Annals of Public and Cooperative Economics 00:0 2017 pp.

1–23

RAIFFEISEN AS SOCIAL INNOVATOR

by
Brett FAIRBAIRN∗
University of Saskatchewan, Canada

ABSTRACT: In recent years the term social innovation has become widely used by
policy makers, yet important ambiguities remain. One of these concerns what has been
called the paradox of embedded agency – how social innovators conceive of something
new when working with existing social institutions. So far few writers have considered
whether historical examples can, with benefit of hindsight, shed light on the rela-
tionships between social innovators and social institutions. This paper considers the
example of Friedrich Wilhelm Raiffeisen, creator of rural credit unions and agricul-
tural co-operatives in 19th-century Germany. Raiffeisen was a social conservative who
worked in many ways within existing social institutions. At the same time, his desire to
meet social needs drove him to create new forms of action and organization that resulted
in social innovation. Raiffeisen’s process of invention shows that social innovation, par-
ticularly in transitional eras like his, need not be a matter of using logical-deductive
processes to address a social need, but may depend critically on values, will, a readi-
ness to experiment, and an ability to find allies. These qualities enabled Raiffeisen to
break through existing institutions to do something fundamentally new, and they may
be qualities that provide new focus for social-innovation research and policy.

Keywords: Social innovation, Institutional innovation, Cooperatives, Rural cooperatives, Raiffeisen

F.W.
JEL classification: B31, O35, P13

1 Introduction

Innovation has come to be perceived as a key attribute of contemporary economies. Noth-

ing could be more modern or more future-oriented than innovation, or so it might appear;
and among concepts of innovation the idea of social innovation is one of the newest. But
how new is social innovation? Have there been historical social innovations? What did
these look like, and what lessons do they hold about the social-innovation process? These
questions are particularly interesting if, as will be argued in this paper, social innova-
tion is a context-dependent and institutionally embedded process: not standardized, not
universal. In this case the best way to understand social innovation deeply is to appre-
ciate how it works across diverse contexts such as those offered by other times, other
places, other cultures and mentalities.
∗
E-mail: brett.fairbairn@usask.ca

© 2017 The Authors

Annals of Public and Cooperative Economics © 2017 CIRIEC. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford
OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
2 BRETT FAIRBAIRN

This paper has two main parts. The first part analyzes scholarly literature on
the subject of social innovation. While there are a variety of uses of the term, some
of which are too broad to be useful for social and historical analysis, the goal in this
section will be to derive a meaningful concept of social innovation that is helpful for
interpreting large-scale processes of social change. The second part of the paper be-
gins with methodological reflections about why and how to apply a concept like social
innovation to a historical example, and the remainder of the section develops the ex-
ample of the work of Friedrich Wilhelm Raiffeisen. Raiffeisen, the famous 19th-century
founder of credit and agricultural co-operatives in Germany, does not appear to fit the
modern template of a social innovator. Yet it is difficult to argue that the invention and
spread of Raiffeisen’s co-operatives does not constitute a social innovation. Precisely
because Raiffeisen’s example is unconventional in the context of the literature so far
on social innovation, it provocatively illustrates key dynamics of social innovation that
relate to context-embeddedness. Following these two main sections, the conclusion will
reflect on the lessons to be derived for the concept of social innovation and for further
research.

2 Social innovation theory

In the last 15 years the term social innovation has become widely used by pol-
icy makers, including international organizations such as the UN (Tucker 2014) and
the EU (European Commission 2015). In the context of late-20th-century debates about
the nature and sources of change in modern economies and societies, the phrase social
innovation gained currency as a way to redirect attention away from technical innova-
tions towards additional kinds of progress or improvement. Management writer Peter
Drucker was an early adopter when he wrote in 1987, ‘Are we overemphasizing science
and technology as this century’s change agents? Social innovations . . . may have had
even profounder impacts on society and economy’ (Drucker 1987, p. 29).
The Center for Social Innovation, created in 1999 at the Graduate School of Busi-
ness, Stanford University, offers an influential definition of social innovation as ‘a novel
solution to a social problem that is more effective, efficient, sustainable, or just than
present solutions and for which the value created accrues primarily to society as a
whole rather than private individuals’ (Stanford Graduate School of Business 2015). In
defining social innovation in this way, the Stanford centre follows the thinking around
the more general word innovation, stressing that what is denoted is not simply some-
thing that is novel but rather also something that is beneficial and that proves itself (by
being efficient, sustainable and so on). What makes an innovation a social innovation is
two characteristics, in this definition: first, that it is a solution to a social problem, and
second, that society as a whole is the main beneficiary.
Other writers have gone further in emphasizing that social innovation is not only
about solving a problem but also importantly about the nature of the process. Murray
et al. defined social innovations as ‘new ideas (products, services and models) that
simultaneously meet social needs and create new social relationships or collaborations.
In other words, they are innovations that are both good for society and enhance society’s
capacity to act’ (Murray et al. 2010, p. 3). According to this view, development of capacity
is an essential and co-equal part of social innovation.
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The European Union’s working definition of social innovation follows closely in

this vein. The European Commission states: ‘Social innovations are new ideas that meet
social needs, create social relationships, and form new collaborations. These innovations
can be products, services, or models addressing unmet needs more effectively’ (European
Commission 2015).
Other writers have shifted the focus away from the novel solution, product, or
service and even more towards the collective process. Howaldt and Schwarz argue that
social innovation is ‘a process of collective creation in which the members of a certain
collective unit learn, invent and lay out new rules for the social game of collaboration
and of conflict or, in a word, a new social practice, and in this process they acquire
the necessary cognitive, rational and organizational skills’ (Howaldt and Schwarz 2010,
p. 26).
Scholars have lamented the lack of a single authoritative definition. Some asked
whether social innovation was merely a buzzword (Pol and Ville 2009). Others observed
that:

The idea of social innovation remains to date underdeveloped. Little attention has
been devoted to understanding its emergence and diffusion as an outcome of pur-
poseful and legitimized social actions. Research about social innovation is still
largely based on anecdotal evidence and case studies lacking unifying paradigms.
The literature remains fragmented, disconnected, and scattered among different
fields such as urban and regional development, public policy, management, social
psychology, and social entrepreneurship. (Caijaba-Santana 2013, pp. 42–43)

