Institutional Capacity Building of Social Organizations: A Framework for Sustainable Governance

Abstract

This research investigates the complex relationship between institutional capacity and social governance innovation within the sustainable development framework, employing a comprehensive panel data analysis of 3,416 organizations from 2015 to 2022. Purpose: To examine how institutional capacity influences social governance innovation and explore the moderating role of sustainable development in this relationship. Methodology: The study utilizes multiple econometric approaches, including panel regression, instrumental variables estimation, and system GMM, to address potential endogeneity concerns. A rigorous heterogeneity analysis explores variation across organizational and contextual dimensions. Findings: The results reveal a non-linear relationship between institutional capacity and social governance innovation, characterized by an inverted U-shaped curve (β = 0.418, p < 0.01; β2 = -0.132, p < 0.01). Sustainable development significantly moderates this relationship (β = 0.174, p < 0.01), with stronger effects observed in organizations with robust sustainable development frameworks. Heterogeneity analysis indicates varying impacts across regional development levels and organizational characteristics. Implications: These findings advance theoretical understanding of institutional capacity deployment while providing practical insights for organizational governance enhancement. The research demonstrates the critical role of sustainable development in maximizing institutional effectiveness and governance innovation outcomes. Originality/Value: This study contributes to institutional theory by establishing the non-linear nature of capacity-innovation relationships and identifying crucial boundary conditions affecting institutional effectiveness.