Public service innovation and multiple institutional logics: The case of hybrid social enterprise providers of health and wellbeing

Public sector organisations are confronted with growing health and social care needs in combination with severe resource constraints, prompting interest in innovative responses to such challenges. Public service innovation is poorly understood, particularly where innovators must navigate between the norms, practices and logics of public, private and civil society sectors. We contribute to the understanding of how innovating hybrid organisations are able to creatively combine co-existing logics. Case study evidence from newly established social enterprise providers of health and wellbeing services in England is utilised to examine how innovations are shaped by (i) an incumbent state or public sector logic, and two ‘challenger’ logics relating to (ii) the market and increasing competition; and (iii) civil society, emphasising social value and democratic engagement with employees and service users. The analysis shows how a more fluid and creative interplay of logics can be observed in relation to specific strategies and practices. Within organisations, these strategies relate to the empowerment of staff to be creative, financial management, and knowledge sharing and protection. The interplay of logics shaping social innovation is also found in relationships with key stakeholders, notably public sector funders, service users and service delivery partners. Implications are drawn for innovation in public services and hybrid organisations more broadly.


Introduction
At a time when the public sector is facing complex societal challenges related to growing demand combined with severe resource constraints, there is considerable interest in the potential of innovation to help address such challenges. Public service innovation is relatively poorly understood and there is a common assumption that employees of the state are risk averse and lack incentives to be creative. This paper shows how innovation occurs in a range of organisational and service settings and is shaped by multiple institutional logics.
We examine the case of hybrid social enterprise organisations that deliver health and social care services and explore how their innovative activities are shaped by the co-existing logics of the public, market (private for profit) and civil society sectors (Battilana and Lee, 2014;Billis, 2010;Doherty et al., 2014). By drawing on the concept of institutional logics as cultural beliefs, goals, norms, rules and practices that structure cognition and decision-making behaviour (Friedland and Alford, 1991;Thornton et al., 2013), we are able to contribute to understanding of innovation that seeks to address societal and public service needs.
This paper explores how logics may be creatively combined and how different actors find ways to navigate the tensions experienced (Jay, 2013). We present a framework for understanding the interplay of logics within hybrid organisations and in relationships involving a range of external actors. In other words, we set out to explain how different logics are combined in the activities of innovating hybrid organisations. We draw on case study evidence from eight social enterprises in the health and wellbeing sectors in England to address the core question: How do co-existing logics shape approaches to public service innovation in hybrid organisations? To answer this we set out three specific research questions: How are the logics of the state, market and civil society manifested in the innovative activities of public service hybrid organisations? What are the organisational strategies and practices that enable the interplay of multiple logics in public service innovative activity? What are the inter-organisational relationships with external innovation actors that facilitate the interplay of logics in public service innovative activity?
There is a growing interest in public service innovation (Osborne and Brown, 2013;Windrum and Koch, 2008) and social innovation (van der Have and Rubalcaba, 2016;Tracey and Stott, 2017;Ziegler, 2017) as government bodies and delivery organisations are confronted with both increasing demand and resource constraints. Ziegler (2017) examines social innovation as an "essentially contested concept" and as a "hybrid concept" which has arisen from discontent with the 'mainstream' understanding innovation which tends to focus on technology-and market-led innovation. The idea of social innovation suggests greater collaboration between multiple actors in different domains to catalyse alternative ways of mobilising resources for constructive ends. We focus on the innovative potential of newly created hybrid social enterprise (SE) organisations which span the traditional boundaries of the public, private-for-profit and civil society sectors by re-combining logics traditionally seen as distinctive to each of these three realms (Doherty et al., 2014;Jay, 2013;Pache and Santos, 2013). SEs predominantly adopt civil society sector legal forms and have a core social purpose which they achieve through trading in goods or services and winning contracts from the public sector. They have been promoted by governments alongside public sector reforms that are resulting in the creation of new quasi-markets for public provision and the greater involvement of private and civil society sector organisations, particularly in the UK (Bartlett and Le Grand, 1993) and the US (Smith and Lipsky, 1993). Hybrid organisations therefore offer a useful context for studying how plural logics influence innovation.
By taking an interpretivist approach (Bryman, 1989), we develop a framework for understanding how the introduction of new ideas and concepts is shaped by both compatibilities and tensions between (i) an incumbent public sector logic and two 'challenger' logics relating to (ii) the market and enterprising responses to increasing competition; (iii) civil society, emphasising social value and democratic engagement with employees, and user communities.
Although the analysis is focused on specific innovations developed by groups of staff and leaders at the micro/organisational level, we are also sensitive to field level influences, such as from public policy and decision-making on health and social care provision. We provide insight into the relationships and multiple levels at which different institutional logics are played out and reconciled (or not), thus offering a relatively high level of generalisability to other hybrid enterprises and to the dynamics of public service and social innovation more broadly. In developing our argument, we contribute to theories of public service and social innovation, hybrid organisations and institutional logics by explaining how innovation arises from creative (synergistic) interplay between logics.
The paper is structured as follows. The next section sets the theoretical context by reviewing the literature on public service innovation, hybrid organisations and institutional logics. The research context of health service provision and efforts to promote innovation in the UK is then introduced (3.1), followed by an explanation of the methods of data collection and analysis (3.2). Section 4 presents the findings related to the interplay of logics within the innovation activities of eight selected SEs. We identify how and at what junctures the interplay occurs, and the strategies and practices that facilitate innovation. We then discuss the contribution to theory, policy and practice and conclude (5).

