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EVALUATION OF THE EUROPEAN SOCIAL FUND AS A MEASURE TO

SUPPORT SOCIAL INNOVATION IN THE PUBLIC SECTOR
Katarzyna Tarnawska1, Marek wiklicki2
1

Cracow University of Economics, Poland, tarnawsk@uek.krakow.pl

Cracow University of Economics, Poland, cwiklicm@uek.krakow.pl

http://dx.doi.org/10.5755/j01.em.17.1.2273

Abstract
The main objective of this research paper is to present how the public sector may contribute to the
development of social innovations and to what extent this process may be supported by the European Social
Funds (ESF) resources. The research method comprises critical analysis of the ESF reports.
Discussion on the concept of social innovation is covered in the first part. Then determinants of social
innovations are presented, followed by observations on social innovations in the public sector. The
subsequent part is devoted to a short study of the ESF as an instrument to support social innovations in the
public sector and finally a short empirical example of the ESF usage in Poland is delivered.
Although the usage of the ESF funds as an instrument strengthening social innovations in the public
sector is not always unproblematic, it may be assessed to be a useful measure of support in this area.
Keywords: social innovation, public sector, ESF.
JEL Classification: O31, O38, H44.

Introduction
Social innovations have recently captured the attention of researchers and policy makers. This is due
to the fact that a paradigm of sustainable growth which includes a social dimension has become a dominant
one, at least in the EU. The social dimension implies inclusion of social needs into the mainstream of the
public policy. The same refers to innovations that are not any more regarded as a purely technical or
organisational issue. Moreover, technology is to a certain extent socially constructed and innovations
develop under particular cultural conditions.
The main objective of this research paper is to present how the public sector may contribute to
development of social innovations and to what extent this process may be supported by the European Social
Funds (ESF) resources. Discussion of the concept of social innovation is covered in the first part. Then
determinants of social innovations are presented, followed by observations on social innovations in the
public sector. The subsequent part is devoted to a short study of the ESF as an instrument to support social
innovations in the public sector and finally a short empirical example of the ESF usage in Poland is
delivered.

