Social Impact Bonds (SIBs): analyzing efficiency and legitimacy motivation using systematic review methods and social media analysis

Policymakers frequently endorse evidence-informed policy design. But, in the context of public management reform, the most technically suitable innovations are often not the ones that become widely and deeply adopted. Legitimate (i.e. socially ‘acceptable’) reforms can spread greatly within and across public sectors, despite being inefficient; and efficient reforms may nonetheless remain unimplemented if they lack the legitimacy necessary to gain support. Inefficient reforms may even become “institutionalized”, which means they are regarded as having social value beyond their technical value. At best, the result is ineffectual public management reforms, with attendant opportunity costs; at worst, poorly-targeted interventions directly harm public service delivery and policy outcomes.
In between these widespread and un-spread management initiatives, however, are those reforms that gain some traction among governments, yet never really “take-off” to become fully institutionalized. Social Impact Bonds (SIBs) are a recent example of this. A SIB is a type of payment by results (PbR) contracting, in which the commissioner pays for outcomes achieved rather than services delivered, using upfront capital from private investors who earn a financial return if the intervention is successful. As of 2023, more than twelve years after the first SIB was launched in Britain, there have been 276 SIBs in 38 countries, with approximately 745 million USD raised in upfront capital and 1.7 million beneficiaries reached (GO Lab, 2023a). This growth is far less than initially expected; in recent years (from 2019 onwards), the usage of SIBs has decreased markedly. In 2021, only 19 SIBs were launched (raising approximately 25 million USD), compared to 44 SIBs in 2018 (with 54 million USD raised). Thus, the spread of SIBs has been “wide” but “thin” – i.e., to many places and sectors, but only to a very limited number of organizations or programs in each.
What explains this truncated reform diffusion? Why did SIBS rapidly appear in successive jurisdictions, but penetrate those public sectors barely at all? And what does this “in-betweener” category of innovation, neither widespread nor un-spread, tell us about the combined effect of instrumental and institutional, or efficiency and legitimacy, pressures for public management reform, and the role of evidence in decision-making? The empirical chapters of this thesis suggest that this reform has been truncated and only ‘thinly’ diffused because it has often been adopted for institutional reasons. The legitimacy benefits have caused decision makers to interrogate the reform idea with lower thresholds of rigour than they otherwise would. Yet, legitimacy benefits can only propel the innovation forward so far and for so long without concrete evidence of effectiveness. Thus SIBs usage has declined, in recent years, with Development Impact Bonds (DIBs) being introduced (and gaining popularity), likely in a deliberate attempt to re-package the idea as novel.
Building on seminal works in organizational sociology, this thesis shows how efficiency and legitimacy exercise varying influence over reform processes as levels of uncertainty change over time regarding the effectiveness of an innovation. I use an effectiveness systematic review of SIBs to gauge the changing state of academic knowledge about the benefits of SIBs during 2010-22, as well as a qualitative systematic review to identify broader drivers for the adoption of the reform. I perform sentiment analysis and network analysis on social media data to understand changing practitioner understanding of the reform between 2010-2020 and use framework analysis to understand how rhetorical and discursive techniques have been applied, in this same period, to frame the SIB idea as a worthwhile reform to pursue. Overall, these analyses demonstrate that legitimation is central to the early-stage diffusion of management innovations that, ultimately, spread widely but only thinly.

Keywords: social media analysis
SIBs
DIBs
public mangement reform
Social Impact Bonds
Development Impact Bonds
management fashions
organizational sociology
organizational institutionalism
Diffusion of Innovations
evidence-based policymaking
Advisor: Elston, T
Humphreys, D