Theoretical context of innovation in public services
Public sector services constitute an important although often misunderstood and underacknowledged arena for innovation (De Vries et al., 2015;Osborne and Brown, 2013;Windrum and Koch, 2008). Not only does the public sector continue to represent a significant proportion of GDP in most economies, it is also central to the resolution of many pressing and often 'wicked' social and environmental problems (Rittel et al., 1973) and to the promotion of different approaches in their resolution (Weber and Khademian, 2008).
Much of the literature on public service innovation examines how structural and related cultural characteristics can shape but also inhibit innovation (Potts and Kastelle, 2010). Public sector practices are characterised by asymmetric incentives whereby unsuccessful innovations are punished more severely than are successful ones rewarded, and there is also adverse selection by innovative individuals against careers in public services (Borins, 2001). Bate (2000), for instance, found that clinicians within a hospital work environment were resistant to innovation due to 'conservatism' and 'defensive cultures'.
However, despite resistance, evidence of significant innovation in the public domain can be found in areas such as health and community welfare, employment policy, and environmental regulation (Osborne and Brown, 2013;Sorenson and Torfing, 2011;Vigoda-Gadot et al., 2005 and2008;Windrum and Koch, 2008).
To shed light on the potential of new approaches, this paper builds on the emerging literature that explores the distinctiveness of a more 'social' and holistic model of innovation in a quasi-public sector context where a change in logics would seem to require a more collaborative approach between multiple actors. While there is a good understanding of how public sector priorities and values may drive or inhibit innovative activities, there is less understanding of hybrid organisational contexts and how civil society and commercial (market-focused) objectives shape innovation characteristics. In the UK and many other countries, public service delivery is subject to ongoing change as a result of debate and contestation between different political-philosophical-social perspectives and beliefs.
Relatedly, there have been drives to reduce the role of the state and to re-organise public services along market-based principles (Windrum and Koch, 2008), to bring in elements of civil society to support delivery of public goals (Bode, 2006) and to promote social innovation (Ziegler, 2017).
However, there remains a research gap with respect to how organisations that deliver public services in competitive environments are able to reconcile multiple competing goals (Billis, 2010;Resh and Pitts, 2012;Vangen and Huxham, 2012). Institutional perspectives offer a useful theoretical lens on how innovation may emerge despite the tensions between different norms and practices. Hence, a recent review of the literature on public service innovation calls for further research that engages with neo-institutional theory to analyse the spread of organisational practices and norms (De Vries et al., 2015).
Given that public service innovation is shaped by multiple goals and, increasingly, a diversity of providers from the public, private and civil society sectors, we draw on the institutional logics perspective to provide a rigorous approach to studying this heterogeneity (Friedland and Alford, 1991). An institutional logic is defined by Thornton and Ocasio (2008) as "the socially constructed, historical patterns of cultural symbols and material practices, including assumptions, values and beliefs, by which individuals and organisations provide meaning to their daily activity, organize time and space, and reproduce their lives and experiences". Greenwood et al. (2010) refer to the core societal institutions, each with its own overarching logic and Thornton et al. (2013) propose seven ideal types of institutional order -the family, religion, state, market, profession, corporation and community.
We focus on the three logics of the state, market and civil society, given their centrality to current academic debate around hybrid organisation and also policy discourse around public sector reform and social innovation. The logics of the state and the market are discussed in most definitions of institutional logics (Thornton and Ocasio, 2008) and the logic of civil society (or the social sector) is explored in the literature on social enterprise (SE) and hybrid forms (Battilana and Lee, 2014;Doherty et al., 2014;Jay, 2013;Pache and Santos, 2013;Seibel, 2015;. The concept of hybridity is particularly relevant. Organisations that do not align closely to one logic are termed hybrids and can include SEs (Doherty et al, 2014); micro-finance enterprises (Battilana and Dorado, 2010); universities (Townley, 1997), hospitals (Miller and French, 2016) and orchestras (Besharov and Smith, 2014). Scholarly interest in hybrid SE organisations has grown alongside a policy trend in many national contexts to increase competition for funding between diverse providers of health services with the aim of driving up service quality and innovation (Sepulveda, 2015).
A growing number of studies claim that hybrid SEs may have a particular advantage in addressing complex (and often under-served) needs insofar as they are able to creatively reconcile tension and paradox when combining logics of public service and social value with the logics of private enterprise and the market by drawing on the knowledge and capabilities of different stakeholders and their priorities (Doherty et al., 2014;Jay, 2013;Pache and Santos, 2013;Vickers and Lyon, 2014).
Despite the proliferation of literature on hybrid organisations and institutional logics, and on social innovation as an essentially collaborative concept (Ziegler, 2017), there has been a lack of attention to how innovation for productive ends may arise from the interplay of multiple logics. This gives rise to our first research question: RQ1. How are the logics of the state, market and civil society manifested in the innovative activities of public service hybrid organisations?
Previous studies have examined the tensions between different logics, with research focussing on the idea of the 'marketization' of non-profit organisations (Eikenberry and Kluver, 2004;Weisbrod, 1998) and the danger of 'mission drift' whereby social ends and social innovation are compromised by the logics of business and the market (Carroll and Slater, 2009;Jones, 2007;Ziegler, 2017), but with only limited research on how organisations may be able to work with, reconcile and manage co-existing logics (Jay, 2013). This paper therefore responds to calls for research on the mechanisms of logic recombination (Skelcher and Smith, 2015;Thornton et al., 2013), on the organisational cultures and relationships involved (Battilana et al., 2015) and the implications for innovation management including with respect to enduring tensions (Jay, 2013;Smith et al., 2013). We therefore focus on how co-existing logics combine to shape the innovative activities of hybrid organisations.
The institutional logics approach emphasises the agency of organisational actors and their potential to shape the social world and its macrostructures. This can involve the strategic choices made by leaders; ongoing interactions and learning between key actors; and changes that alter the rules and norms that shape organisational choice, behaviour, and how resources are distributed (Friedland and Alford, 1991;Thornton et al., 2013). Such interactions can be between powerful 'structural actors' (e.g. regulators, public service commissioners, large enterprises) as well as less powerful entrepreneurial actors who nevertheless are able to introduce and enlist support for innovative ideas . However, little is known about such processes and the contributions of different actors in public service innovation, and particularly so in health care where the scope for experimentation and innovation can be limited by the emphasis placed on high reliability in a context where risk-taking and the threat of failure is discouraged.
The institutional logics concept provides a lens by which to examine the influence of different norms, goals and practices on innovation, focusing attention on the compatibilities, tensions and compromises involved. Thus Reay and Hinings (2005;2009) show how logic multiplicity -in this case the logic of medical professionalism and a business-like 'challenger' logic -can persist and coexist within healthcare organisations. However, they note the lack of research on these practical collaborations, especially those that include active roles for patients, and question how multiple logics co-exist in different organisational fields. We build on this perspective by examining how the interplay of multiple logics occurs within (and shapes) the innovation activity of hybrid public service providers. This leads to the second and third research questions: RQ2: What are the organisational strategies and practices that enable the interplay of multiple logics in public service innovative activity? RQ3: What are the inter-organisational relationships with external innovation actors that facilitate the interplay of logics in public service innovative activity?