Concept of social innovation

In order to define what social innovation is and what its features are it is necessary to describe
innovation itself. Innovation is not a synonym of invention as invention is the first appearance of an idea for
a new product or process, while innovation is the first attempt to implement it (Fagerberg, 2006). Innovation
has to meet two criteria: novelty and improvement understood as an increase in effectiveness in comparison
to the previous arrangements. J. A. Phills et al. propose to include sustainability as an important criterion for
improvement. By sustainability they understand solutions that are environmentally and organizationally
sustainable. This means that such solutions may work over a long period of time (Phills et al., 2008).
There are two general approaches to innovation. The first one focuses on the organisational and social
processes that produce innovation, such as organizational structure or social and economic factors. Another
one treats innovation as a new product or its new features or production methods. Therefore it is useful to
make a distinction between innovation as a process and innovation as an outcome which can be named a
proper innovation (Phills et al., 2008). According to K. Pavitt, innovation processes involve the exploration
and exploitation of opportunities for new or improved products, a process or service which stems from new
technical practice or change in market demand, or a combination of the two (Pavitt, 2006).
The social and economic changes triggered the implementation of analysis that goes beyond a purely
economic context. J. Hochgerner analyses this trend in detail providing rationale for this development
(Hochgerner, 2011). It is very difficult to explain what the notion of social means. According to social
choice theory social choice is about aggregating individual preferences or values or gathering information
about what individuals want to develop what the society wants (Cain, 2001). This approach suggests that the
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word social describes a class of needs and problems. Although it seems that there is a consensus within
societies on social needs, problems and objectives, in reality it is very difficult to assess what maximises
everyones happiness or utility.
M. Harris and D. Albury explain the rationale behind the rise of interest in social innovations (Harris
& Albury, 2009). Firstly, many forms of innovations are neglected by a traditional approach and can be
described as hidden innovations escaping official statistics but important in the service sector, such as in
public services. Secondly new social entrepreneurs are very often disappointed at existing institutions and
their limits. Thirdly new public management does not respond adequately to reform agenda for public
services facing major economic and social challenges. Finally, traditional innovation deems to be insufficient
to solve major societal challenges such as climate change and an ageing society.
M. Harris and D. Albury observe that social innovation means different things to different people. It
may be regarded as innovation developed and delivered by the third sector, any innovation that contributes to
alleviating or solving a social problem or new social economy that focuses on new social movements and
social relationships cutting across the state, the market, the household and grant-based organisations (Harris
& Albury, 2009). Many scholars by social understand institutional forms generating social value.
Therefore this notion is associated with non profit organisations or social entrepreneurs. Social value may be
defined as creation of benefits or reduction of costs for society through addressing social needs and problems
(Phills et al., 2008). Anyway not all products meet the definition of social innovation although they might
solve social problems. According to Phills et al. social innovation must not be related to the private value but
they should contribute to distribution of financial and social value toward society as whole. Therefore
according to these authors, social innovation is a novel solution to a social problem that is more effective,
efficient, sustainable, or just than existing solutions and for which the value created accrues primarily to
society as a whole rather than private individuals (Phills et al., 2008). A social innovation can be a product,
production process, or technology but it can also be a principle, idea, a piece of legislation, a social
movement, an intervention, or some combination of them. It is inspired by the desire to meet social needs
which may be neglected by traditional forms of the private market and often poorly served or unresolved by
the state (Harris & Albury, 2009). H. Brooks enumerates four categories of social innovations: market
innovations (like leasing), management innovations (like new working hours arrangements), political
innovations (like summit meetings) and institutional innovations (like self-help groups) (Brooks, 1982). J.
Hochgerner stresses that innovations themselves are embedded in basic cultural patterns and processes of
social change. Hence innovations influence social conditions and trends and as social relations are embedded
in the economic system, all socio-cultural structures seem determined by the economy (Hochgerner, 2011).
This statement is supported by J. Howaldt and M. Schwartz who point that social innovations are much more
context-dependent and more specific than technology in type (Howald&Schwartz, 2010). Social innovations
occur on the level of social behavioural patterns, routines, practices and settings. Moulaert et al. stress three
interrelated dimensions of social innovations: satisfaction of human needs, changes in social relations,
especially with regard to governance (the systemic changes perspective) and increase in socio-political
capability and access to resources (Moulaert et al, 2005). Zentrum fr Sociale Innovation describes social
innovations as new concepts and measures for solving social challenges that are accepted and utilized by
social groups affected (Zentrum fr Sociale Innovation, 2008). They are not only determined by the
potential of an idea but also by its realization (Hochgerner, 2011). J. Howaldt and M. Schwartz claim that
there is a substantive distinction between social and technical innovations. Social innovations occur and are
collectively created at the level of social practice. They are configurations of social practices in certain areas
of action or social contexts prompted in an intentional targeted manner to satisfy or answer needs and
problems in a better way in comparison to established practices (Howald&Schwartz, 2010).
There are four strands of research on social innovations (Howald&Schwartz, 2010). The first one is
devoted to management and organizational research putting emphasis on improvements in social capital. A
second research area examines the connection of business success and social progress. The third line of
research focuses on impact of charismatic individuals. Finally the fourth strand is devoted to local and
regional development. According to this approach. social innovations have huge impacts on national and
regional economies and their sources come from citizens living in specific locations.

Determinants of social innovations

Mulgan et al. claim that some social innovations are modest and incremental, while others like the
shift to a low carbon economy are more fundamental and systemic transformations (Mulgan et al., 2007).
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Phills et al. notice two sources of social innovations (Phills et al., 2008). In recent years non-profit and
governmental organisations started to employ managerial rules in their activities. Governmental agencies and
business at the same time started to recognize social and environmental issues, philanthropy and advocacy.
Simultaneously, business and non-profit organisations leaders engaged in shaping public policy. As a result
a favourable environment for social innovations has emerged. Another source of social innovations is the
shifting roles and relationships between government, business and NGO sectors. Traditionally government
agencies established regulations and monitored the business, businesses tried to fight with regulation and
monitoring while NGOs were undertaking mainly monitoring functions. Antagonistic roles have been
replaced by collaboration and mutual support.
Social innovations are subject to demand and supply. Demand refers to social needs. According to
Mulgan et al. the starting point for demand is a social recognition of needs that are not being adequately
met (Mulgan et al., 2007). This demands efforts of innovators themselves who try to persuade the public to
care about new issues and a good timing as demand is growing when problems become more acute.
Acceptance for social innovations should be shared by their direct consumers (the public who pay directly
for goods and services) and indirect consumers (organizations that buy goods and services on behalf of
people in need). The second category comprising for example public agencies is critical to the spread of
innovations. Indirect demand for social innovations depends on decisions of a small number of indirect
consumers and is determined by the level of public spending and proportion of resources that can be devoted
to new and at the same time risky models or responding to new needs (Mulgan et al., 2007). Some research
reveals that that public sector employees are more risk averse and less inclined to make charitable
contributions than private sector employees (Buurman et al., 2009).
Effective supply of social innovations is related to their diffusion. Paths of social innovations diffusion
comprise the market, technological infrastructure (web-based, social networking), social networking and
social movements, governmental guidelines and support, intermediary and self-organised institutions,
organizational processes, different forms of communication and cooperation (Howald&Schwartz, 2010). In
order to be effectively diffused, social innovation should be superior to its alternatives, bring observable
results, compatible with what already exists, lack or have weak competition, be a simple idea and entail low
marginal costs (Mulgan et al., 2007).