‘Compounding the lack of clarity,’ Borzaga and Bodini wrote, ‘the term is applied to
an extremely heterogeneous set of initiatives and organisations, which range from the
interventions of the third sector as a whole, to public policy initiatives, to the actions of
for-profit organisations that have even a marginal social impact’ (Borzaga and Bodini
2014, p. 412). Others distinguish five different uses of the term, arguing that social
innovation can mean societal transformation, a model of organizational management,
social entrepreneurship, the development of new products and services, or a model of
governance and empowerment (Haxeltine et al. c. 2013). The editors of a recent book on
social innovation declared ‘there is no clear understanding of what qualifies as innovation
and what does not’ (their italics) and concluded that most definitions are ‘too broad to
be of much help’ (Cnaan and Vinokur-Kaplan 2015, p. 2)
Given the state of the field, it is important for authors to state with as much
precision as possible what they mean by social innovation. This paper will follow main
features of the Stanford, Murray et al., and EU definitions by stressing that social
innovation always involves (1) a novel solution to a social problem as well as (2) new
social relationships and capacity building. To make the concept fuller, more meaningful,
and more useful for analyzing and explaining social change, we need to add to these
elements others that draw attention to the mechanisms by which social innovation
typically occurs.
A good place to begin is with actors: who initiates social innovations? A number
of writers distinguish two broad approaches in existing literature, one that stresses
individual social entrepreneurship and philanthropy, and another that focuses on the
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collective character of social-innovation processes (Bouchard 2013, p. 17). Another ver-

sion identifies two broad families of approaches: one characterized by market logics
(modernization of public policy and social entrepreneurship as conceived in the US and
UK), and the second characterized by economic pluralism and social aspirations (social
enterprise in the continental European sense, and institutionalism); these two broad
families can be subdivided into four to six more particular strains (Besançon et al. 2013,
pp. 11–12; Guyon and Besançon 2013, p. 20 and ff). The implication of these writers’
views is that we can choose to emphasize approaches that are more focused on individ-
ual agents or collective ones, those more focused on market-like logics and those more
focused on social aspirations. To some extent this resembles a choice between more
individualist and micro views, or more systemic and macro views.
The task of the current paper – to interpret large-scale processes of social change,
as in the example of Raiffeisen’s work – is weighted toward the systemic or macro view
of social change. Nevertheless – as will be shown below – an individual actor played a
key role. For present purposes we should be particularly interested in a concept of social
innovation that links individual agency to societal processes.
Hämäläinen and Heiskala (2007) were among the first to argue that social inno-
vations needed to be viewed not only as isolated changes but more broadly as systemic
approaches to global problems (cited in European Union 2010, p. 33). Murray et al.
(2010) stressed that the ultimate purpose of a social innovation is institutionalization
and systemic change. ‘What underlies the path of social innovation is not a social prob-
lem to be solved, but the social change it brings about.’ (Caijaba-Santana 2013, p. 44).
Recently a group of researchers involving several Dutch academics have begun working
on a theory of ‘transformative social innovation’ (Haxeltine et al. c. 2013). In a report
for the European Union, the Bureau of European Policy Advisors (BEPA) observed that
‘the notion has gained ground that social innovation is not only about responding to
pressing social needs and addressing the societal challenges of climate change, ageing
or poverty, but is also a mechanism for achieving systemic change. It is seen as a way
of tackling the underlying causes of social problems rather than just alleviating the
symptoms’ (European Union 2014, p. 1).
Thus various scholars are concluding that the defining feature of social innovation
is not the individual innovations or the agents driving them, but rather the overall
systemic character of the process of innovation and its intended results. Perhaps it is put
best by Caijaba-Santana, who proposes that ‘social innovations are new social practices
created from collective, intentional, and goal-oriented actions aimed at prompting social
change’ (Caijaba-Santana 2014, p. 44). In this view social innovation is intentional and
goal-oriented: an accidental or unconscious change, even if beneficial, would not be a
social innovation. But intention alone does not make social innovation: it is intention
connected with wide impact.
These ideas about intentions of specific actors and system-level impacts offer op-
portunities to connect agent-centred perspectives and structuralist-institutionalist ones.
We can say that a robust concept of social innovation must consider (3) at least one actor
consciously seeking to change society, as well as considering the institutional field within
which that actor works.
By bringing institutions into the picture, alongside actors, we are pinpointing a
key issue in social theory. In recent decades scholarship has emphasized that human
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action and behaviour are guided by social institutions – complexes of norms and rules
that constrain political, economic and social interaction (North 1991, p. 97). Institu-
tions operate without overt intervention by authority or collective action – they are
self-activating social processes sustained by routine reproductive procedures (Jepper-
son 1991). They define roles that individuals may take, sometimes in ways of which
individuals are not consciously aware. ‘One of the core insights of institutional theory’ is
that ‘institutions constitute actors’ (Clemens and Cook 1999, p. 454) – and this includes
social innovators. Like everyone else they have to think and work within the frames pro-
vided by existing institutions. So how do they imagine something new? By what process
can they think outside the box, even create new social institutions? This is the ‘paradox
of embedded agency’ (Battilana and D’Aunno 2009).
Scholars have suggested a few answers to this paradox. One is that space for indi-
vidual agency might open up in cases where there are multiple competing institutions,
and where actors can exploit conflicts or gaps among existing institutions (Clemens
and Cook 1999; Klein and Harrisson 2007). Another part of the answer has to do with
organizations: as the lowest level of the institutional field, organizations are perme-
able to innovations, and provide a smaller-scale setting where innovations can be tried
and incubated. Innovators typically act through organizations to influence or change
institutions (Scott 2001).
A particularly useful synthesis has been developed by the CRISES centre for
research into social innovation at the Université du Québec à Montréal (Centre de
Recherche sur les Innovation Sociales et l’Économie Solidaire). The perspective of the
scholars associated with the ‘Montréal School’ of social economy (Bouchard 2013, p. 254)
combines agent-centric and institutionalist approaches within a framework of social
change. They define social innovation as ‘an intervention initiated by social actors, to
respond to an aspiration, meet a specific need, offer a solution or take advantage of an
opportunity for action in order to modify social relations, transform a framework for
action or propose new cultural orientations’ (Bouchard 2013, p. 18). Building on institu-
tional and organizational theory, CRISES researchers articulate an innovation process
whereby actors, seeking to change social relations, exploit conflicts and gaps among
existing societal institutions in order to create new organizational forms. A particular
period of crisis, hardship, or conflict among institutions may create an opening for so-
cial innovations. The diffusion of new organizational forms and the related innovations
change societal institutions (Klein and Harrisson 2007, esp. introduction). Thus the
focus is on the interplay between actors and institutions, mediated by organizations,
where the conscious goal is to institutionalize a change in social relations.
Following the ideas of the ‘Montréal School’, we observe that social innovations
may often arise where actors who have an aspiration to meet a need and modify social
relations encounter a situation where there are (4) gaps or conflicts among existing
institutions, possibly in a time of pressure or crisis. These conditions create the opening
in which a social innovator can imagine and communicate something new, for example
by working with one norm or institution to create change in another norm or institution
with which the first is in conflict.
Social innovators, particularly in the earliest stages of the process, operate in a
complicated and conflicted situation in which their own thinking and that of others
who react to them is constrained by institutions the innovator is seeking to change.
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Particularly when norms, rules, and conventions are highly institutionalized, they may
be so entrenched in people’s thinking – including in the thinking of the innovators –
that it is difficult to think outside of them. Caijaba-Santana observes that because
social innovations are new practices, they ‘cannot be built up on the basis of established
practices’ and instead constrain agents to work with existing practices ‘while acting
upon those practices’ (Caijaba-Santana 2014, p. 43). Because of the difficulties of the
cognitive processes involved, it may be expected that social innovations will often be
puzzling, confusing, or controversial in their very early stages.
What is required is a nonconformist actor who can think outside the box and put
something into practice so others can see it work. The act of social innovation begins
in ‘deviant actions that bypass institutional rules’ (Harrisson and Klein 2007, p. 6).
As a result social innovations are often carried out by ‘visionary leaders and even by
those who deviate from the rules’ (Bouchard 2013, p. 249). Following this view, we
would say that (5) because of the nature of institutional innovation, the actor may be
perceived as nonconformist, unsettling, or deviant. Possibly the more fundamental the
social innovation, the more this will be the case.
We have already alluded to another important element of a theory or model of
social innovation: (6) use of organizations to prototype and nurture the social innovation
on a small scale. As outlined by Scott (2001), organizations provide an accessible step
between actors and institutions. Harrisson and Klein describe the process as follows:
‘Social institutions are born and tested initially in organizations. At first they constitute
actions limited to a particular problem, deviant actions that bypass institutionalized
rules. From there, when they respond to widespread social needs, they diffuse to other
organizations and from there to the general public’ (Harrisson and Klein 2007, p. 6).
There is some reason to think that (7) creation of new or alternate organizational
forms may often be important for the spread of social innovations. There appear to be
many examples of this in history, from trade unions, co-operatives, and political parties
to new social movement organizations associated with environmentalism and feminism,
to networks and social-media-based organizing. As with institutions, one may ask: how is
it that social innovators can think outside the box of existing organizations to articulate
a new model? Such new forms may arise through hybridization of existing forms or new
arrangements or collaborations among them (Lawrence et al. 2002), or through ‘social
bricolage’ in which different organizational practices are pieced together pragmatically
to form a new construct (Di Domenico et al. 2010).
Once some actor or actors have conceived and launched a social innovation, it
spreads: recall that important definitions of social innovation rest on the innovation
having society-level beneficial impact and becoming institutionalized. The process of
diffusion of social innovations is likely primarily by means of shared cognitive frames,
facilitated by communications and networks: the innovation comes to the attention of
other actors who have developed similar goals, values, and knowledge and who are
thus receptive to it; they then undertake voluntary action of their own to further or
to replicate the social innovation. We say likely because, according to Scott, the other
typical means for the spread of new rules or arrangements are the use of force, or
mimetic processes of unquestioning orthodoxy (Scott 2001, p. 51). The former of these
seems incompatible with most definitions of social innovation we have surveyed, and the
latter is not accessible to an innovation that is seeking to change existing institutions.