Healthcare provision and the UK context
Healthcare systems which are dependent on public funding are a particularly fruitful context in which to examine how a range of contrasting norms and practices shape innovation. Healthcare can be theorised as a distributed system with an extensive division of labour and a complex collaborative approach to innovation and the application of useful knowledge (Coombs et al., 2003;Thune and Mina, 2016;Von Hippel, 1988). The UK National Health Service (NHS) is funded by taxation and provides universal access to healthcare that is free at the point of use for UK residents, and is still largely delivered by organisations from within the public sector. A range of government strategies have been introduced to expand and develop primary and 'out of hospital' care and to transfer resources into the community and promote more integrated approaches to care (Department of Health, 2006). An infrastructure has developed which aims to promote innovation in terms of a more developed 'social model of health', although there have been bureaucratic and resourcing barriers to its implementation (Bauer, 2015).
Policy debate and action, particularly in the UK, has also sought to increase the diversity of public service providers -i.e. to include more private and civil society/third sector organisations (Bartlett and Le Grand, 1993;Le Grand, 2007;Walsh, 1995). This has included efforts to significantly increase the number and scale of spin-outs from public health and social care services in England (Miller and Millar, 2011;Sepulveda, 2015). (i.e. mutual and SE spin-outs), and innovations that contribute to greater efficiency and cost effectiveness in the delivery of public services. A government press release from July 2014 indicated that 100 'mutuals' had spun-out from the public sector and were delivering £1.5 billion of public services (from community health to libraries) and employed 35,000 people. 3 It is relevant to note the controversial nature of the wider policy context to the public service mutuals agenda and measures taken to reform the NHS. While government sources and others have emphasised increased competition and outsourcing as crucial to driving up standards and efficiency (Le Grand, 2013), critics view such changes as furthering an ideologically-motivated privatisation agenda and the introduction of market forces in ways that will fragment universal provision, undermine the public service ethos and, ultimately, could prove more expensive to the public purse (e.g. Hunter, 2013;Leys and Player, 2011;UNISON, 2011;Murdock, 2010). In this contested context, the commissioners responsible for procuring public services are key actors, with a complex remit to address community health needs and social value considerations 4 while also promoting competitive tendering and financial efficiency in a context of public sector austerity.
There has also been a growing recognition of the potential for 'bottom up' empowerment of frontline workers and of multi-actor collaboration as a source of innovation in public services (Hall and Holt, 2008;Osborne, 2006;Pestoff et al., 2012;Sorenson and Torfing, 2011). The concept of co-production/co-creation which is particularly associated with SE and social innovation emphasises the empowerment of consumers/service users and how this can produce better outcomes (Bovaird, 2007;Pestoff, 2009;Simmons, 2008;Simmons et al., 2012). SEs can be particularly effective in terms of responding to the needs of service users because the gap between those who provide the services and those who benefit is reduced, thus solving the problem of agency (Needham, 2008).
It is in this turbulent and contested policy context that this paper seeks to contribute to understanding of public service and social innovation by examining the strategies and practices of innovating hybrid enterprises as they respond to new combinations of institutional logics.