Social innovations in the public sector

Social innovations may be provided by the public, private or third sectors, or users and communities
but some of them cannot be qualified as social innovations as they do not address directly the social needs
(Harris & Albury, 2009).
A growing importance of social innovations in services is observed in terms of research efforts and
policymaking practices. According to A. Hughes at al. the combination of straightened public finances with
major social challenges means that public services need to become more productive and develop new ways
of working. Innovation in the public sector is therefore a pressing task (Hughes et al., 2011). M. Harris and
D. Albury add that the public services will have to deliver significantly better performance at a significantly
lower cost (Harris & Albury, 2009). Contemporarily there are several serious social problems that need an
adequate response. M. Harris and D. Albury enumerate the following problematic areas for the UK society:
ageing, rise in long-term health conditions, increasingly degraded environment and less important ones:
economic competitiveness, social inequalities, mental ill-health, crime and social disorder, alcohol and drug
abuse (Harris & Albury, 2009). The majority of these problems can be traced in most of European and world
states. Therefore increasing demands of public services may be noticed. They are fortified by such factors as
expectations of increase in the public sectors productivity, growing citizens expectations, globalisation,
medias influence, technological innovations, demographic and climate changes which have become the
major drivers of the public sector innovations (Bason, 2010).
The above-described factors combined with recession leading to significant tightening of public
finances provoke the need to search for new solutions. Besides, the recession may have an impact on
effective responses to societal challenges as public policymakers tend to be more prudent with expenditures.
Nevertheless, the recession demands radical new approaches. There are numerous examples from the past
proving that periods of international tensions led to the emergence of new technologies, organisational forms
and services. M. Harris and D. Albury claim that a radical, not an incremental, approach to social
innovations is needed and government should play a coordinating role in such a process. This does not
exclude cooperation with the private and third sectors. On the contrary, stronger relationship between the
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state, the market and the civil society is indispensable (Harris & Albury, 2009). A similar view is presented
in the BEPA report (Bureau of European Policy Advisers, 2011). According to one of the approaches to
social innovations described in this document the social dimension of innovation relates to changes in
fundamental attitudes and values, strategies and policies, organisational structures and processes,
responsibilities and tasks of institutions and linkages between them and different types of actors. Also
Murray et al. stress the importance of collaboration between public service workers and civil society in the
process of encouraging the social innovation (Murray et. al., 2010).
Although in the past governments were often pioneers of social innovation there are many structural
barriers that inhibit innovating by the government. They comprise cost based budgeting, departmental
structures, lack of career rewards. The government very often lacks innovations enablers in terms of money,
people and processes that can be found in the business sector. The public innovation process is by its nature
centralised, episodic and structurally limited (Murray et al., 2010). Also structural-political barriers to
innovations in the form of relative absence of risk capital are important. Ch. Bason notices that due to yearon-year budgets usually with no possibilities for major longer-term investments, public managers and staff
are forced into short-term thinking. (Bason, 2010).
Murray et al. discuss several areas where social innovation in the public sector could be better
supported (Murray et al., 2010). These fields cover strategic issues (strategy itself, leadership, incentives,
risk management, formation and training, circuits of information, user, engagement and learning cultures)
and financial issues (budgets to promote internal innovation, distributed accountability and democratic
innovation, new forms of taxation and public revenues raising, public medium of exchange and means of
payment, public investment and fiscal moves to promote social innovation). The government also has powers
to influence the business sector social innovativeness through legislation and regulation which themselves
may have innovative features. Support of innovative culture within the governmental bodies is a crucial
factor and a signal from the leaders to front line civil servants that the former ones want to see
experimentation.

