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Network Structure, Resource Availability and Innovation:

A Study of the Adoption of Innovation in Elderly Service in a Chinese Municipality

P R O F. WA I - F U N G L A M , T H E U N I V E R S I T Y O F H O N G K O N G

D R . L I W E I , T H E C H I N E S E U N I V E R S I T Y O F H O N G K O N G

Social Innovation Research Conference Fudan University, Shanghai, China, 21-22 May, 2015

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Research Questions

Prior studies have largely treated resources as a contextual factor or an independent variable, we investigate if resource availability is in fact an intermediate variable that mediates the impact of network structure on performance, with a focus on networks’ ability to innovate.

Specifically:

How does government resource availability affect the choice of network structure and network performance?

What are the impacts of network structure and dynamics on public service performance?

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A Network Model of Public Service Delivery in China

There have been major changes in state-society relationships, with an expansion of political space for grassroots organizations to be involved in social service provision (Shieh and Schwartz, 2009).

Many local governments in China have outsourced the delivery of a range of public services to non-governmental organizations (Jing, 2008; Teets and Hurst, 2015).

The changing state-society relationships have opened up possibilities and potential for reconfiguring public service delivery, can the network model of public service delivery be applied in such a changing context?

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Elderly Service in China

In 2013, about 15% of the country’s population aged 60 or above.

In Shanghai, of its 14 million registered permanent residents in 2013, more than 27% aged 60 or above; among them more than 710,000 aged 80 or above.

The number of residential care beds, however, can only meet the needs of about 3% of the elderly population.

An effective Community-based Elderly Care service network that provides efficient and quality “aging in place” services is considered to be the way forward in the delivery of elderly care.

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Public Service Innovation

Public Service Innovation: the adoption of new services, processes, new users pertaining to more efficient and effective delivery of public services (Damanpour, 1987; Osborne, 1998)

“Expansionary” innovation: meeting the needs of new users by existing services

“Total” innovation: meet the needs of new users by new services

“Development” innovation: addresses the needs of existing users by refining existing services

“Evolutionary” innovation: meet the existing needs of users by new services

Services of the agency

Needs of service users

A Typology of innovation in social policySource: Osborne (1998, p.1140)

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Public Service Innovation

While the effectiveness of community-based network comprises an array of dimensions of performance (Provan and Milward, 2001), we argue that service innovation as manifested in the introduction of new services or refinement of existing services is among the most important ones.

As the implementation of service innovation is getting increasingly complex which often calls for collective efforts of both government and other policy actors, it is important to study innovation at the network level (Abendstern, Hughes, Clarkson, Tucker and Challis, 2011).

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Availability of Resource

Resource availability: an environment in which managers have access to ample opportunities to increase network resources

Resource adequacy: a high level of resources available to the network at a particular time point

The availability of resource not only allows the nurturing and diffusion of new ideas (Mulroy and Shay, 1997), but also provides the necessary flexibility for the experimentation of new products and processes (Subramanian and Nilakanta, 1996).

Some argue that resource availability tends to be associated with more centralized network structures (Provan and Kennis, 2007); others believe a reliance on network managers might have a negative impact on the network’s capacity to explore new sources of resource or to develop new services or clienteles; some even argue that resource inadequacy is a major driving force for inter-organizational collaboration (Provan and Milward, 1995; Pfeffer & Salancik, 1978; Williamson, 1991).

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Hypotheses

H1: A higher degree of resource availability from government will enable network managers to better cope with constraints on innovation which are often associated with a mandated network structure.

H2: A lower degree of resource availability from government will motivate network managers to adjust the network structure with a view to leveraging non-governmental sources of resource to innovate their services.

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Research design and methods

A most similar/most different research design (Seawright and Gerring, 2008)

Cases: Two street-office community elderly care (CEC) networks with similar mandated implementation structure at the starting point, but different levels of resource availability from government

A snowball strategy to identify network actors.

Since July, 2014, 25 in-depth interviews have been conducted with street-office cadres, managers and the staff of elderly service providers in the two street-office communities.

The interview questionnaire is semi-structured, composing of 13 questions.

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Service delivery network A

Network A: a centralized network with a high level of resource availability.

Three service agencies are managed by the same team of managers, despite that each of the agencies is registered as an non-profit non-enterprise service agency .

Street-office Home-based Elderly Care Advising Center:administer applications, evaluate service quality

Management of all service providers and a call center to respond to service recipients’ requests, develop

new service programs to apply for government grants

EHCA: three agency stations ECAC: six service

stationsEDCC: two stations

Other service providers offer free or below market level

price

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Evolutionary Service innovation

In Network A, six types of elderly services were provided in accordance with results of a survey conducted on 3,000 elderly residents in the community in 2006.

The network of organizations has developed new services every year since then, responding to the needs of the elderly subject to the availability of resource.

As of July 2013, there were 51 active service providers providing more than 55 kinds of services door-to-door or at different places in the community.

