprise as network governance actors by providing rich insights from a comparative case study design involving extensive primary data collection. Second, it considers the network governance effects of social enterprise for individual service users, as well as for organizational governance actors, with a particular focus on employment services systems. Before considering the findings and implications of this research, we provide some detail of our research context and the methodology that guided the study.

Research context and setting

The empirical focus of this study was four WISEs, two operating in the Australian states of New South Wales (NSW) and two operating in Victoria. WISEs create permanent employment opportunities and, in some cases, worker ownership, as well as offer intermediate labour market settings to support participants’ transitions into the mainstream jobs market. The WISEs included in this study were primarily based on transitional models, with a focus on developing the employability of young people aged 15–24 who experience socio-economic disadvantage. This age group was selected because it mirrors the national classification of young people in population-level data and policy interventions in Australia. Economic participation of young people can by understood as a wicked or complex policy problem in the Australian context because of the persistence of high unemployment and precarious employment among younger Australians and the federated political system which ‘breaks up’ welfare services required to provide holistic support.

An early adopter of neoliberal policy settings, Australia has a residual welfare regime (Esping-Andersen 1990) characterized by marginal support for those most in need. In its federated political system, mainstream employment services are the responsibility of the federal government, while state governments provide supplementary programmes to support particular cohorts, such as refugees and people seeking asylum. Australia’s employment services system was privatized in the mid-1990s and is delivered via a quasi-market network of private (for profit and not for profit) actors (Considine 2001). Welfare support for people experiencing unemployment is underpinned by a ‘work first’ approach, which focuses on ‘work as the best form of welfare’, rather than the provision of best fit work, or (re)training and education to support labour market participation. With more than two million people (including those who are under-employed) in Australia seeking work prior to the COVID-19 crisis (Australian Bureau of Statistics 2020), the adequacy of this system has been widely questioned. Specifically, Australia’s employment services system has been critiqued for: incentivizing ‘parking’ and ‘churning’ of employment seekers by service providers (Considine 2001); eroding collaboration and people-centred approaches by fostering competition among not for profit service providers (Considine, O’Sullivan, and Nguyen 2014); and its lack of responsiveness to developing the workforce needed to meet contemporary labour market demands (Cortis, Bullen, and Hamilton 2013).

While WISEs have been operating in Australia since the late 1980s (Barraket et al. 2017), they are marginal institutional actors, not formally recognized within the mainstream employment services system or in underlying policy frameworks. Although not technically excluded from participating as employers in the system, their lack of visibility to employment services providers, and limited understanding within government regarding their cost structures and social impacts, constrains their involvement. WISEs are, however, becoming increasingly recognized in state government programmes as ‘niche providers’ that deliver bespoke support to job seekers experiencing particularly significant barriers to employment. At the time of conducting the research, Victoria – one of the states in which our cases are located – had an active social enterprise policy strategy, with goals around developing social enterprise as an inclusive economy actor through public procurement and sector capacity building. The other state where our cases were located – NSW – had no formalized strategy at the time the research was conducted.

Methodology

Given the very limited existing research on this topic to date, and the specified need for deeper empirical insights and theoretical development, a qualitative design was adopted for this research. Informed by ethnographic principles, our approach was designed to contribute to improving understanding of social enterprises as ‘a kind of doing’ – that is, as a social phenomenon built around performative practices, rather than as a ‘ready-to-use’ but decontextualized business model (Mauksch et al. 2017, 114). Consequently, the research methods used focused attention on the everyday activities, engagements and interactions between the case WISEs and their networks and stakeholders, eliciting a rich primary data set that provides insights into the complexities of their operations.

The research presented in this paper forms part of a wider study that examined the impacts of WISEs on the socio-economic participation of young people experiencing disadvantage. The research design was based on a holistic organizational perspective that considered the interplay between business functions and practices and the social impacts of the participating WISEs on young people, WISE staff, and the communities they served. This included close analysis of the role of the case organizations in local employment and related social services systems and labour markets, which is the focus of this paper.