Research methods
We adopt an interpretive approach (Bryman, 1989) to analyse qualitative data on innovations from eight case study hybrid organisations which were drawn from a larger sample of SEs (and 134 identified innovations) that were delivering publicly funded community health services. Cross-case analysis (Eisenhardt, 1989) was used to identify the patterns and characteristics of innovation and the combinations of institutional logics involved. The case study methodology enables in-depth insight (Yin, 1994) into processes involving the conception, development and implementation of innovations, with the multiple-case and multi-stakeholder approach allowing a higher degree of generalisability while also reducing the danger of selection biases to which single-case approaches are prone (Eisenhardt, 1989). The main data collection tool was a semi-structured interview questionnaire which was adapted for the different categories of interviewee: CEOs (29 in total); staff members (166); external stakeholders (such as commissioners and partner organisations) (39); and a limited number of interviews and some focus groups with service users and volunteers (35 individuals). The 208 interviews were conducted by the four authors, either in person or by telephone, and with some interviews involving more than one respondent. A total of 100 hours and 47 minutes of interview recordings were made. The interview transcripts totalled 860,074 words. While there are dangers in relying on the accounts of individual interviewees and their ability to accurately recall and relate past events, the risk of bias has been minimised by triangulating the accounts of multiple interviewees, including external stakeholders as well as actors within the innovating organisations.

Specific innovations were initially elicited by asking interviewees within the SE cases
to identify what they were doing or were aware of that was new or substantially improved since their organisation had left the public sector, i.e. in terms of changes to services and related work practices, organisation and systems. What appeared to the researcher in each case to be the significant innovations, as related by interviewees, were then explored with both closed and open questions to elicit interviewees' understanding of their conception, development and implementation; the roles of different actors; challenges encountered (and how overcome); and the innovation impacts to date. 5 Appendix A shows the 30 case organisations and their profile characteristics.
The analysis resulted in the identification of 134 innovations -or areas of innovation in some cases -which were entered in an Excel database to capture details of the nature of the innovation; source of the idea/concept and degree of novelty (i.e. new to the organisation, new to the sector or completely novel); partners and support received; and evidence of impact since implementation. Excluded from this were some nascent and smaller innovations that were only briefly mentioned by interviewees.
The initial analysis led to the 134 innovations being grouped into four categories: organisational innovations associated with the new form (i.e. other than the SE form itself); improvements to existing systems and services; new wellbeing services and treatments; and outreach and marketing (Table 1). These four types of innovation provide our starting point for the detailed analysis of institutional logics and their interplay. In order to more explicitly reveal the interplay of different logics, eight cases were purposively selected to represent the four main areas identified in the first stage analysis and where the interview evidence offered particular depth of insight. In total, 88 individuals were interviewed across these eight cases (Table 2). NB Some interviews were conducted with more than one person The subset of eight organisations and their innovations are summarised in Table 3 along with some indicative evidence on their impacts at the time of the research fieldwork, including take-up and influence within the wider public service arena.

Data analysis and theory building
Detailed analysis of all the interview data was conducted using NVivo software. The first stage involved the development of a coding guide to facilitate cross-organisation thematic analysis of the transcripts from the 30 cases, comprising 21 main themes or 'parent nodes'. Key nodes were identified through an initial analysis by the four authors which was informed by the insights and themes identified in the literature review. The nodes used for this paper are: innovations -type, actors, processes and logics; innovation strategy and culture; employee involvement; collaboration and communities of practice; user community involvement; competition and markets; commissioners, policy and regulation. To ensure reliability and common coding at this preliminary stage, 70 of the transcripts were analysed by two of the researchers. Cases where there was lack of agreement or uncertainty were separately re-examined by the researchers and discussed until agreement was reached on a consistent and common coding system.
In a second stage, data on the innovative activities of the eight case study organisations were scrutinised and coded according to the logics of State, Market and Civil Society. Drawing on the recent literature on institutional logics and hybrid organisations (as previously discussed) we identified the constitutive elements of each logic (i.e. particular values, priorities, norms and identities) and how these were manifested in the interview evidence.
Given the focus of the paper on how co-existing logics interplay, we synthesised the observations recorded for each case to create narrative accounts of the innovation process and the role of different actors and their relationships. The main logic or logics at play were indicated within these narratives by inserting in brackets the combinations observed at key points -i.e. S: state, M: market, CS: civil society. This method was used to capture evidence of both logic interplay and combination as well as areas of unresolved tension between coexisting logics.
In a third stage of analysis, the data was re-coded by two of the researchers working independently to identify the specific aspects of hybrid organisational culture, strategy and practice where the creative interplay of logics was most apparent.

