Catalysing innovation for social impact: The role of social enterprises in the Indian sanitation sector

•Social entrepreneurs/enterprise/entrepreneurship cannot be referred to interchangeably.•NSI merely focusing on innovation generation cannot ensure optimal social impact.•Social enterprises are new NSI actors who focus on social impact of innovations.•Additional NSI mechanisms are needed to incentivize 'long-term impact' of social enterprises.•To catalyze and forge 'demand' for pro-poor innovations, NSI support is vital.

One of the roles of social entrepreneurship within a national system of innovation (NSI) is to generate and ensure effective adoption of innovations that address underserved needs. However, many such innovations do not achieve the expected social impact. Why? Our paper explores answers to this question by considering access to sanitation as a basic need and 'toilets' as an innovation for those who had no prior access to one. We trace the evolution of the Indian sanitation sector and then delve into the process of sanitation coverage in an Indian village. We show that demand for social entrepreneurship is being increasingly satisfied by third party sponsored social enterprises. However, there is systemic uncertainty about the efforts required to catalyze demand and strategic uncertainty about the social enterprise's capabilities and intentions. Long term impact is jointly determined by the true intention of the social enterprise, its capabilities and the nature of contextual challenges. Therefore, forecasting of social change should integrate the incentives within NSI for social entrepreneurship to make high-quality sustained social impact rather than short-lived ones. This will not only depend on the willingness to adopt, but also the monitoring systems, impact analysis and sustainability audits that social entrepreneurship is subject to.