Case selection of the four WISEs was informed by engagement workshops with 20 youth representatives, social entrepreneurs, and public health professionals across each of the participating states. A paradigmatic case sampling approach (Flyvbjerg 2006) was used, seeking to include examples that demonstrate prototypical characteristics of the phenomena in question. To minimize differences related to the stage of business lifecycle, the four cases selected were well-established WISEs, which we operationalized as being organizations that had been operating for at least five years and had a publicly reported record of financial sustainability. All case WISEs were predominately self-funding through trading. Each case organization had an explicit focus on supporting young people, and operated within or into regions experiencing a high degree of socio-economic disadvantage according to the Australian Bureau of Statistics SEIFA Index (Australian Bureau of Statistics 2016). To explore whether place and institutional differences related to different practices or effects, case variance was based on: (1) geography, with the sample including urban, metropolitan fringe, and regional cases; and (2) institutional contexts, with two cases in a state that has no explicit social enterprise policy framework (NSW) and two in a state that does (Victoria). See (Table 1) for a summary of the case studies:

Table 1. Summary of case study WISE.

	Case A	Case B	Case C	Case D
Social purposes	Employment pathways for disadvantaged youth Housing affordability Environmental sustainability	Youth engagement and employment pathways Environmental sustainability Support local community	Training and employment pathways for disadvantaged young people Social inclusion for young people	Employment pathways for young people and refugees Environmental sustainability Local and fair food production
Geographic location	Inner-metropolitan Victoria	Inner-metropolitan NSW	Outer-metropolitan Victoria	Regional NSW
Industry	Food services (cafes and catering)	Information technology	Construction	Farming Waste management
Key local service system network actors	Vocational education providers Housing services Counselling services Local employers	Schools Corporate partners/purchasers Local employers	Schools Vocational education providers State government apprenticeships agency	Schools Vocational education providers Local employers State government education department Community sector partners

Data collection included: formative and summative engagement workshops within each case organization; semi-structured interviews with participating young people, WISE staff and managers, supply chain partners, customers, philanthropic partners and community services organization partners (N = 93); participant observation in each case organization; and collation and analysis of relevant organizational documents and media reports (e.g. reports, newsletters, emails, meeting minutes, and media archives). Interviews averaged 44 minutes in length and were fully transcribed. See (Table 2) for a summary of interviewees by case and type. Participant observation averaged 13 days per case in three cases and 3.5 days in one case due to the nature of on-site activities. The researchers participated in diverse activities as part of participant observation, including work activities, training programmes, and board meetings. Information related to participant interactions was recorded textually using a participant observation guide and spatial information was recorded visually through sketches and photographs.

Table 2. Interviewees by case and participant type.

Case WISE	Interviewee type
	WISE staff and directors	Young people	Adjacent and ancillary service providers	Funders and partners	Customers
A	12	5	3	2	2
B	12	6	2	3	0
C	11	9	1	0	1
D	10	7	2	2	3
Total	45	27	8	7	6

For the purposes of this paper, interview data and participant observation notes by different governance actors – service users, social enterprise staff, other service providers, and social enterprise partners – were selectively coded against our two research questions (outlined above) using NVivo 12. Secondary data collected were largely used to verify or supplement statements of fact.

Drawing on our literature review and cross-case analysis, selectively coded material was then subject to thematic analysis to identify key themes and differences across different case contexts and in relation to earlier studies. With regard to prior studies, we looked particularly at how our data cohered or diverged from Park and Wilding’s (2014) ‘institutional glue’ metaphor of social enterprises attracting and coordinating resources in local governance systems, and Garrow and Hasenfeld’s (2014) theory that the nature of embeddedness in social services or markets informs WISE missions and structuring of service users. This approach guided our analysis and we return to it in explicit terms in our discussion.

Findings

We have organized our findings around our two research questions – that is, to understand the roles and effectiveness of WISEs as local network governance actors; and to explore the implications of WISE involvement in local welfare systems for individual service users. Our findings present a picture of highly networked governance activity within welfare systems seeking to improve economic participation of young people, with case WISEs playing a purposeful role in fostering and navigating governance networks while also responding to gaps within the services system.

Role of WISEs as network governance actors

The role of case WISEs as network governance actors presented in our data in three themes. The first of these themes was fulfiling service gaps. Adjacent employment and ancillary (for example, housing, mental health, youth justice and education) service providers interviewed described experiences of coordination or collaboration between the case WISEs and their own agencies to meet the needs of young people. The case WISEs were largely recognized by other service providers as filling local service systems gaps.