European Social Fund as a mean of social innovations support in the public sector
The European Union has, over the years, developed a lot of measures supporting various initiatives
empowering citizens and organisations to respond to social challenges in a more effective manner and help
national, regional and local actors to develop innovative practices and governance modes (Bureau of
European Policy Advisers, 2011). One of the central policy documents placing innovations in the core of
social and economic policymaking was the Lisbon Strategy supplemented by the Renewed Sustainable
Development Strategy for an enlarged Union and a Renewed Social Agenda. The Europe 2020 strategy
acknowledges that innovations and a more direct interaction between the economic and the social dimension
contribute to overcoming economic crises and identifying an appropriate response to societal challenges.
The European Social Fund (ESF) is regarded as a financial arm of the Lisbon Strategy supporting
national employment and inclusion priorities (Bureau of European Policy Advisers, 2011). The ESF made
significant investments in social innovations. Regarding the current programming period 2007-2013, the ESF
focuses on strengthening institutional capacity and efficiency of public administration and public services at
national, regional and local levels in Convergence regions and to promote the labour market institutions
across the EU, the design and introduction of reforms in education and training systems and the updating of
skills of training personnel (The European Social Fund and institutional capacity of public bodies, 2010).
The ESF invests also in transnational cooperation (sharing experience, learning mobility) and innovative
activities within the Operational Programmes (new forms of work organization, improvement of employees
skills, new approaches to lifelong learning, development of human resources in research and innovation,
cooperation between the sectors, new skills for climate change and sustainable growth, new ways of
combating unemployment). The current design of the ESF seems to meet Europeans expectations.
According to The Eurobarometer Report, the Europeans most want the EU to address unemployment as a
priority (63%), then education and training (30%), equal opportunities for all (25%), climate change (18%)
and ageing population (17%) (Special Eurobarometer Report 350, 2010).
The smallest programming and reporting units in the 2007 2013 programming period are fairly
broad priority axes. Some Member States such as Bulgaria, Greece, Hungary and Romania have dedicated
one Operational Programme explicitly to institutional and administrative capacity. 85% of all EU Member
States are using the ESF to address the capacity of their public bodies in 82% of all Operational Programmes
and 46% of all priority axes (The European Social Fund and institutional capacity of public bodies, 2010).
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The ESF funds support social innovation offering financial means to strengthen the institutional
capacity of public bodies in order to increase their efficiencies, promote socio-economic development and
promote good governance as a key element of the Lisbon Strategy. There are three types of the ESF
interventions regarding increase in institutional capacity (capacity building, improving systems and research,
networking) and three types of recipients (public employment services, educational training systems and
other public administration) (The European Social Fund and institutional capacity of public bodies, 2010).
In the field of public employment, services capacity building related to the staff training (e.g. Czech
Republic, the Slovak Republic). Another way of modernising the public employment services is to enhance the
system itself through modernisation of the network of public employment services by developing statistical
monitoring systems (e.g. Cyprus), harmonisation and updating of the services offered and collaboration among
public employment services, local authorities and social partners (e.g. Lithuania). Networking covers
stakeholder co-operation and comprises information flow between educational institutions, enterprises, service
providers and NGOs (e.g. Hungary), modernisation of labour market instruments and institutions and the
development of a network for vocational information and counselling services (e.g. Poland).
The ESF funds are also used to support various public administration bodies at various levels of
governance. Training of civil servants and employees in local public administration, capacity building of
regional development agencies are addressed to public actors at regional level (e.g. in Spain, Hungary, Italy
and Portugal). Some Member States support specific functional public administration departments (e.g.
Greece, Italy and Portugal) and modernisation of the public administration by public staff training courses
covering such topics as ICT, HR management and soft-skills, economic, legal or technical subjects (e.g. the
Czech Republic, the Slovak Republic, Italy and Malta). Regarding improvement of systems, the competence
schemes for the individual administrations and training materials were prepared (e.g. in Poland) and egovernment projects implemented (e.g. in Bulgaria). Concerning networking, cooperation amongst local
players is supported and training programmes focus on development of IT skills, language training, etc. (e.g.
in Hungary). Active participation of social partners and NGOs with the public administration in the
implementation of the Lisbon Strategy is promoted e.g. in Poland, where such measures as evaluation of
participants needs regarding social dialogue, disseminating best practices of cooperation, creation of codes
of conduct aiming at the provision of better public services, strengthening of public consultation,
coordinating public policies with social partners and increasing the skills of civil servants in the area of
cooperation with NGOs and social partners are implemented.