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Figure 1 – Logistic curve (black) and normal distribution (grey).

Source: Hanisch and Fairbairn 2016, based on Rogers 1995.

The spread of a social innovation, particularly in early stages, may thus rest on
particular discourse, frames of reference, and allies, which takes the spread of social
innovation into the realm of politics. We can anticipate (8) tactical appeals to other
actors and institutions in order to legitimize the innovation and aid in the spread of the
innovation and the related organizations. This consideration highlights the conflicting
demands on the social innovator: to be nonconformist enough to conceptualize something
truly new, while being able to connect and work with other people to facilitate its spread.
The balance and tension between these two aspects of social-innovation processes would
be particularly interesting to analyze in case studies.
Once a social innovation begins to spread, its development tends to follow a well-
understood pattern. The classic work on diffusion of innovations is Rogers (1995). Rogers
outlines how a population may be seen as subdivided into multiple categories ranging
from early adopters to late adopters, based on their perspective on the innovation in
question and their willingness to adopt it. As new groups buy into an innovation, the
population of individuals who have adopted it grows, displaying a characteristic logistic
growth curve (Figure 1).
Following Rogers, we would expect social innovations, as well, to exhibit (9) dif-
fusion through networks to more and less willing adopters, following a logistic pattern.
Growth in numbers is slow at first (as only early adopters are getting on board), then
mounts rapidly in a take-off phase during which most of those who are going to adopt
the given innovation under the given circumstances do so. A plateau follows as the
innovation gradually reaches the least willing adopters.
The phase of consolidation and institutionalization will also reflect the reactions
of other actors in society to the spread of the innovation. ‘The emergence of an innova-
tion generates a process of negotiation, resistance, or accommodation as groups protect
their interests and advance new ones’ (Klein and Harrisson 2007, p. 10). Organizational
and institutional factors, policy and politics, may condition how far a social innovation
spreads and when the trajectory of adoption levels off. Possibly stabilization and institu-
tionalization could be followed by a new period of transformation or growth, depending
on the efforts of actors and their success within the institutional context.
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To summarize this point briefly: (10) build-up and take-off phases will be followed
by institutionalization of the innovation as it encounters limits due to exhausting the
supply of willing adopters and to the reactions of other actors.
So in summary we characterize social innovation, for our present purposes, as
a complex, interactive, creative process by which actors who are sometimes deviant,
sometimes visionary, sometimes pragmatic try to exploit gaps and hybridize features of
existing organizations and institutions, all with the aspiration to change social relations
and human behaviour. Their success of failure depends not only on their own efforts but
on the institutional environment and the actions and responses of others.
Pulling together the preceding discussion and analysis, a concept of social inno-
vation for the purposes of this paper includes the following 10 points, which will be
referenced below as SI-1 to SI-10:

(1) a novel solution to a social problem

(2) wide social impact, new social relationships, and capacity building
(3) at least one actor consciously seeking to change society
(4) an institutional field within which there are gaps or conflicts, enabling the actor
to work within some institutions to change others; the tensions or contradictions
may be associated with a time of crisis or hardship
(5) because of the nature of institutional innovation, the actor may be perceived as
nonconformist, unsettling, or deviant
(6) use of organizations to prototype and nurture the social innovation on a small
scale
(7) creation of new or alternate organizational forms through bricolage or hybridiza-
tion of existing forms
(8) tactical appeals to other actors and institutions in order to legitimize the innova-
tion
(9) diffusion through networks to more and less willing adopters, following a logistic
pattern
(10) build-up and take-off phases will be followed by institutionalization of the inno-
vation as it saturates populations of willing adopters and it reaches limits to its
impact

The first two points are restatements of influential and significant definitions of social
innovation; the remainder outline conceptually a series of mechanisms, conditions, and
interdependencies that can explain how a particular social innovation emerges and
spreads. Together these points round out a theory or model of social innovation – what
it is, how it occurs, and what we should look for in possible instances of it – sufficient
for the purposes of the present inquiry.