… but working with these kids you have to have that resilient level … And they [WISE staff] understand that as well … Where [large for profit businesses] their staff are not trained to work with our kids … I think that’s why [the WISE] has been so successful (Case D, Adjacent service provider)

Representatives of schools and government education departments interviewed were unanimous in describing all case WISEs as providing unique hands-on learning environments, through both their own services and their coordination of access to other services that met the needs of young people who are not served by mainstream education and employment services provision:

[the WISE is] able to offer that individual wraparound support … they had they were able to make referrals to other agencies and they attached a support worker … and it offered also like a positive role model relationship, which we thought [the young person] may benefit from. Plus, the experience in working in a live café, you’ve got the customers there, you need to serve them … And, [my client] wanted to be a chef, so for him, this all tied up really nicely. (Case A, Ancilliary service provider)

The second theme through which case WISEs presented as network governance actors was their role in purposefully providing coordinative functions within local services systems. Interviewees from other services noted that the lead coordinative function in services navigation was not always undertaken by the WISE, as this depended on the context and the young people’s needs and starting points. However, all identified the important function of the WISEs in services coordination, and cited examples where they led these processes. The wraparound support characteristically provided or brokered by case WISEs was commonly cited as their distinct contribution to young people’s needs and thus to the services system offerings:

I tend to take interested students down to [the WISE] for a visit … if they’re interested, we’ll make an individual appointment for parents and students to go down … they’re not quite ready to go to [vocational education], they need more wraparound services. And, that’s what [the WISE] I think really offer … (Case C, Adjacent Service Provider)

The nature of wraparound support varied across geographies, with transport support particularly needed in the regional and metropolitan fringe cases, detailed in relation to service user experiences below.

The third theme related to the function of WISEs as network governance actors that presented in our data related specifically to their hybrid characteristics as social services providers that operated as (multi-resource) businesses. As case WISEs offered both training and live business settings, relationships between them and other local service providers resulted in two-way pathways for participants:

We refer young people to [the WISE] and we’ve made, I think, eight placements with them to date. Then we also have. through … their traineeship programme we have an employee from them as well. (Case B, Partner recruiting organisation)

In addition to coordinating mainstream services in support of young people’s needs, three of the four case WISEs also enacted examples of drawing in novel service support from commercial organizations as a result of their business orientation and relationships. For example, the representative of a private for-profit counselling practice working with one case WISE described formalizing their involvement in pro bono counselling for the young people the WISE was supporting:

… we really just asked [the WISE] what they needed and came to an agreement around that so the service is specific to [the WISE] and quite individualised for the clients … (Case A, partner organisation)

The case WISE referred to here is practiced in accessing pro bono support from the business sector, and this arrangement came about as a result of a pre-existing business relationship between the two organizations and subsequent advocacy by the WISE seeking to have the counselling practice become more deeply involved:

I think often times the partnering with organisations for a purpose because they need a particular piece of service to fit with what they already do and so in that sense it’s quite easy to work with those organisations. (Case A, partner organisation)

Another case WISE had a relationship with a commercial provider to support education outcomes for young people. The WISE partner described this as a multi-actor relationship:

… so there’s basically like a three-way relationship with myself from the [registered training organisation] … and then the student, and sometimes we also obviously have the host employer as well, so there’s four parties involved when [the WISE] gives us a student. (Case B, Training Partner)

While all case WISEs were active in filling gaps in local welfare systems for young people, the leadership of only two cases framed the work of their WISEs as being explicitly concerned with creating social systems change. These case organization leaders identified themselves and their organizations as being explicitly driven by social purpose that contested existing hegemonies in social services systems that were slow to respond to users’ needs, insufficiently joined up, and limited in social innovation thinking. Here, interviewees framed their systems change work as a process informed by inter-organizational relationships grounded in shared purpose or a willingness to take on the mission of the WISE:

[We’re] the people who go in and just deal with the worst stuff … If you want to collaborate with us, fantastic, we’re going to be sprinting hard and we want you to come along on the journey with us, but if you either can’t keep up with the pace or you’re going to stand in our way, that’s okay, you don’t have to work with us. (Case A, CEO)

Where the WISEs had significant relationships with government departments interested in ‘purchasing social outcomes’, the data showed they were also influencing elements of government service design and some performance measures. In this way, WISEs were contributing to shifting network governance dynamics within their local services systems.