Results -Analysis of the interplay of logics
To answer the research questions, we first examine how different logics are manifested within the innovations of public service hybrid organisations. Second, we examine the extent to which particular organisational strategies and practices facilitate the creative interplay of logics. Third, we explore the role of relationships with key innovation partners and stakeholders.

State, Market and Civil Society logics in public services
The analysis of the data shows how the three key co-existing logics -of the state or public sector, the market and civil society -are manifested and combined within the innovations in each of the eight cases, as summarised in Table 4. Integral to the state logic is the principle of a universal health service as a public good. Interviewees in all eight cases affirmed the public benefit of their innovative services, often referring to the importance they continued to attach to the public service ethos and related practices of accountability and regulation, while also operating as independent enterprises. In many of the cases, public service commissioners had played a key role in supporting innovation, setting the strategic direction by identifying needs, encouraging experimentation, funding pilot studies and procuring innovative services. Public service values were also referred to in terms of a need for co-operation with other providers to continue to deliver integrated services, but with significant service innovation also requiring new relationships to be forged.
The market logic was evident in the adoption of practices and guiding values that are more commonly associated with the business world, with the case study SEs having to bid against other providers for competitively tendered public sector funded contracts. The influence of the market logic was also apparent from the importance attached to achieving financial savings and delivering 'value for money', as was particularly evident in six of the eight cases. All cases were also attempting to generate a surplus or profit by diversifying into new sources of trading income. New enterprises that were trading with the general public had been set up in four cases (ACE, Navigo, SA, SCH) including a garden centre (SA) which had been motivated by a business logic and the need to ensure financial viability while also providing health and vocational training services to clients. How surpluses were used to support innovation is discussed later. The civil society logic was particularly evident with respect to an explicit focus on social goals, including new pathways to health and wellbeing (Roy et al., 2013) that sought to encompass the social and economic participation needs of user communities. The emphasis on holism and social value also relates to co-operative practices and collaboration with other service providers, with some interviewees (notably in ACE, Navigo and SA) emphasising the importance attached to sharing ideas and knowledge (also in line with the public service logic) with other organisations. The civil society logic was also manifested through the use of human resources, with five cases making particular use of volunteers to help deliver innovative services (FCHC, Navigo, NCC, SA, SCH). Finally, the civil society logic was reflected in the alternative forms of governance adopted and evidence of a much greater degree of democratic participation by staff and users than when organisations were part of the public sector.
Having established, at a general level, how co-existing logics were manifested in innovation, we next turn to the particular ways in which logics interplayed and the extent to which this had been facilitated by the specific strategies and practices of hybrid organisations.

Strategies and practices for innovation within hybrid organisations
In order to address the second research question, we next examine the extent to which the creative interplay of logics is enabled by organisational strategies and practices, specifically with respect to leadership, empowerment and team building; financial management; and knowledge sharing and protection (Table 5). We explore each of these areas in detail below, using selected quotations to support the analysis.

Leadership, empowerment and team building to create a culture for innovation
The interplay of logics was apparent in terms of how innovation was enabled by the relatively new and more hybrid cultures that had developed subsequent to organisations having transitioned from the public sector. First, leaders (CEOs but also members of executive teams and service leads) were found to be particularly alert to the opportunities and challenges posed by the new context and able to 'combine' and/or selectively apply elements of co-existing logics through their styles of management and communications with others. The analysis shows how the vision of leaders was informed by health service need, as expressed and driven by public service commissioning policy, user community needs, and also a financial efficiency imperative in line with the logic of competitive markets. 'Guiding visions' which combined logics, and as promoted by leaders and executive teams, were often key in terms of stimulating and shaping the direction of innovative activity (notably in ACE, Navigo, SCH, TLS). There was a particular challenge in terms of promoting the legitimacy of a complex, more multi-faceted vision of wellbeing and communicating this to various stakeholders in terms of public health outcomes and also efficiencies more commonly associated with competitive business.

Manager, Navigo
The third way in which hybrid organisational culture contributed to a more fluid and creative interplay of logics relates to the building of service delivery teams that combined diverse capabilities which, in turn, could be associated with particular logics, notably by recruiting new staff from the world of business as well as the social economy. In this way, organisations were better able to respond to the expectations of commissioners and service users, while also accommodating loyalties and values associated with the incumbent logic of public service and the challenger logic of civil society. At the same time, there was some evidence of tension, including from the greater involvement of volunteers and community/service user representatives on Boards of Governors due to their aversion to the logics of the neoliberal state and the market.