Administrative and institutional capacity building in Poland through the ESF interventions
According to the ECORYS report, due to the politicization of the civil service and weak tasks
coordination, the Polish public administration still has problems in meeting overall needs of citizens and
especially firms (ECORYS, 2011). The Polish public administrations suffers from lack of management
standards, high staff turnover combined with insufficient skills and competence. Concerning the systemic
problems, there is a lack of task-oriented budgetary planning, limited usage of management tools and poor
monitoring systems.
Priority Axis 5 under the Operational Programme Human Capital (OP HC) is devoted to Good
Governance and it is designed to address Polish administrations main problems. It comprises the following
specific objectives: improving regulatory potential of public administration, improvement of quality of the
public policies and services related to enterprises creation and business operation, modernization of
management in public administration and justice administration, strengthening of the potential of social
partners and non-government organizations oriented at enhancing their active participation in the process of
implementing the Lisbon Strategy. Table 1 presents five measures of Priority Axis 5 and corresponding submeasures.
The beneficiary of the majority of resources available within Priority Axis 5 is public administration
although the data reveal a strong interest of the third sector. The evaluation of Priority Axis 5 shows that
many projects focus on diagnostic issues and their implementation brings indirect effects like better internal
cooperation and better preparation of new projects (ECORYS, 2011). The major achievement is the
implementation of performance-based budgeting. There are, however, some problems like fragmented
implementation and poor standards of cooperation within a given institution. Despite these difficulties,
according to the ECORYS report, the implementation of ESF projects has an overall positive impact on the
organizational culture and public administration (ECORYS, 2011). This should be a prerequisite for
innovativeness.
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Table 1. Measures of the Priority Axis Good Governance

Measure

5.1 Strengthening the capacity

of the government (central
administration)

5.2 Strengthening the capacity

of self-government
administration
5.3 Support for the
implementation of the Lisbon
Strategy
5.4 Development of the
capacity of the third sector

Sub-measure

5.1.1 Modernisation of management systems and

improvement of human resources competence
5.1.2 Implementation of financial management
system in terms of tasks
5.1.3 Internships and practical training for NSPA
students
5.2.1 Modernisation of management in local
administration
5.2.2 System support of local administration
functioning
5.2.3 Improvement of public services human
resources
-

Applications
after formal
assessment
(% of total
allocation)

Signed
contracts
(% of total
allocation)

94,6

78,7

206,5

59,1

92,4

76,9

5.4.1 System support for the third sector

522,7
60,0
5.4.2 Development of civic dialogue
5.5.1 System support for social dialogue
5.5 Social dialogue
168,5
42,5
5.5.2 Strengthening of social dialogue participants
Source: State of the OP HC implementation on February the 29 th, 2012.
http://www.ESF.gov.pl/AnalizyRaportyPodsumowania/poziom/Documents/Stan_wdrazania_PO_KL_29_02_2012.pdf

There are examples of social innovations implemented through Priority Axis 5. The project
Innovative Toolbox for Regulatory Impact Assessment and Public Investment Decisions - iSWORD
supports the public administration in better policy making in the field of environment, infrastructure,
pensions and health for the society. The Local Government Activity Program PAS enables monitoring of
the public services taking into account opinion of representatives of social and professional communities
(Wosik et al., 2011).
A study on innovativeness in Poland criticizes usage of the EU structural funds in Poland with regard
to its impact on increase in innovativeness of the Polish economy (Geodecki et al., 2012). Failures are also
attributed to the OP HC. Projects completed under this scheme cover dummy activities like trainings,
conferences and unrealistic development strategies produced by local authorities that have little to do with
practical development of innovations and improvement of the social capital indispensable to implement
social innovations. On the strategic level, ambitious proposals included in the report Poland 2030 are not
mirrored by the management of public policies and the public administration activities.

Conclusion
There is a clear need for social innovations delivered by the public sector, especially in the period of
economic and financial turmoil combined with demographic and environmental challenges. Although the
government in the past used to be a pioneer of innovativeness processes, contemporarily there are a lot of
structural barriers that inhibit this process. In order to regain innovative capability, governmental structures
need internal change. In the EU this may be supported by resources of the ESF regarded as a financial arm of
the Lisbon Strategy designed to reinforce innovations in Europe. In the programming period 2007-2013 the
ESF provides financial means to strengthen the institutional capacity and efficiency of public administration,
public employment services and its cooperation between the public and non-governmental stakeholders in
the field of social issues. Usage of the ESF funds is not always unproblematic and the efficiency of many
projects is doubtful. This fact does not, in any way, change the conclusion that the ESF could be a very
useful instrument to support social innovations in the public sector.

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