… one of the key differences here was that it wasn’t a tender scenario where the problem and the solution were well identified … ‘we want you to do ‘A, B and C - please put your application in’. This is very much a co-design type of approach … [and] … It’s a payment by outcomes approach and the outcome measures were agreed at the negotiation phase for all of the providers. (Case D, government customer)

In the two inner metropolitan cases, the WISEs described taking a proactive approach to engaging their existing funders and upstream customers to further leverage new resources. Here, the WISEs both used their relationships to access new resources, and leveraged their existing partnerships as entry points into new and expanded networks. As one WISE partner described:

… [The WISE leader] will actually send me an agenda for what she wants to talk about in the [reporting] meeting, which is pretty proactive … I take a note of all the new development areas that they’re looking for support from, and I keep that in a dashboard … and then I use my networks, to basically provide that support. (Case D, philanthropic funder)

Through their supply chain relationships and philanthropic partnerships, WISEs described brokering new network actors into local governance by intermediating between corporate organizations and the needs of young people. The corporate partners we interviewed generally viewed themselves as having shared values with their WISE partners, and being motivated to partner with WISEs because of the local embeddedness and legitimacy of these organizations in serving the needs of young people:

[Our] motivation is corporate responsibility and wanting to be able to give back to the community around us and make sure that people in need are able to access … our services. I think really that’s been our motivation from our end. We were keen [on the WISE] as an organisation to partner with … and strengthen our ties … (Case A, Corporate Partner)

Commercial partners also described co-creating employment pathways with case WISEs, identifying strong mutual benefits, such as workforce development to meet young peoples’ and corporate organizations’ needs, which motivated these activities:

… we are a host employer for [WISE], who organise [legal] traineeships for us … it’s really hard to get a good legal secretary these days without trying to poach from other firms … So I came up with the idea to train our own legal secretaries, and get them in traineeships … (Case B, Host Employer)

While interviews and participant observations suggested that all case WISEs commanded significant practical legitimacy (Suchman 1995) with their young participants and cross-sector partners, each also discussed the challenges of conducting their work with limited formal recognition by government for their roles in the federally-run employment services system:

… here we have this model that potentially feeds right into [government-desired] outcome[s] … I think the strategy needs to bend towards having them invest in this type of programme in a recurrent, sustainable and recurrent kind of way. (Case C, Manager)

There were no discernible differences in case WISEs’ experience of their legitimacy with governments across the two states in our research – one in which social enterprise is explicitly supported by government and the other where there was no such strategy. This possibly reflects that employment services in Australia is predominately a federal rather than state government responsibility.

Implications of WISE involvement in local welfare systems for service users

The section above sets out our findings in relation to network navigation and the services system. Systems networks affect and are affected by individual service users, and in this section, we consider the implications of the way WISEs deliver services and participate in local employment services systems for service users themselves. Here, we found thematically that WISE have particular impacts on service user experiences through coordinating support, intermediating between service users and the open labour market, and providing hybrid spaces not offered through traditional services or workplaces.

All four WISE cases in our study took a purposeful approach to linking young people with relevant welfare system agents to support their diverse needs for social security benefits, housing, education, mental health support and so on. In some cases, this also included linking young people to additional employment services providers and/or training opportunities, such as paid apprenticeships with the social enterprise’s commercial or social economy partners. The extent of this support varied according to the needs of different young people and the duration of various WISE programmes. However, across the different cases and programme models, young people typically described experiencing the WISE as offering a holistic approach that provided them with direct assistance and supported them to develop their own confidence and agency. Researchers noted in participant observation that this growth in confidence and self-efficacy – which arose from working and interacting in the live business settings described above – increased the participating young people’s ability to navigate the range of services and developmental opportunities available:

Like, I never used to feel confident with going out and being in front of everyone, even talking to people and opening up my mouth … but I’ve got a lot more confidence now and everything. (Case C, Young Person)

… in terms of the skills, I’ve definitely found that I’ve become more assertive … All the liaising that you need to do. Also leadership, not just of other people, but of yourself. Self-leadership is definitely a real thing. It’s all part of the motivation, the initiative. And on top of leadership, it’s teamwork skills and communication skills. (Case D, Young person)

While this coordinated support had demonstrably positive impacts for service users, the partnership-informed approach to service delivery also revealed divergent cultural practices among providers that were occasionally regressive. In participant observation in one case, for example, researchers noted gender stereotypical behaviour enacted by staff of a separate service provider co-located with the WISE, which limited training opportunities for girls and non-binary young people in the cohort. With regard to economic embeddedness and its impacts on service users, our participant observation also recorded examples across all WISEs of efforts to develop participants as ‘good workers’ by training them in professional expectations of behaviour and appearance.