3 Raiffeisen and social innovation history

Given the preceding concepts and theory, why might we be interested in past
examples of social innovation? Would conceptualizing them as social innovation help
us understand better the idea of social innovation? And how would we go about such a
reconceptualization?
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The concept of social innovation, as developed in the first part of this paper, is
about actors working within institutional fields to carry out broad social change. Such
projects are often long-term in nature and highly dependent on the specific institutional
environment and political dynamics. The separation provided by time and space may
help put social innovators’ work in perspective, to assess long-term impacts and out-
comes. Such separation also assists us to see how social innovation unfolds in conditions
quite different from our own present-day ones, enabling us to consider how much of
the process is context dependent, and what forms it may take in environments that are
different from the ones we know. In other words, analysis of a historical case is a way
to compensate for our own ‘embedded agency’. By doing so, we can test theories and
concepts of social innovation to ensure they are as robust as possible – applicable to
diverse circumstances.
For this purpose a historical case study should meet several characteristics. It
should be amply documented by numerous sources so that we can have reasonable
confidence what happened. Second, it should be an example that strongly illustrates
defining features of social innovation such as a novel solution to a social problem and a
wide societal impact. Third, the available information should allow us to inquire deeply
about the mechanisms, conditions, and interdependencies outlined in our model of social
innovation. By doing this we can test whether the features of the model are helpful for
interpreting the historical example. And we can reflect on whether the historical example
causes us to reassess anything about the model.
There is reason to look to the social economy for instances of social innovation.
Just as the social economy is an important contemporary example and vector of social
innovation (Bouchard 2013), so, too, the early history of the social economy should be
illuminating for the history of social innovation. From the late 18th century onward in
Britain, and beginning in the 19th century in many other countries, co-operatives were
the first wave of the social economy: a new organizational model that introduced new
products and services. The individuals who created co-operatives intended to empower
economically or politically marginalized groups, such as workers, farmers, and minority
ethnic populations, and thereby to change social relations for the better. While there are
many examples to consider, this paper focuses on one of them.
As the originator of rural credit unions and agricultural co-operatives, Friedrich
Wilhelm Raiffeisen (1818–88) started worldwide movements that have empowered farm-
ers and rural people. Today he is honoured among other ways by an international or-
ganization bearing his name and with membership from 35 countries (International
Raiffeisen Union 2015). Arguably Raiffeisen may be one of the most widely known
German names in the world, entirely because of his association with a new form of
organization that aimed to help particular social groups that had pressing needs. His
co-operatives were novel, particularly in a rural context, and they appear to have had
wide social impact, as will be discussed below. On the surface his work appears to be
a promising candidate to satisfy key points in a model of social innovation (SI-1 and
SI-2).
There is considerable documentation of Raiffeisen’s life and work. The first three
biographies, published between 1902 and 1928, provided the basic information about
Raiffeisen’s early life, his family and career, and his work on co-operatives, as well
as presenting the broad outlines of interpretations most writers have followed since

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(Faßbender 1902, Krebs 1918, Seelmann-Eggebert 1928). Later studies filled in details
and documentation, and considered Raiffeisen’s significance for later eras (Arnold 1996;
Bauert-Keetman 1970, 1987; Beyer 1987; Braumann 1987; Hüttl 1988; Klein 1997; Koch
1991; Krebs 1955; Maxeiner et al. 1988). Important and useful collections of original
documents, including his letters, make Raiffeisen’s life and work particularly accessible
(Koch, 1988a, 1988b; Werner 1988). Few of these accounts of Raiffeisen’s life have been
written by professional academics or historians, though there have been historical stud-
ies of the development of co-operatives and co-operative banks (Kluge 1991; Guinnane
2001, 2002, 2012; Guinnane et al. 2013) and there is one recent biographical sketch in a
collective volume (Kopsidis 2016).
While little of the relevant material is in English, plenty is known about
Raiffeisen – enough that his story can be re-told analytically with an eye to social
innovation. Thus the two conditions for a historical case seem to be satisfied: social
innovation appears to be present, and there is considerable documentation of the life,
work, and thought of a central actor.

4 Raiffeisen as actor

In a society where status mattered considerably, Raiffeisen came from a modest,

provincial background. He was not aristocratic nor, in the beginning, well-connected. He
was also not wealthy or particularly well-educated. His father, a village mayor in Hamm,
was dismissed in 1819 for stealing poor-relief funds which he took nearly 20 years to
repay; the father was spared criminal prosecution only because he was considered too
infirm either because of a neurological disease or alcoholism (Bauert-Keetman 1987,
p. 16; Klein 1999, p. 10). As a result Raiffeisen’s mother raised her nine children on her
own. Her care for the family (under difficult conditions) and religious devotion seem to
have been important parts of Raiffeisen’s early life.
Raiffeisen’s public contributions took shape in the context of a career that spanned
military service, small-town officialdom, and eventually leadership of co-operative orga-
nizations. Raiffeisen’s ability in mathematics gained him private tutoring and admission
to the Prussian artillery, into which he enrolled at age 17. He was subsequently pen-
sioned out after an eye injury. From military service he went on to serve as a mayor
in a series of small communities in Prussia’s Rhine province. In this role was energetic
in undertaking improvement and public works. First entrusted with the mayoralty of
the small community of Weyerbusch in the poor region of the Westerwald in 1846, he
was moved to the larger role of mayor of Flammersfeld in 1848, and then to Heddesdorf
from 1852 to his retirement for health reasons in 1865. He led these communities in con-
struction of schoolhouses, roads, and public infrastructure and became concerned with
the social and economic plight of villagers and farmers, particularly in the aftermath of
the harsh winter of 1846–47. The revolutionary movements of 1848 further concerned
him, just as they alarmed many of his contemporaries, and seemed to demonstrate the
urgency for social reform.
To help those in distress, Raiffeisen the civic leader looked to the local state, to the
church, and most immediately and particularly to local notables and elites. Philanthropic
associations had existed decades earlier in the region, and Raiffeisen seized on the model
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as a vehicle for poor relief. He sought to mobilize the resources of the well-off in the
community to address social need. With this in mind Raiffeisen proved to be a zealous
founder of organizations, an activity that led to his social innovations as will be described
in the next section.

