the State as a Catalyst, not a Constraint • Secondo Welfare

Innovation starts locally. In Gothenburg (Sweden), a 2016 pilot project integrated municipal employment programs with national labor policies, ensuring migrant labor participation within a structured, long-term framework (Scalise and Hemerijck, 2022). In Bologna (Italy), collaboration pacts between municipalities and civil society redefined childcare services, embedding co-production into welfare governance (Campomori and Casula, 2022).

Across cities, bottom-up initiatives are recalibrating welfare governance (Ferrera, 2008; Maino, 2023), but without national coordination, they remain fragmented experiments rather than systemic solutions. The issue is not whether social innovation can thrive at the local level — it already does. The real question is whether it can scale without widening inequalities. And for that, the State is indispensable.

The risk of fragmentation: innovation without coordination

When social innovation remains confined to local ecosystems, it risks deepening welfare dualism — where well-resourced areas innovate, and the rest lag behind.

In Italy, company-based welfare schemes have expanded to address gaps in public provision, primarily within large firms. However, small and medium-sized enterprises (SMEs) and precarious workers remain excluded, highlighting the inherent limitations of decentralized welfare solutions (Maino and Razetti, 2019). Likewise, mutual aid organizations have reemerged as an alternative to market-based welfare, but they continue to be fragile — lacking the financial sustainability and regulatory support needed to ensure broad access (Vriens and De Moor, 2020).

Barcelona (Spain) exemplifies this challenge. Ambitious social innovation policies have floundered due to weak national coordination, resulting in fragmented welfare delivery. Local labor market initiatives struggle to align with national employment strategies, leaving gaps in coverage and coherence (Scalise and Hemerijck, 2022). Lyon (France) illustrates the opposite problem: overcentralization that paralyzes local adaptation. Despite France’s strong welfare state, rigid national structures have stifled local adaptation, preventing municipalities from integrating services to respond to regional labor market needs (Scalise and Hemerijck, 2022).

Both cases highlight the same lesson: without a balance between national coordination and local flexibility, social innovation is either fragmented (Barcelona) or suffocated (Lyon).

Scaling innovation requires coordination: the Neo-Weberian State as an enabler

Social innovation requires a state that coordinates, not dictates, to move beyond isolated experiments. The Neo-Weberian State (Campomori and Casula, 2022) strikes this balance —ensuring stability while embedding innovation into institutional frameworks without rigidity. Campomori and Casula (2022) analysis of childcare co-production in four European cities—Bologna (Italy), Budapest (Hungary), Thessaloniki (Greece) and Kortrijk (Belgium)—shows that where national governments enable multi-level coordination—like in Bologna and Thessaloniki — co-produced services become embedded. Where they do not, as in Budapest, fragmentation and financial instability follow.

This principle is evident in Gothenburg, where national and local authorities work together, aligning municipal employment policies with national labor market frameworks. The result is sustained labor market integration, not fragmented, short-term fixes (Scalise and Hemerijck, 2022).

Collaborative governance structures, as theorized by Ansell and Gash (2008, 2018), provide the necessary platforms for scaling local innovation into systemic solutions. They enable multi-stakeholder networks that bridge gaps between local initiatives, national frameworks, and private sector engagement. Without these platforms, local successes remain isolated and lack the structure needed to influence broader welfare systems.

Italy’s company-based welfare networks reinforce this point. While multi-stakeholder initiatives have successfully expanded employee benefits, their impact is uneven, benefiting large firms while leaving SMEs behind (Maino and Razetti, 2019). Without national mechanisms to integrate these networks into broader welfare strategies, they risk reinforcing, rather than reducing, inequality.

The State as a facilitator: balancing local adaptability and national integration

For social innovation to scale, the state must act as a facilitator, not a central planner.

Flexibility in institutional frameworks is crucial. The principle of subsidiarity — governance occurring at the most local level possible, with higher authorities intervening only when necessary — ensures that national coordination does not suppress local initiatives (Scalise and Hemerijck, 2022). Gothenburg exemplifies this balance — where vertical (national-to-local) and horizontal (regional-municipal) coordination have become a structural component of social investment in welfare. In contrast, Barcelona illustrates the consequences of weak institutional integration —where promising local initiatives remain disjointed.

Scaling demands both knowledge transfer and financial coordination. Maino and Razetti (2019) caution that company-based welfare remains unevenly distributed, largely due to financial disparities between firms. Without state-backed funding incentives, social innovation risks becoming the domain of wealthier regions, reinforcing territorial inequalities. Similarly, mutual aid organizations thrive only when embedded within a broader regulatory framework, ensuring sustainability beyond local funding constraints (Vriens and De Moor, 2020).

Trust-based philanthropy cannot replace state intervention. The emergence of relational philanthropy (Petzinger and Jung, 2024) showcases the potential of long-term, community-driven funding models. Yet, they remain localized and fragmented without national policy frameworks to incorporate these approaches into wider welfare structures.

Conclusion: social innovation needs the State to scale

Social innovation and social investment are transforming welfare systems by providing alternatives to traditional state-centered models (Jenson, 2025). However, these innovations remain fragmented due to a lack of national coordination, benefiting only certain regions while neglecting others. Civil society drives innovation, but only institutional frameworks can integrate it into the broader welfare system (Then and Mildenberger, 2022).

The state does not replace social innovation — it enables its expansion. Its role is not to control but to coordinate — ensuring that local solutions evolve into systemic transformations. This happens by institutionalizing innovation in welfare services (Campomori and Casula, 2022) and addressing governance gaps through strong policy frameworks. As Busacca (2022) argues, social innovation cannot remain a patchwork of local experiments; it needs multi-scalar governance, where national frameworks integrate bottom-up initiatives while also shaping local strategies to ensure sustainability and reach.

The issue is not state intervention but rather how to implement it effectively. Excessive control, as evidenced in Lyon, stifles adaptation, while insufficient coordination, as seen in Barcelona, leads to inefficiency and fragmentation (Scalise and Hemerijck, 2022). The solution lies in a hybrid model in which the state establishes the conditions for scaling without stifling local initiative. This captures the essence of the Neo-Weberian state — a governance structure that supports rather than constrains innovation.

The cases of Gothenburg, Barcelona, Lyon, and Italy’s company-based welfare all illustrate the same fundamental reality: social innovation cannot remain isolated; it must be integrated into national policy to serve as a structural pillar of the welfare state. Without this integration, innovation will exacerbate regional disparities — flourishing in affluent areas while neglecting others. That is not progress; it is institutionalized inequality.

References

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