Rachel TaylorNuttaneeya TorugsaAnthony ArundelUnited Nations University Institute for New Technologies - UNU-INTECHUniversity of TasmaniaMahidol UniversityFederation University Australia2020-03-262020-03-262020-04-01Nonprofit and Voluntary Sector Quarterly. Vol.49, No.2 (2020), 399-423089976402-s2.0-85073835997https://repository.li.mahidol.ac.th/handle/20.500.14594/53915© The Author(s) 2019. This study uses an abduction-based approach to identify the capabilities harnessed by nonprofit organizations (NPOs) as they develop social innovations. The context of this study is the Australian disability sector currently undergoing a once-in-a-generation social policy reform with the implementation of the National Disability Insurance Scheme. Data from extensive field observation and 52 interviews were collected during “researcher-in-residences” at two disability NPOs and analyzed using thematic coding and practice–theory iteration to arrive at a “working” hypothesis. The findings reveal many capabilities used by disability NPOs on the path to social innovation development. The complex interplay of these capabilities forms five pivotal capabilities (i.e., transformational empathy, place-based relationing, diversity learning, paradoxical change making, and complexity leadership) for eliciting nonprofit social innovation (NSI) with community and system-level impacts.Mahidol UniversitySocial SciencesArticleSCOPUS10.1177/0899764019873965