In addition to formally coordinating services for participants, case WISEs also drew on the informal networks of those within their organizations to access supports for young people that were not available through the formal system. This was particularly observable in our regional case, where transport access was a major barrier to young peoples’ participation in employment. Here, the case WISE described multiple examples of supplementing local transport through informal arrangements:

One young woman … She’s got a really difficult home life financially. Most days it’s really hard for her to afford the bus to come to the farm so we’re working on sort of a buddy system where someone can pick her up on their way. It’s being flexible as well, and this is where a lot of government funded programmes aren’t flexible. So your [federal employment services providers] of this world … can’t organise a car to go and pick someone up. (Case D, Manager)

All the case WISEs also provided active intermediation with local employers to assist young people into decent jobs. This included supporting, and in turn shaping, young people at all stages of the work integration process. In the case of one WISE, staff literally acted as translators between their graduates and the workforce, accompanying young people to their workplace inductions to help them understand expectations and support employers with occupational health and safety guidance for those from linguistically diverse backgrounds.

[WISE staff member] puts a lot of effort into making sure these guys are supported and they get on site. She comes in and attends the … inductions and things like that to make sure that everything’s getting understood and because sometimes there can be language differences … she’s very supportive of them and comes in and assists them with that. (Case D, Customer)

Beyond these formal intermediations, young people and WISE staff reported that the live work settings and presence of diverse people in the case WISEs created the conditions for young people to develop new relationships, practise interpersonal skills, and access new social, social support and economic opportunities. These often resulted in young people accessing opportunities beyond formal referrals, as well as exposing other network actors to young people with whom they would not typically have contact. In one example, a young man with autism was introduced to an ongoing work opportunity via a volunteer within the WISE, who advocated with the local employer on his behalf after a poor first interview experience:

But when I went for another interview with my [now] boss he said … I like your resume and all that but you didn’t seem as confident in the first [interview]. He goes, You seemed a bit nervous, so come in at [our local headquarters]. We’ll have another interview there, see how you go. (Case D, Young person)

Our participant observation and interviews with young people and WISE staff were consistent in suggesting that the nature and quality of these encounters were informed by various functional and relational factors. Specifically, physical business and training space layouts affected the frequency and the diversity of interaction young people had with others, and the extent to which other service system providers were accessible to support them on site. Further, the diversity of tasks and people with which young people could engage through the WISE was identified by young people as being particularly important to building their skills and confidence to participate in work and to access social services that they needed. Cases A, C and D were purposeful in providing such diversity of activities, both through their internal operations and the partnerships with other services system actors. Finally, the extent to which business functions – for example, front of house retail activity versus working in a warehouse – fostered interaction between young people, other WISE staff, customers, and supply chain partners both affected their skills and confidence, and resulted in a small number of encounters that led to new work and/or training opportunities.

Discussion

The research presented here provides insights into the role and effects of WISEs in network governance in the context of local welfare systems and considers the effects on individual service users of governing through networks. We find that the WISE cases studied in this research are indeed active in network governance, as both lead actors and as collaborators. Our findings suggest that WISE leaders embody services system leadership, defined by Kinder et al. (2021, 1) as ‘creating an overall consciousness of the service system goals, educating and helping other active agents in the service to become legitimate and exercise power’, particularly with regard to non-traditional welfare service system actors from philanthropy and the corporate sector. Similarly to Park and Wilding (2014) our results indicate that social know-how and trust are important to the institutional effectiveness of WISEs within network governance. Reflecting past findings from the literature on social enterprise-corporate relationships (Di Domenico, Haugh, and Tracey 2010), the local embeddedness of our case WISEs was also significant both in establishing trust and generating exchange value needed by other actors – such as corporate partners – in the welfare system. While social know-how was present and deployed by all case WISEs in the navigation and remediation of local services systems and support of the communities they serve, only two out of four cases articulated an explicit focus on macro-systems change.

