Preparing a social impact bond in a Nordic welfare state: governance challenges and hybrid responses

PurposeThis study aims to examine the preparation of a complex Social Impact Bond (SIB) project in Finland, exploring how challenges and solutions reflect the interplay between new public management (NPM) and new public governance (NPG) logics. It contributes to debates on the institutional adaptability of SIBs beyond Anglo-American contexts.Design/methodology/approachThe authors conduct a longitudinal case study of the Children’s SIB II in Finland, analysing data from 21 stakeholder interviews. Five preparation phases are identified and examined for governance dynamics and challenge-response logics.FindingsThe findings show how SIB preparation involved hybrid governance, combining NPM tools, such as performance-based incentives, with NPG principles like trust-building and cross-sector collaboration. While many challenges were initially framed through NPM logics, their resolution often leaned towards NPG-style responses, highlighting the adaptive use of relational governance practices. A key insight is the critical role of a publicly funded intermediary in framing the SIB, mobilizing networks and embedding the instrument within national welfare discourses.Social implicationsHybrid governance tools like SIBs can reinforce trust-based public-private cooperation and support developing responses to complex social issues, but they also require significant institutional capacity.Originality/valueThis study extends the literature on SIBs by examining their preparation in a Nordic welfare state context, distinct from the Anglo-American settings where SIBs have been most studied. It contributes novel insights into how hybrid governance unfolds in such contexts, particularly how NPG-style solutions emerge even when problems are framed through NPM logics. It also highlights the overlooked role of public institutional intermediaries in shaping SIB development beyond technical and financial coordination.