Financial management
Greater flexibility and interplay of logics was also apparent with respect to financial management, given the freedom of the new hybrid organisations to commit any surplus made from delivering contracts to the development of new services (notably in the cases of BH, Navigo, NCC, SA, SCH). In the new more autonomous context, SEs had greater control over their own budgets and were therefore more able to take risks without jeopardising their financial position or damaging relationships with public sector commissioners. In this way, they were able to combine the logics of the market (i.e. generation of profit or surplus) with the logic of the state (the provision of public services) and civil society (delivering benefits to communities).
"We've used that surplus as well to do a lot, to do the innovation stuff […] I think we've invested nearly £60,000 this year in innovation." CEO, SA In two cases, staff were involved in voting on how to re-invest a financial surplus in areas of social/community need that were perceived as insufficiently addressed by existing public health services (Navigo, NCC). This demonstrates a shift in the balance of logics, from the dominant incumbent logic of the public sector, with its emphasis on hierarchy and accountability to distant elected representatives, to the challenger logic of social value and local democratic involvement in decision making.

Knowledge sharing and protection
The core mission of SEs requires that they maximise the socially beneficial impacts of their interventions. Strategies for achieving this included a focus on increasing the scale and reach of established services to (quasi-) markets in other regions (which may also be in line with a business growth logic) or, alternatively, by sharing knowledge and innovative ideas with other delivery organisations and policy actors at national and even international levels.
"…and we have lots of people from all over the world to see our method.
[…] to see a different way of working. It is a subtle influence, we do not shout about it and we never advertised our services." CEO, Navigo Some public service commissioners had also encouraged SEs to share their knowledge with other providers, especially when the development and testing of innovations had been supported by public funding. Tensions were apparent, however (notably in ACE, Navigo, NCC, TLS), around the need for co-operation and the desirability of freely sharing innovative ideas versus the business logic of protecting knowledge capital.
Hence hybrid organisations face a more complex situation than their public sector counterparts and can be more reluctant to share knowledge with other delivery organisations (in private and civil society sectors) who may be innovation partners, but may also be bidding against them for public service contracts.
"The commissioners still work on, 'Oh, we're all in this together', you know, 'we're one big happy family', and I think that was where I was talking about being caught between a rock and a hard place, because absolutely yes, you know, we want to be working in partnership like we always have done, but actually in the next breath, they're likely to put that contract out to tender and we've shared all of our information with somebody else and they could win the contract, you know?" CEO, ACE The tension between openness and sharing versus protecting useful knowledge in a competitive environment was identified by some interviewees as posing a significant and growing challenge for innovative SE providers of public services (i.e. CS versus M logic).

Relationships with key stakeholders
To address the third research question, we explore the external relationships that shape how hybrid organisations approach innovation. We find that these relationships are also spaces for the interplay of logics, with our analysis identifying the distinctive role played by funders, service users, and collaborations with other organisations involved in service delivery, as summarised in Table 6 and discussed in detail below.

Relationships with funders
At the time of the fieldwork, all eight cases were reliant on public service contracts for the bulk of their income but were also seeking to diversify and be less dependent on this one main source. Maintaining relationships with existing funders while also building relationships and legitimacy with potential new funders requires that hybrid organisations combine public service and market logics in order to continue to deliver their services while also diversifying and growing by winning new contracts. In six cases, interviewees described the positive relationships they had with sympathetic commissioners who were keen to support innovations where they saw potential to ameliorate some of the immediate and pressing problems faced by the public sector. In some cases, it was particularly apparent that commissioners wishing to drive innovation had been instrumental in encouraging re-thinking of existing approaches.

"The commissioners […]
are very open to us having an approach where we can just try things out and that's quite an important part of the contracts […] they want us to try new stuff."

Staff, SA
Thus SEs had to find ways of implementing the requirements of commissioners and their interpretations of central government policies on health provision, which also required the promotion of competitive markets for healthcare delivery. Some interviewees expressed concern at the extent to which commissioners appeared to be under pressure to achieve immediate financial savings, which could make it harder to secure support for projects where outcomes were less tangible and harder to demonstrate or were only likely to emerge over the longer term. The accounts of some interviewees revealed the tensions experienced when attempting to meet community health needs while also cutting costs and securing 'value for money' in the short term (i.e. a market or neoliberal state logic). Some commissioner interviewees also spoke openly about the tensions they experienced in their roles, notably with respect to promoting competition while also maintaining integration in health service provision and factoring in social value. Notwithstanding the value of a greater competitive interplay of institutional logics and potential benefits in terms of innovation, concern was expressed at the danger of fragmenting and undermining of universal public service provision. Working with SEs was seen as one way of navigating these tensions within commissioning policy. Moreover, some of the SE cases were exploring the use of social impact measures in order to better demonstrate the less tangible and immediate outcomes of innovative services. For example, SCH was using social return on investment approaches to place a monetary value (i.e. a business logic) on the social benefits provided (i.e. civil society or public logics).