While our findings confirm and strengthen earlier insights, our micro-level and comparative analyses also highlight other factors that are significant in consolidating the effectiveness of social enterprises as network governance actors. Beyond conferring trust and social know-how, the WISEs considered in this study enable – both purposefully and incidentally – encounters between diverse people and tasks, in ways that support the empowerment of individual users within services networks. This suggests – similarly to studies that have considered some of the social impacts of social enterprise (for example, Farmer et al. 2016) – that the spatial and relational specificities of different social enterprise models and contexts inform their practices and effectiveness as intermediators within local services systems and labour markets.

Our data also suggest that the hybrid social and commercial nature of social enterprise invites unexpected actors into governance networks, and stimulates new organizational combinations that generate different opportunities for service users and new insights into how policy and programme design can be more person-centred. This echoes findings from studies of social enterprises in welfare services delivery, which suggest that their hybrid business and social orientation fill gaps in local services systems and in local labour markets (Borzaga and Galera 2016; Campopiano and Bassani 2020; Loosemore 2015), and that their addition to local services networks can generate better outcomes for service users (Calò et al. 2018).

Park and Wilding’s (2014) institutional glue metaphor and the compex services system strand of network governance theory (Klijn and Koppenjan 2012) emphasize the coordinative or mediating role of actors in network governance. We suggest that a more accurate metaphor in this context might be that of ‘capillary action’, which has been previously adopted in network governance studies to describe the ways in which network actors attract novel actors to governance systems (Assens and Lemeur 2016) and drive resource flows within these systems (Shiroma 2014). In our study, this metaphor signifies that, in addition to coordination, WISE have adhesive and generative functions as network governance actors. That is, while the case WISEs in our study certainly fulfilled coordinative roles in social services systems and as intermediaries between their participants and local employers, they also attracted new resources and actors into these systems through their dual social and commercial activities and relationships. These resources included new in-kind corporate supports, new employment opportunities within WISE partner organizations, and diverse networks and know-how. This ‘resource adhesion’ in turn generated new social value in the form of improved work, education and housing opportunities for participating young people, and changed service responses to local needs. This was co-produced with policy network actors, including commercial firms, government agencies, adjacent service providers and young people themselves. Beyond the resource interdependence of network actors to date emphasized in both network governance theory (Klijn and Koppenjan, 2012) and research on social enterprise partnerships, our findings suggest resource generation and value co-production are a distinct feature of hybrid organizations as network governance actors.

While hybrid features of our case WISEs generated new and new combinations of resources and actors in support of their service users, we also observed regressive effects. These included the imposition of ‘traditional’ norms on service users by partner organizations, and WISEs themselves shaping their participants as ‘good’ workers in a neoliberal society. Although this gives some further empirical credence to Garrow and Hansfeld’s (2014) theory that dominant embeddedness in ‘social’ or ‘market’ domains can result in commodification of WISE workers, the efforts to innovate in social services demonstrated by all case WISEs and explicitly named by two of them suggest that these hybrid organizational forms are as concerned with contesting the limitations of traditional bureaucratic logics of social services as they are with embracing commercial practices more consistent with the neoliberal agenda of new public management. We thus conclude that the presumed binary between social (as progressive) and economic (as regressive) requires further interrogation in our understandings of the likely societal impacts of hybrid forms of welfare delivery.

While our data reveal that there is more to the role of WISEs in network governing than coordination alone, they also reinforce Park and Wilding’s (2014) conclusion regarding the importance of pre-existing institutional conditions in underpinning the effectiveness of social enterprise as network governance actors, along with findings from the wider literature on social enterprise as providers of public services (Hall, Miller, and Millar 2012, 2016; Sepulveda, Lyon, and Vickers 2018). Noting that governance networks may be formal or informal and constituted from the top down or the bottom up (Sørensen and Torfing 2005), our focus in this study is on informally constituted governance networks focusing on the wicked policy issue of youth socio-economic participation within specific territorial boundaries. In this context, and reflecting the lack of symbolic and practical legitimacy (Dart 2004; Suchman 1995) of WISEs within the Australian employment and wider social services system outlined earlier, our case WISEs experienced very high transaction costs, and often relied on ‘above and beyond’ commitments from staff and volunteers in their efforts to improve and mobilize services systems in support of their young people’s needs. While there was evidence of generative capacity discussed above, limited legitimacy within the policy system also created precarity and high transaction costs for the case WISEs, with the quality and range of connections to potential local employers having potential to ‘make or break’ their model. With regard to Beaton and Kennedy’s (2021) observations about the market correction strategies of WISEs, the lack of institutional legitimacy within Australia’s employment services quasi-market thus limits WISEs’ capacity to improve the local service and labour market systems in which they are working.