Analysis

Let us pause in Raiffeisen’s story to take stock of who he was as a social actor. Raif-
feisen was not socially or spatially distant from the poor and needy of rural Germany,
but he also was not himself one of them. He came from a background of village officials,
people with some status and authority; but in his case, with his father’s history, this sta-
tus must have seemed precarious. It is hard not to see a connection between Raiffeisen’s
desire to do good and his father’s failure or weakness (Bauert-Keetman, 1987 referred
to the father as a ‘negative key figure’ in Raiffeisen’s life, p. 14), as well as the positive
example of his mother’s Christian devotion. A modest, strained background helped drive
Raiffeisen to seek to demonstrate responsibility and community service. He had to work
with what he had: his personal qualities and commitment, and his knowledge of the
world of the German village.
Raiffeisen was a public servant in the state of Prussia, a monarchical régime
known for conservatism in many ways, but also for rationalism and for economic liber-
alism. He was not seeking by any means to overthrow this existing order. Peasants had
been legally freed throughout Germany early in the century, and in any case had long
been personally free in western Germany where Raiffeisen lived and worked. The last
vestiges of guilds and many other communal structures had disappeared. The roles of
markets and of trade, meanwhile, had been increasing. Business, including agriculture,
increasingly required new techniques, investment, trade, and credit. Small agricultural
producers needed income, knowledge, and a solution to indebtedness in order to deal with
new crops, rotations, and fertilizers. Raiffeisen did not imagine rolling back the over-
arching economic changes – he was not looking to re-impose social regulation of prices,
incomes, or production, nor was he seeking for the state to enter business and employ
the poor (as advocated by his contemporary Ferdinand Lassalle, and implemented by
Louis Blanc in Paris).
What Raiffeisen wanted to do, as he described later in his book (Raiffeisen 1866)
and other writings, was to address critical economic impacts and their social conse-
quences, namely the poverty, distress, and indebtedness of small farmers. To accom-
plish this he wanted to strengthen and reinvigorate the village community – not only
to make individual farmers more successful, but to do so by cultivating solidarity (what
one of his defenders called collective thinking or Gemeinsinn, Brandt 1896, p. 15) and
Christian ideals. He was looking to achieve economic benefits for a marginalized group,
while also increasing their collective capacity and sustaining a particular kind of rural
social order. Raiffeisen was an actor consciously seeking to change society (SI-3). He
was working in a tense institutional field at a time of social crisis, when some institu-
tions (notably economic policy and German village life) were weakened and in conflict
with each other (SI-4). And Raiffeisen’s impulse was to work with some institutions to
address the impact of others, experimenting with new organizations as prototypes to
nurture new social relations.
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5 Raiffeisen’s process of invention

As one of his early biographers commented, Raiffeisen was an ‘organizer – the

term could have been made for him’ (Krebs 1918, p. 114). But while Raiffeisen may
have been an organizer, he had to find a method of organizing that would work, and for
Raiffeisen this was less a deductive process than a pragmatic and experimental one.
First among Raiffeisen’s creations, in the hunger winter of 1846–47, was the As-
sociation for Supply of Bread (Verein für Selbstbeschaffung von Brod und Früchten) to
provide the poor in the village of Weyerbusch with bread from a communally operated
bakery. It was followed in 1849 by an aid society in Flammersfeld, and in 1854 by a
benevolent society in Heddesdorf. These efforts were driven by his Christian idealism,
his sense of responsibility as a local official, and his concern for the poor. But philan-
thropy was more than a means to an end: to Raiffeisen aid from the well-off to the
poor in times of need epitomized the solidarity and social cohesion of village society.
Raiffeisen’s ideal world was one in which all citizens would be responsible and support
themselves and each other. But the results did not match his hopes. Societies that he
founded faltered when his attention moved elsewhere; he was especially disappointed by
the collapse of the Flammersfeld association after he moved to Heddesdorf (Seelmann-
Eggebert 1927, p. 58). Philanthropy was not self-sustaining and appeared to require
constant injections of Raiffeisen’s energy and drive.
With evident reluctance, and under the influence of his contemporary Hermann
Schulze-Delitzsch, Raiffeisen began to harness his ideas to the impulse of self-help.
The poor were now to be members of the organization that was helping them, and
would share in ownership and control. Also, out of many aspects of economic distress,
Raiffeisen was increasingly narrowing in on one: debt. As Raiffeisen described in his
book (Raiffeisen 1866), he had come to identify debt as a key problem for small farmers,
and co-operative credit as the solution. Unscrupulous usurers were, in Raiffeisen’s view,
exploiting producers and taking advantage of times of distress to burden them with
ruinous debt. A savings-and-loan co-operative enabled those with money to provide
the capital to those who needed it within the same community. Funds would circulate
locally; residents would help each other with no profit taken; they would use these funds
to improve their farming and their family well-being.
The addition of self-help to his earlier projects, and the focus on credit as a mech-
anism for capacity-building and development, resulted in the creation of Raiffeisen’s
first co-operative, the Heddesdorf Savings and Loan Banking Association (Heddesdor-
fer Spar- und Darlehnskassenverein) in 1864. Raiffeisen then published his book, Loan
Banking Associations, outlining his ideas and his successful experience with the Hed-
desdorf co-operative (Raiffeisen 1866). With the one highly successful co-operative and
the book to publicize it, Raiffeisen’s idea began to spread and be imitated. This was the
moment of Raiffeisen’s social innovation.

Analysis

Raiffeisen’s invention was a new kind of organization, one that would institute on
a small scale the behaviours and relationships he soon looked to publicize and spread
(SI-6). It took him nearly 20 years of experimentation, adaptation, and combination
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RAIFFEISEN AS SOCIAL INNOVATOR 13

