Is Scarcity the Mother of Innovation? Nonprofits’ Response to the Pandemic

The threat of resource scarcity has been looming in the news over the past few months. In the United States, parents are struggling to feed their babies due to a shortage in baby formula. Several countries across the globe are experiencing a cooking oil shortage because of the conflict between Russia and Ukraine. Like consumers, businesses need resources to operate, and resource scarcity has only increased during the COVID-19 pandemic.  

In “Resource Scarcity and Humanitarian Social Innovation: Observations from Hunger Relief in the Context of the COVID-19 Pandemic,” Iana Shaheen, Arash Azadegan, and Donna F. Davis explore the impact of resource scarcity during the COVID-19 pandemic on the development of social innovation in humanitarian social enterprises (HSEs). In their research, Shaheen, Azadegan, and Davis analyze these issues by examining 12 HSEs dedicated to hunger relief efforts in the U.S. The COVID-19 pandemic caused a drastic increase in demand and a drastic decrease in supply. Recent data shows that the number of people in need of the services provided by HSEs has almost doubled globally. However, the cost of providing these services has almost tripled. Because of this increased need for their services and increased prices, HSEs face pressure to continually implement innovative practices by stakeholders, which include donors and governmental agencies. These providers’ expectations incentivize HSEs to continually improve and come up with new ways to address their humanitarian causes. 

HSEs operate as non-profit organizations, as they depend on donations and volunteers for revenue. HSEs’ mission centers on social well-being in a non-profit context but they must also employ social innovation to develop new ideas to address unmet social needs. The researchers identified one example of social innovation in a HSE where a hunger-relief HSE partnered with several organizations to open a nonprofit grocery store. The nonprofit grocery store’s purpose was to provide a way for local families to access food after all the grocery stores in the area closed. The business model for the project had not been tested before and required socially innovative practices to be successful.   

Previous research on this topic focused on resource scarcity and its impact on innovation development. Researchers have not reached a definite conclusion of resource scarcity’s effect on the development of innovation: some studies suggest that an abundance of resources offers more opportunities to innovate, while others suggest that resource scarcity can prompt innovation. Prior to this study, there was little information regarding how HSEs’ organizational capabilities are useful for developing innovations during crises. Previous research on this subject did not consider the operating environment or the use of specific organizational capabilities.   

How Bricolage Fuels Social Innovation 

Social enterprises and HSEs must focus on finding creative and sustainable solutions to deal with modern social challenges. Prior research found that social enterprises are critical for developing humanitarian relief and economic recovery efforts during crises. And, while organizational capabilities are crucial for innovation development, these organizational capabilities can be impacted by the resource scarcity level. In the operating environment, HSEs heavily rely on resources from others such as volunteers and donations. The findings of Shaheen, Azadegan, and Davis’ research suggest that during extraordinary operating circumstances, such as the COVID-19 pandemic, HSEs’ organizational capabilities shift as the enterprises become more familiar with their extraordinary operating circumstances. 

The hunger-relief HSEs were challenged by the significant increase in demand during extraordinary operating circumstances. Additionally, the COVID-19 pandemic changed how food was delivered because of new social distancing and food preparation protocols. Different stages of the pandemic carried different challenges for HSEs. To address these issues and changes, hunger-relief HSEs shifted to developing social innovation through bricolage. 

Bricolage is an organization’s ability to “make do" by applying their resources to new problems and opportunities to develop new solutions. Two variations of bricolage include parallel bricolage and selective bricolage. Parallel bricolage can be applied using a broad range of resources and across many domains of activity.  Parallel bricolage activities in the context of hunger-relief HSEs included the simultaneous development of several innovations, such as virtual volunteers, partnerships, and social media accounts. Selective bricolage is applied more sensibly and in one or a few domains of activity. One hunger-relief HSE using selective bricolage activities focused on only one innovation of virtual volunteers instead of several innovations. At the beginning of the COVID-19 pandemic, resource-scarce HSEs focused on parallel bricolage to develop social innovation. Following this, as they became familiar with the extraordinary operating environment, they shifted their focus from parallel bricolage to selective bricolage.  
 
During ordinary operating environments in resource scarce HSEs, social innovations were concentrated around improving operational efficiency. Examples of social innovations in these environments include redesigning facility and warehouse operations to optimally use space, developing better work allocation, and using inexpensive local resources to build additional operational capabilities. These innovations are examples of parallel bricolage, as resource scarce HSEs were able to focus on many domains of activity during ordinary operating environments.  
Resource scarce HSEs focus heavily on building close relationships in their communities. An informant from the study explained that “Collaborations and relationships are everything. Relationships really help us to be efficient. ... We know receiving docks and grocery stores can be very busy at certain times. [But] if you establish that relationship well, you might get in and out of a store much quicker. You also will gain more flexibility with them, in terms of if altering your route is made better by changing your time in the store.”    

Social innovation is not, however, just the provenance of resource scarce HSEs. Resource abundant HSEs serving densely populated areas had more opportunities to attract volunteers. The larger number of manufacturers and wholesalers in densely populated areas made it easier for HSEs to find food and funding sources, which limited the need for donations. Resource abundant HSEs, however, serve millions of residents, and they can be overwhelmed because of a broad range of expectations.  

In the ordinary operating environment, resource abundant HSEs focused on social innovation to create new initiatives, such as enhanced food offerings, nutrition education programs, and reaching out to more of the population. During the COVID-19 pandemic, the demand for these HSEs rose significantly.   

This study found that both resource scarcity and resource abundance significantly influence how HSEs develop their social innovation capacities. HSEs facing resource scarcity relied on their collaborative capabilities, in which an enterprise combines the operational resources offered by other organizations with internal operational resources. Examples of collaborative capabilities include HSEs establishing relationships with farmers to use their resources to develop new channels to minimize the cost of waste management and with distribution centers to improve perishable item delivery.  

HSEs experiencing resource abundance, however, relied on their absorptive capacity, an organization’s ability to identify, assimilate, transform, and use external knowledge. Examples of absorptive capacity include leveraging the external knowledge developed through research by partnering organizations and paying close attention to market patterns to explore viable new ideas.        

Regardless of whether you are operating with a scarcity of resources or an abundance of resources, in an ordinary operating environment or an extraordinary operating environment, one thing is certain. Without existing ideas and practices to adapt and a committed community to engage with, bricolage - and the innovation it brings- cannot happen.