Hansen et al. (2021, 15) suggest that social entrepreneurship within public sector social innovation networks is embedded in ‘dynamics of change’ that simultaneously produce individual and systems-level effects. Our own data suggest that systems-level consciousness is not explicit among all social enterprise leaders, and that systems-level impacts of social enterprise is enabled or constrained by metagovernance conditions. For the two case organizations that explicitly viewed themselves as local actors concerned with changing supralocal systemic conditions (Andreotti, Mingione, and Polizzi 2012), this lack of legitimacy was experienced as both a challenge to which to respond, and a significant constraint on their network effectiveness. Thus, while social enterprise in this context does act as more than institutional glue, the absence in our particular research setting of metagovernance (Sørensen and Torfing 2009) through which these governance networks are formally recognized by and linked to the state, significantly inhibits their impacts.

Conclusion

This paper makes three contributions. First, by examining the role of hybrid organizations in network governance, it contributes to the theoretical strand of network governance that examines interorganizational service delivery (Klijn and Koppenjan 2012). Specifically, our findings challenge the underlying assumption of this theoretical tradition that networks emerge only because organizations need resources from each other, and points towards the generative and co-produced forms of social value that are enabled by hybrid forms of organization and organizing.

Second, we contribute to theorizing the relationship between WISE and welfare regimes by offering contextually-distinct empirical insights that challenge existing theoretical propositions. While we have no argument with the proposition that WISE embody neoliberal welfare logics (Garrow and Hasenfeld 2014), we suggest that greater deconstruction of what constitutes ‘social’ and ‘market’ logics is required to understand both the progressive and regressive impulses of WISEs as welfare services providers.

Third, this study responds to Hansen et al.’s (2021) call for greater codification of social innovation networks that seek to deliver public value by extending empirical understanding of the functions and outcomes of WISEs operating in local employment services systems in two states of Australia. It extends knowledge of how WISEs generate social value within network arrangements, and finds that their effectiveness is challenged by their level of institutional legitimacy within employment and other welfare services systems.

While our data present rich comparative empirical insights, like all small N case studies, the findings of our research are not generalizable across jurisdictions, socio-cultural contexts, and populations. Future studies could further enhance this programme of work through testing our observed ‘capillary action’ characteristics of WISE in other policy settings and with other demographic cohorts.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the Australian Research Council.

Notes on contributors

Jo Barraket

Distinguished Professor Jo Barraket is the founding director of the Centre for Social Impact Swinburne at Swinburne University of Technology in Melbourne, and is Australia’s premier researcher of social enterprise and social innovation. A political sociologist, Jo’s research focuses on both organizational design and impacts, and relationships between state and civil society in the design and implementation of public policy. In addition to her focus on the social economy, Jo has research interests in the socio-political effects of online technologies. She has authored more than 80 publications in her areas of expertise, and is a regular advisor to governments and international bodies on both social enterprise and digital inclusion.

Joanne McNeill

Associate Professor Joanne McNeill is R&D Lead with The Yunus Centre, Griffith University. Her action research and professional experience engage with diverse economies and social innovation eco-systems – around for-purpose enterprise, social procurement, financing, legal structures, capability development, capacity building and demonstrating impact. Joanne’s specialisms include distilling research findings into forms useful for practical application. She is a Founding Director of the Community Economies Institute and has been a Churchill Fellow since 2008.

Perri Campbell

Dr Perri Campbell is a youth and social enterprise Research Fellow at the Centre for Social Impact, Swinburne University. Perri has worked extensively with social enterprises developing Action Learning evaluation along with critical theoretical analysis skills to support program development. Perri has published widely on young people’s civic participation, well-being and use of digital media, and the health equity implications of social enterprises for staff and stakeholders.

Gemma Carey

Professor Gemma Carey is Director at the Centre for Social Impact UNSW, and the National Research Director for the CSI network. She works with governments and non-government organizations to identify and change structures and processes that impact inequality. She has worked extensively on joined-up government reforms and social service markets.