of existing forms before he came up with an organization that was fully successful.
While the new banks were co-operatives – depositors and borrowers would be mem-
bers and owners with one vote apiece – they retained several features of Raiffeisen’s
philanthropic projects. Raiffeisen’s banks were amalgams of idealistic philanthropy and
pragmatic self-help. As he refined his model, he insisted that each co-operative was
to be highly localized, preferably a single parish, so that the co-operative would corre-
spond to a single, integral community. Raiffeisen wanted all the notable and trust-
worthy people in the community to band together, not only those who needed the
help of the co-operative. He wanted the administrators and functionaries to be un-
paid, doing work for the co-operative in their roles as community leaders. Similarly
he wanted depositors to receive no interest on deposits. He would have preferred that
members not subscribe shares: ideally the co-operatives would raise capital by com-
bining the creditworthiness of the members, who together would pledge with unlim-
ited personal liability for the co-op. All of these features reflected a philosophy that
resisted individual pay or property to emphasize the collective good, ‘one for all and
all for each’ as the slogan went. For legal, economic, and technical reasons Raiffeisen
had to compromise on various of these principles, but he stuck to them as best he
could.
Seeing Raiffeisen’s work as social innovation makes it clear that his invention
process was one of hybridization of existing forms, of social bricolage to assemble pieces
of existing models into a new amalgam (SI-7). The new creation embodied some tensions
and contradictions (such as those between its market- and contract-based aspects, and
its solidarity-based aspects), but what gave it coherence was that it fit the norms and
values associated with rural communities. Raiffeisen’s credit co-operatives functioned
effectively under the conditions of village society, and as they succeeded they also began
to branch out to become multifaceted village co-operatives. In addition to offering long-
term credit, and they traded in agricultural supplies and products. Raiffeisen’s cobbled-
together invention fit and served important functions in its milieu.
Raiffeisen’s credit co-operatives had to be different from what existed in order
to meet needs and have an impact; they had to be different even from his own initial
conceptions. The same differences that made his banks unique and suited to rural needs
also made them strange and unfamiliar to contemporaries, many of whom viewed them
with scepticism and suspicion. Some doubted Raiffeisen’s motives, others the soundness
of his banks; and any small-scale associations ran the risk of appearing subversive in the
context of 19th-century Prussia. If hybridization and bricolage were key to Raiffeisen’s
invention, finding allies was key to spreading it.

6 Raiffeisen’s alliances and tactics

Raiffeisen found allies, scattered at first, in state, church, and academia (Faust
1977, pp. 381ff). One of the most important of these was Dr Hugo Thiel, a senior offi-
cial in the Prussian Ministry of Agriculture. Thiel ‘constituted for Raiffeisen the con-
nection to decision-makers in the highest Reich and state agencies and to the parlia-
ments’ (Krebs 1918, p. 131). Raiffeisen’s patron among noble and aristocratic circles was
Wilhelm Prince zu Wied, the local prince in Neuwied near where Raiffeisen served as
mayor in Heddesdorf. Wied became an ally and eventually nominated Raiffeisen for
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recognition by the Kaiser in 1882 (Krebs 1918, p. 131). Two professors at the University
of Bonn, Adolf Held and Erwin Nasse, provided academic backing and respectability.
Notably, Raiffeisen’s ideas found support and promotion from the clergy. Initially, the
Catholic clergy, influenced by emerging doctrines of social Catholicism, were particu-
larly supportive (Faßbender 1902, p. 43). But as the Lutheran church became influenced
by the ideas of the ‘innere Mission’, especially from the 1880s, Protestant clergy increas-
ingly became allies in Raiffeisen’s cause (Klein 1997).
Raiffeisen’s credit co-operatives needed these kinds of allies for a variety of rea-
sons. The conservative Prussian state was suspicious of associations as possible centres
of anti-state thinking; it did not help that, among other co-operative founders, Schulze-
Delitzsch was a left-liberal and Lassalle was a Social Democrat. To spread his ideas in
rural Germany, Raiffeisen had to demonstrate patriotism, monarchical loyalty (in the
numerous separate German states), and the non-revolutionary character of his move-
ment. Raiffeisen and his co-operative creations also came under vigorous attack in the
1870s from Schulze-Delitzsch and his followers in what became known as the system
conflict or Systemstreit (Schmid 1888). Ultimately Raiffeisen had to further adapt his
model to satisfy the legal, financial, and technical criticisms from the Schulze-Delitzsch
camp.
As they spread, Raiffeisen’s co-operatives gained social-political legitimation not
only from above but also locally. At the village level, Raiffeisen appealed directly to
local elites – in conformity with his original ideas of social solidarity – to support co-
operatives. A speech he distributed in 1887 summed up his lifetime belief that not only
the needy but also ‘the better-off and even the best-off’ in every community should join
the Raiffeisen cause (Raiffeisen 1887). The well-off would benefit from the reduction
in the number of poor and in the costs of poor relief, the creation of ‘an energetic middle
class [Mittelstand]’ that would work for community improvement, and from greater
volumes of business and rising land values. They would set an example by putting their
own money into the co-ops, and reduce any sense of shame associated with farmers
going to the co-op for help. In the leaflet Raiffeisen especially thanked and welcomed
members of the clergy, stressing to them that “material help is at the same time the key
to the doors of the heart” and would assist them in their pastoral work. In fact members
of the clergy and local government officials played early leadership or support roles in
numerous co-operatives and in regional federations of co-operatives.
After Raiffeisen’s death, key institutions came even more strongly onside with
agricultural co-operatives. In 1892 the Prussian ministers of the interior and of agri-
culture instructed officials throughout rural areas to support agricultural co-operatives
(Ministry of Agriculture 1892). Other German states followed suit in various ways;
both Bavaria and the Grand Duchy of Hessen took great interest in agricultural co-
operatives. By this point much had changed in the German co-operative movement, as
will be discussed below – co-operatives had spread and diversified beyond their creator’s
ideas.

Analysis

It had taken Raiffeisen almost 20 years, from 1846 to 1864, to develop and refine
his innovation; and it took a similar length of time after that for rural co-operatives
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RAIFFEISEN AS SOCIAL INNOVATOR 15

to be systematically accepted as legitimate. This recognition was the result of a long

campaign on the part of Raiffeisen and allies and supporters he gained. His strategy in-
volved tireless publicity combined with cultivation of contacts in government, the clergy,
and academia. At the same time, his creations spread at the local level by appealing to
and working with local élites as much as possible while organizing farmers. Raiffeisen’s
creations intentionally embodied his social vision of harmony, solidarity, and local au-
tonomy supported by the state. Raiffeisen built a network of well-placed supporters
as well as thousands of co-operatives; by the time of his death these could scarcely be
ignored by governments.
Seen as an example of social innovation, Raiffeisen’s story forcefully highlights
the strategy and tactics of gaining allies at many levels and in different existing insti-
tutions (SI-8). Also highly political was Raiffeisen’s task of spreading and legitimizing
his own ideas, distinguishing them from others and maintaining their uniqueness while
also finding ways to make them acceptable. The Systemstreit illustrates the tensions
involved in remaining distinct and at the same time adapting as needed to other in-
terests and ideas, to circumstances beyond one’s own control. These interactions were
strategic because Raiffeisen’s moves depended on the moves and contributions of others;
they were tactical because they depended on taking advantage of openings and oppor-
tunities. The process of diffusion discussed in the next section was not automatic or me-
chanical, but rather depended fundamentally on ideas, politics, strategies, tactics, and
discourse.
The institutionalization of co-operatives was full of ambiguities for Raiffeisen. As
he intended, the banks reproduced and reinscribed the rural community in economic
relations, including providing leadership roles for rural notables. This was both pater-
nalistic and patriarchal. In the long term it also was not without a certain democratizing
potential, for a noble landowner, a peasant, and a government official sitting at the board
table each had the same one vote. Also as Raiffeisen intended, the co-operatives multi-
plied and spread, but in so doing they also spread beyond his own control. By the 1880s
Raiffeisen’s co-operatives were supplemented by others that acknowledged his influence
but followed different rules and principles. And when the state recognized his accom-
plishments, the consequences were not entirely welcome. Raiffeisen had set out to build
a movement for village autonomy and solidarity, and his successors ultimately found
themselves fighting against excessive central state control.