Relationships with service users
The interview evidence supports that all eight cases were attempting (at least) to become more responsive to the needs of service users since having left the public sector, with some service innovations being strongly motivated by the understanding of service needs as experienced by newly empowered frontline staff working closely with patients. In several cases users had been more deeply involved in the co-production (i.e. co-design and co-delivery) of new services (notably Navigo, SA, SCH) and playing active roles on boards of directors or governors (notably TLS).
The case of TLS was particularly notable in that this organisation's board of directors was entirely composed of service users, described by their CEO as "experts by experience" who played a key role in strategy and innovation. This further exemplifies the interplay between logics of civil society (community engagement) and of the market (responsiveness to customers) combined with the aim to meet the objectives of public service commissioners.
"The services here were diabolical 12 years ago […] I told [the CEO] my ideas and it's just gone from strength to strength." Service user and board member, Navigo "I think they've got tremendous strengths in terms of working very differently with disabled people from a very co-productive model.
[…] they're very into real employment opportunities for people with disabilities and not tokenism; they are also operationally very effective."

Commissioner, TLS
Finally, interplay and a changing balance between incumbent and challenger logics was also evident in a shift in terminology -e.g. from 'patients', as in the public sector, to 'customers' as more commonly deployed in private sector contexts.
"…we know we're a business.
[…] the key is making sure that the staff are aware that each patient is a customer and we need to embed within them that we want them to have a pleasant experience." Staff, NCC

Collaboration with other delivery organisations
The interplay of logics was evident in the relationships and partnerships developed with other organisations involved in delivering services, whether of the public, private or civil society sectors. Effective collaboration often required SEs to build their legitimacy as newly independent providers and to accommodate and negotiate around the logics of partner organisations in different sectoral/societal domains. Unlike much of the previous literature on public service innovation and logic hybridity, we have focused on specific innovations as the main unit of analysis. In doing so, we address recent calls to explore the mechanisms by which logics are combined (Battilana et al., 2015;Thornton et al., 2013;Smith et al., 2013) by developing a framework for understanding how the interplay of institutional logics contributes to innovation, as shown in Figure 1. This goes beyond the assumption that isomorphic pressures and regulation inevitably restrict innovation in public services (De Vries et al, 2015). Our analysis of the interplay of logics also highlights the role of external actors, thus addressing our third research question (RQ3: What are the inter-organisational relationships with external innovation actors that facilitate the interplay of logics in public service innovative activity?). A key element for social innovation in a hybrid context is therefore how SEs harness spaces of inter-organisational interplay to facilitate the contributions of diverse actors. Figure 1 shows the three specific areas of strategy and practice involving relationships with funders, service users and other delivery organisations. This is an area that theory related to institutional logics and hybrid organisations has yet to fully engage with, although such relationships are crucial and distinctive to effective public service and social innovation, and particularly so in the current context of institutional and organisational turbulence.
First, we show the crucial role of funders -most notably the commissioners of public services, who are empowered to set the strategic agenda for innovation through their funding decisions. The evidence here is mixed. The 'discursive strategy' of some commissioners has been to encourage innovation by shaping the diagnostic framing of needs, identifying and defining problems, rather than prognostic framing whereby the solutions required are advanced (Snow and Benford, 1988). At the same time, commissioners themselves are faced with having to make difficult trade-offs between the demands of competing logics, i.e. how to support social-value directed experimentation and innovation while also prioritising cost-cutting and short-term financial efficiencies, as mandated by market and (neoliberal) state logics.
Second, we show how innovation is shaped by the interplay of logics occurring through relationships with other service delivery organisations, i.e. in the public, private and civil society sectors. Related to this, SEs have had to find ways to navigate between the market logic of protecting their knowledge capital (and potential competitive advantage) and the logics of civil society and the public sector which favours the sharing of ideas and experiences of innovation with other delivery organisations for wider benefit. By studying the interplay of logics, we are therefore able to illuminate the tensions between market and state logics in a context where public policy has been to increase the role of competitive tendering.
Third, there are implications for the changing role of service users -the patients, clients and customers of public service delivery organisations. The rigidities of professional boundaries and hierarchical cultures within the public sector have tended to prioritise the views of senior clinicians and managers, but with some scholars calling for further research on how service users and citizens may play a more active role (Reay and Hinings, 2009). This study has shown that much innovation is taking place within SEs to develop organisational structures that enable co-production and co-design. This trend signifies an increasing receptivity to the views and ideas of users who themselves are funding public services through the taxes they pay as citizens.
These pioneering SE cases therefore demonstrate important principles in relation to the practical benefits of the greater involvement of user communities in areas of service need that pose complex wellbeing challenges. The interview evidence supports that the new post-spinout cultures were less hierarchical and more open than was the case when organisations were part of the public sector, thus providing a more fluid context for the interplay of co-existing logics and with greater possibilities for creativity and experimentation.