The number of times users served has increased from 50,000 in 2007 to over 700,000 in 2014.

New services are adopted to meet mainly the needs of existing service users.

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Innovation through a centralized network structure

The expansion of services has not been accompanied by major changes to the existing centralized network structure.

The process of innovation has largely followed the same pattern, all carried out by the management team:

Demand Survey

Design and Prototype New

Program

Test pilot program

Implement final

program

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Government Resource availability

Government resource availability plays a key role in enabling the network manager to develop new services.

Resource availability also enables the network manager to reward staff and service providers with compensation package or service awards regularly.

The network manager looks at the Network As a government-run entity although, operationally, many of the service programs are funded through government service contracts after competitive biddings.

“Our services range from the most basic to all sorts of specialized ones, relying mainly on resources made available by government rather than through the markets.”

---A Manager in Network A

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Drawbacks

The degree and sustainability of the network’s ability to innovate largely depends on the manager’s leadership quality. For Network A, it is not clear if the network will be able to sustain its innovativeness after the network manager has departed.

As the network depends heavily on government resource, it is subject to uncertainty that might be brought about by various external factors affecting the level of government funding.

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Service delivery network B

Network B: limited government resource availability, adaptive network structure

As the EHCA is the only major agency in the network that provides community-based elderly care(CEC) services, Network B does not have the capacity to meet the service needs in the community.

Number of managers and staff

Number of care paid care workers

Number of subsidized service users

Number of times of all users served

Elderly population

Three service agencies and six service stations in Network A

21 About 700 About 210 About 60,000 About 12,000

One EHCA in Network B

3 95 About 300 About 2,000(users)

About 27,000

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Decentralized network structure

The decentralized network has allowed the street-office government to draw upon the resource of NGOs to deliver a variety of elderly services which are not confined to policy mandated CEC services.

Street office government outsources CEC services and steers the service delivery network

Three non-profit service enterprises

One non-profit service

enterprise

One non-profit service

enterprise

One non-profit service

enterprise(HY)

Manages EHCA Manage four community

service centersMeal-on-wheel

services

Manage two day care centers

Assign trained care workers to needed elderly

Two non-profit service

enterprises

Health education, cultural and sports

services

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Innovating Network Structure

The street-office government perceives outsourcing the management of EHCA to a non-profit service enterprise(HY) has improved the performance of the agency.

HY’s voluntary programs and its network of service providers in many ways complement the subsidized services offered by the EHCA in Network B.

HY plays an important role in facilitating the operation of the network through regular interactions with service providers, street-office cadres, the District government agencies.

These organizations share with one another all sorts of resources, including information, clienteles, venues, and even volunteers with professional expertise.

While the street-office government coordinates major joint programs among NGOs, many collaborative efforts are initiated by the organizations themselves.

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Decentralized innovation process

Surveying and identifying users’ needs, designing new programs, and implementing the programs are all delegated to the NGOs.

As they interact with users on a daily basis, the NGOs command much better local information and understand the needs of users. They often involve volunteers who live in the community in the innovation process.

The network is now also subject to lesser constraints possibly imposed by government policy mandates because they are better able to diversify their sources of resources

NGOs are motivated to innovate. To be competitive, the NGOs strive to expand their services to meet the needs of the community.

“Nowadays there are more and more elderly service agencies, more and more elderly services with unique features. If we do not create new services, we will be marginalized easily. The change is not confined to only our District; one can observe rapid growth of elderly services in other Districts as well. After all, it is much easier to set up a social organization than in the old days.”

--Manager of a non-profit service enterprise in Network A

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“Total” service innovation

Network B increases the number of times users served quickly within three to four years, meeting needs of new service users.

Network B has better capacity to provide health care as well as cultural and entertainment services than Network A. These services have met new needs of service users.

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Conclusions

Government resource available

Centralized innovation

Evolutionary innovation but unsustainable in the long run

Government resource limited

Decentralized innovation

“Total” and sustainable innovation

Centralized formal Network Structure

Despite abundant availability of government funding, a closed, centralized network has only limited sustainable capacity to innovate.

For a network which has only limited access to government resource, an effective strategy to adapt and innovate is through changing the network structure; the more decentralized process of innovation is of the “total” type and sustainable in the long run.

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Limitations

Findings are based upon a comparative analysis of only two service delivery networks.

We have only focused on the impact of government resource availability on centralized network structure.

In future research, we hope we will be able to decipher how a decentralized, self-emerging network structure responds to government resource availability as well as resources from various sources.

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Caveats: importance of government role

In China, governments have a long history of direct service delivery and maintain a degree of control over the residents

governments, particularly at the street-office and District levels, play an important role in

developing new networks helping social organizations to win the trust of community stakeholders (including residents) gaining political support to initiate new service programs implementing new service programs resolving conflicts among network organizations facilitating resource exchange among network organizations

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End of Presentation Thank You!