7 Raiffeisen – diffusion and institutionalization

The preceding section considered the institutional field and political alliances
within which Raiffeisen’s inventions established themselves and spread. Let us turn,
finally, to the internal organization and leadership of his movement as it grew and
encountered its limits.
With the spread of the co-operatives from the 1860s onward, Raiffeisen had to
consider how they could support each other and be tied together in a movement. Each
individual credit co-operative was modest in its financial resources and expertise. They
needed central financial services – a place to put excess funds on deposit, or to receive
loans when needed – and they needed information, training, and capacity-building. The
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technical difficulties stretched Raiffeisen’s ingenuity to its limits and created lasting
strains.
In the early 1870s Raiffeisen began developing central banks, companies, and
federations to support his co-operatives. These creations tended, like his first associa-
tions, to be experimental, as he cast about for pragmatic solutions to organizational and
technical problems. Unlike with his village co-operatives, Raiffeisen never did find vi-
able organizational solutions at the movement level. His central organizations tended to
be idiosyncratic and jury-rigged in design, with a tendency toward centralization at the
national level rather than tiers of organization. For example, a private firm he founded
and owned, which traded in commodities unrelated to the co-operatives, was to provide
salaries for people who would work for the co-operative cause. Raiffeisen’s first attempt
to found a central bank doubled up on the unlimited liability of local co-op members
and contravened the German co-operative law (Kopsidis 2016). Raiffeisen also sought to
found an insurance company so he could use its capital to finance his co-operatives, but
Schulze-Delitzsch and his followers condemned this as a bad practice. Nontransparent
and centralized business arrangements occasioned attacks from enemies and mistrust
from supporters (Krebs 1918, p. 120).
While Raiffeisen’s national-level organizations were complicated and suspect to
some, there was no doubting the ideological solidity of his movement. His organization
became known for the rigidity and zeal with which it stuck to his doctrines. Raiffeisen
himself grew if anything more religious, more idealistic, more stubborn, and more de-
manding of those around him as he aged. Delegates at Raiffeisen meetings were sub-
jected to lengthy religious speeches from their leader, exhorting them to live by Christian
virtues. With his eyesight failing – he was eventually blind – Raiffeisen was supported
and cared for by his adult daughter Amalie. She read correspondence aloud to him, took
dictation for his letters, and essentially devoted her life to being his personal secretary
and assistant. Raiffeisen all but forbade her to marry. Raiffeisen’s son, on the other
hand, found no place in Raiffeisen’s plans or organizations. Instead Rudolf Raiffeisen
lived in a kind of exile, returning briefly and unsuccessfully to try to take over his father’s
organization when the elder Raiffeisen died (Schneider 1988). For a time, co-operative
organizer Martin Faßbender appeared to be Raiffeisen’s chosen successor until the two
had a partial falling-out. Raiffeisen’s enormous expectations of his family and support-
ers illustrate the tenacity of his commitment to his cause as well as the difficult nature
of his personality.
As Prinz has noted, Raiffeisen was strict, stubborn, unyielding in his dedication
to his ideas, with a personal manner that might today be considered authoritarian
(Prinz 2002). Another writer concluded, ‘Raiffeisen was . . . from today’s perspective,
sometimes un-Christian in his hardness towards both his employees and his children’
(Schneider 1988, p. 21). The standard history of the German co-operative movement
simply notes that, despite all uncertainties and polarized views of Raiffeisen, ‘it counts
as certain that he was a harsh and also a stubborn person’ (Faust 1977, p. 365).
Such characteristics helped impose limits on Raiffeisen’s influence. While Raif-
feisen inspired the creation of tens of thousands of rural credit and agricultural co-
operatives in Germany, the majority of these – though honouring his name and contri-
bution – chose to form separate federations and not be formal members of Raiffeisen’s
organization. The biggest of these, the Imperial Federation of German Agricultural

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RAIFFEISEN AS SOCIAL INNOVATOR 17

Figure 2 – Credit co-operatives in Raiffeisen Federation, 1865–1913.

Source: Fünfzig Jahre Raiffeisen.

Co-operatives (Reichsverband deutscher landwirtschaftlicher Genossenschaften), dif-

fered from Raiffeisen’s in being more secular and more open to regional and state
sub-federations that, in turn, expressed regional identities and regional state patrio-
tism. In this way rural leaders who did not strictly follow Raiffeisen participated in
spreading versions of his ideas in a kind of co-creation of innovation.
Most co-operative and agricultural leaders praised Raiffeisen as the originator,
even as they took his ideas in directions somewhat different than he had advocated in
his lifetime. Perhaps ironically, the greatest expansion came after his death, precisely in
the 1890s and early 1900s when governments and farm organizations across Germany
were discovering and systematically promoting the co-operative cause. Raiffeisen’s own
federation shared in this general expansion. The spectacular growth in the number of
credit co-operatives in Raiffeisen’s federation (the Generalverband or General Federa-
tion of rural co-operatives) is thus both a sign of Raiffeisen’s success and of compromises
as his ideas permeated German rural society and became strongly institutionalized
(Figure 2).
Raiffeisen had worked to develop his model and to legitimize it, but he did not
live to see the era of its most rapid expansion. The long, slow build-up led to a take-
off just before the turn of the century, followed by gradual levelling off in a classic
logistic shape (SI-9). By the early 20th century, rural Germany was effectively perme-
ated by village-level co-operatives, and correspondingly there were many claimants to
Raiffeisen’s heritage.
When in 1902 a memorial was dedicated to Raiffeisen in Heddesdorf, the crowd
included princes and politicians, professors and priests (Festbericht 1902). Raiffeisen
was honoured for his work in furthering the social vision of Kaiser Wilhelm II,
whose government introduced landmark social reforms. Raiffeisen was praised for his
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18 BRETT FAIRBAIRN

