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The German welfare state is predominantly built on social insurance systems. Broadly, Germans see their economy as a social market economy—that is, one that combines a capitalist mode of production with the belief that society should protect all of its members from economic and social need. This has a strong influence on the environment for social innovation throughout the country.

The definition of social innovation continues to evolve in Germany. Norbert Kunz, a German social entrepreneur, defined a social innovation as a systematic solution to a social problem wherein the success factor is the social change—financial sustainability is desired, profit however is not the main aim. Howaldt and Schwarz (2010) take a less integrated view, instead contrasting social innovations to technical innovations. Social innovations, they state, ‘can be not only be analyzed, but also engendered and (co-)shaped; they are oriented toward social practice and require reflection on the social relationship structure’.

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