Implications for public service innovation policy
Innovation is being demanded by policy makers, commissioners and civil society groups to help address pressures on public health services around the world, severe resource constraints, and in recognition of the scale and multi-dimensional nature of the wellbeing needs of individuals and communities.
In terms of implications for policy and practice within organisations, we contend that there is scope for cultures of employee and user engagement to be accorded greater priority in all public service delivery organisations, whether of the public, private or civil society sectors. The analysis and resulting framework identifies the strategies and practices common to innovating SEs. For example, building a culture of creativity in innovative teams requires leaders to recruit individuals who are comfortable and able to work with different logics, and to manage teams of individuals with diverse backgrounds that may be a source of tensions between logics. Financing innovation also requires leaders to explore and balance multiple logics (e.g. commercial versus social objectives) and to have clear policies for surplus generation and subsequent investment in innovation. However, the pressures of public spending cuts, alongside increasing demand for health services, makes profit/surplus generation particularly challenging. Organisations also need to have explicit strategies for knowledge protection and sharing, an area characterised by tension between social/public service and market/neoliberal state logics. At times there may be a commercial justification to protect intellectual capital, whereas at others the social and public good missions of organisations may provide a strong case for sharing.
In terms of relationships with external actors, understanding of the interplay of logics is vital in building constructive relationships with the public sector commissioners who play a key role in these new but growing quasi-markets. Innovating organisations need to develop a good understanding of the objectives of these pivotal individuals when making the case for additional funds to support innovation or to build an evidence base. A better understanding of how multiple logics can be combined for productive ends can also inform strategies for collaboration with other delivery partners whether from the state, business or civil society sectors.
There are also implications for public policy more generally, notably with respect to encouraging innovation and the dissemination of useful knowledge. Given the considerable amount of public spending on health services, there are opportunities for those controlling these budgets to encourage innovation by funding the delivery of services by organisations (or through other institutional mechanisms) that demonstrate an ability to work with the interplay of logics and to span sectoral boundaries, enabling collaboration with multiple actors. Although this paper has focused on SEs as hybrid forms which may be particularly conducive to working with and combing different logics, we contend that the understanding developed is applicable to other types of organisation in the public, private and civil society sectors. Of particular importance is the need to integrate and balance bottom up, coproduction models with a more centralised strategic direction without this being overly bureaucratic and stifling of innovation (Osborne and Brown, 2013;Potts and Kastelle, 2010).
This study has identified how public sector commissioners, through their funding decisions, have the ability to directly finance innovation or enable organisations to generate and retain a surplus that can then be re-invested in innovation. However, such funding entails risk and can be difficult to justify in an era of public sector austerity. Nevertheless, there remains scope for commissioners to encourage public benefit directed innovation through ensuring that smaller organisations with their distinctive contributions are involved in tender processes, and by adopting assessment criteria that reward social value and related innovation. This study show that some commissioners are willing to support innovation that may have longer term benefits, even when it may not be the lowest price in a competitive bidding process. However, this is not always the case. Commissioners can also support innovation through ensuring that knowledge is shared and that successful innovations are scaled-up and widely adopted. However, in a competitive quasi-market, the logic of the market can inhibit such collaborative approaches.

Conclusion
While innovation in public services and social innovation are seen as necessary to address societal and wellbeing challenges, there has only been limited research on the mechanisms involved. This paper shows how innovation in this context is shaped by different logics, not just of the state/public sector, but also logics of the market and civil society. Our analysis examines the innovation activity of newly created hybrid organisations and shows how the creative interplay of logics, even when there may be tensions, contributes to alternative ways of mobilising resources for constructive ends. By examining specific service and organisational innovations, we fill a research gap on innovation related to the public domain, contributing to understanding of the interplay of logics both within organisations and in their relationships with external actors, notably the public sector commissioners who fund services, other service providers and the users of the public services themselves. This is particularly relevant to other national contexts with developing quasi-markets for the delivery of public services.
Despite the breadth and depth of the comparative case study approach, the research has some limitations which also lead us to identify some promising avenues for further research. The analysis is based on evidence from selected SE cases and is likely to be biased towards the more successful and innovative organisations due to the self-selection of those willing to participate in the research, therefore potentially underrepresenting less innovative and less successful SEs. At the time of the research fieldwork, public policy and funding for spin-out 'mutuals' in health and social care was relatively nascent and thus the vast majority of our sample consisted of organisations that had only been independent from the public sector for one to two years. Many had not yet reached the end of their initial NHS contract and the future viability of spin-out SEs, even those considered to be the most innovative, is not guaranteed. The growth and further development of public service hybrids is, to a large degree, dependent on how the different logics are played out in the wider institutional context and the quasi-markets involved.
Whilst our study has provided a rigorous snapshot of a relatively large sample of organisations, future studies could take a longitudinal approach to reveal more about the processes of public service/social innovation and how logics play out over time, particularly given the turbulence of the policy and organisational environment. Additionally, further research is required to determine how the relative influence of different logics on innovation processes varies between different types of public service delivery organisation. A comparative study of public, private and/or SE sector organisations would be a valuable addition to this line of research. It is also possible that the particular political and environmental context of English public policy has been instrumental in shaping the specific interplay of logics identified. There is therefore a need for further investigation through international comparative research.