patriotism, as evidenced by his military service. A priest spoke about the moral impor-
tance of Raiffeisen’s work. Extreme nationalist Alfred Hugenberg praised Raiffeisen as
a defender of the German Mittelstand (in 19th-century context, the lower-middle class).
He was honoured by patriotic and religious institutions of his age.
His followers, deep into the 20th century, remembered Raiffeisen for his dedica-
tion to social needs and his impact on rural life. Raiffeisen co-ops were identified with
idealism, solidarity, and commitment. To be a “Raiffeisen man” meant having devoted
one’s life to a cause, and that cause was rural people. One of Raiffeisen’s most prolific
and loyal publicists, pastor Adam Meyenschein, captured the essence of the Raiffeisen
legacy when he chose as his theme ‘Raiffeisen and the German Village’. Meyenschein
wrote, ‘the future of the German village community rests from a social perspective on
the life work of Friedrich Wilhelm Raiffeisen’ and the ‘ethical-religious deepening’ he
caused. Raiffeisen co-operatives made farmers into citizens: ‘they educated the rural pop-
ulation for the state’, teaching them how to participate in economics, administration,
and law (Meyenschein 1917, pp. vii, xi, and 52 respectively). Rural people were con-
structed through Raiffeisen-inspired co-operatives as autonomous actors and agents.
Viewed against the starting point of 1846–48, this was a significant social change.

Analysis

Raiffeisen may appear today as an ‘ascetic, Christian-motivated, stubborn, some-

what odd figure’ (Prinz 2002). Even in his own time, many found him intense and
offputting. Perhaps here, indeed, is a version of the difficult, unconventional, ‘deviant’
personality theorized to be at the heart of social innovation (SI-5). To be effective Raif-
feisen had to have unusual traits that allowed him to work partly outside of existing
ways of doing things to drive forward a project that no one else, at first, could see or
understand.
What set Raiffeisen apart was his stubborn commitment to a distinct set of values.
For him his social practice was about Christian care and responsibility of people for one
another; these were ethical teachings he transferred and translated into the sphere of
economic relations and poverty relief. His values motivated him, almost obsessively,
to try to do something about pressing social needs. He did not care deeply for ideas of
democracy or self-help, but he was driven by a respect for the dignity of people and a
desire to see them enter voluntarily into relations with each other that would be good
for the community and ultimately for themselves. Importantly, Raiffeisen’s world view
did not include any precise blueprint for how to put his values into practice. Rather,
Raiffeisen learned by trial and error. Thus it was his will (in the face of perceived needs,
in the context of communitarian values) that made him an innovator, not a blueprint
and not any logical-deductive reasoning.
As we have seen, Raiffeisen’s process for developing his life’s work was pragmatic
and inductive: he was willing to be guided by what worked, socially and economically.
He tried various things and reluctantly gave up on those that did not prove them-
selves; he made compromises and adopted features (like self-help and share capital)
that he initially thought less well-suited to his values. This willingness to take on board
lessons from hard experience, even from rivals like Schulze-Delitzsch, was an essential
counterpoint to his stubbornness. Raiffeisen was similarly pragmatic in his search for
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allies: from local notables and philanthropists, to religion and its social teachings, to
the Prussian state and other states. Raiffeisen worked hard to make his co-operatives
connect with the sources of support and legitimacy in his society. As his innovation
spread, it also adapted to the institutions around it: his co-operatives were agents of
change, and also changed in their substance and meaning to fit society as they became
institutionalized (SI-10).
Raiffeisen succeeded because he identified and focused on a social need; confronted
it with a strong sense of personal values; drove his projects forward with stubborn will;
complemented his ideals with a canny pragmatism and willingness to experiment; and
made the strategic and tactical alliances that ultimately won his ideas widespread
support. Need, values, will, experimentation, tactics, and alliances: Raiffeisen’s success
as a social innovator depended on every one of these qualities.
Inspired by a preindustrial image of village solidarity, Raiffeisen instigated a pro-
cess of voluntary self-mobilization that had dramatic and far-reaching effects. Secular
movements and state agencies took over his ideas more than he would have liked. His
co-operatives helped provide a basis for democratic local leadership. A dispersed network
of community-owned co-operative banks helped foster and support Germany’s network
of Mittelstand or small–medium enterprises, which Germans came to see in the 20th
century see as the backbone of their social market economy. ‘For his whole life he had
vehemently rejected modernity, and yet he was a great modernizer’ (Kopsidis 2016).
So here is Raiffeisen’s example of embedded agency: working within and with
existing institutions but also somewhat apart from them, he created something new
that developed, in interaction with society, beyond his own ability to imagine. It was
not classic intellectual qualities like intelligence, imagination, or vision that enabled
him to break out of existing patterns of thought – likely Schulze-Delitzsch exceeded him
in those regards – but rather will, zeal, action, a readiness to learn, and allies. Of the
two men Schulze-Delitzsch was the brilliant legal intellect for the early co-operative
movement. Raiffeisen was its heart.

8 Conclusion: Raiffeisen as social innovator

Although his work fits all 10 of the features of social innovation identified in this
paper, Raiffeisen does not fit the early-21st-century template of a social innovator. He
was conservative, religious, and became connected in traditional circles such as clergy,
aristocracy, and officialdom. Precisely for this reason, his life and work offer important
insights into the nature of social innovation. Social, political, and chronological distance
help make clearer how social innovators negotiate the dilemmas of embedded agency.
From Raiffeisen’s example, researchers and policy makers might take note that
social innovation is not necessarily a visionary, linear, or deductive process, but may
in significant cases be attributable to stubbornness and zealous experimentation on
the part of a difficult and driven actor. Innovators will have to have one foot within
existing institutions, as Raiffeisen did with clergy and state, while having the other
foot outside where they experiment with things that may at first appear strange and
new. Innovators may drive for change, based on their values and a determination to
address a social need, without having a blueprint for where their movements will end
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20 BRETT FAIRBAIRN

up. Social innovation can be a messy, iterative, emergent process wherein the precise
outcome is not imaginable to the actors who initiate it. Ideas will change as they become
institutionalized, as Raiffeisen’s did, taking on new forms or new nuances as a growing
movement makes compromises and accommodations with other social impulses.
It is interesting to speculate what Raiffeisens may be out there today, how they
would appear to us, and whether policies or programmes to support social innovation
would accommodate them. It is unlikely that social innovators today will be monarchi-
cal Christian conservative men: more than ever, we should likely look to women, non-
Europeans, and members of different or minority cultures. But like Raiffeisen, they may
provide uncomfortable and ambiguous examples, partly within and partly outside of fa-
miliar institutions, each one stretching our concept of social innovation in a unique way.

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Annals of Public and Cooperative Economics © 2017 CIRIEC