Social innovations are new social practices that aim to meet social needs in a better way than the existing solutions, resulting from - for example - working conditions, education, community development or health. These ideas are created with the goal of extending and strengthening civil society. Social innovation includes the social processes of innovation, such as open source methods and techniques and also the innovations which have a social purpose—like activism, crowdfunding, time-based currency, telehealth, cohousing, coworking, universal basic income, collaborative consumption, social enterprise, participatory budgeting, repair Café, virtual volunteering, microcredit, or distance learning. There are many definitions of social innovation, however, they usually include the broad criteria about social objectives, social interaction between actors or actor diversity, social outputs, and innovativeness (The innovation should be at least "new" to the beneficiaries it targets, but it does not have to be new to the world). Different definitions include different combinations and different number of these criteria (e.g. EU is using definition, stressing out social objectives and actors interaction). Transformative social innovation not only introduces new approaches to seemingly intractable problems, but is successful in changing the social institutions that created the problem in the first place.

According to Herrero de Egaña B., social innovation is defined as "new or novel ways that society has to deal with Relevant Social Challenges (RSCh), that are more effective, efficient and sustainable or that generate greater impact than the previous ones and that contribute to making it stronger and more articulated".

Prominent innovators associated with the term include Pakistani Akhter Hameed Khan, Bangladeshi Muhammad Yunus, the founder of Grameen Bank which pioneered the concept of microcredit for supporting innovations in many developing countries such as Asia, Africa and Latin America, and inspired programs like the Jindal Centre for Social Innovation & Entrepreneurship and Infolady Social Entrepreneurship Programme of Dnet (A Social Enterprise).

Geoff Mulgan defines social innovation as consisting of "activities and services that are motivated by the goal of meeting a social need and that are predominantly developed and diffused through organisations whose primary purposes are social." Social innovation is understood in contrast to business innovation, which is aimed at profit maximization. The European Commission cites it as "another way to produce value, with less focus on financial profit and more on real demands or needs." More specifically, it defines social innovation as comprising "innovations that are social in both their ends and their means. They are innovations that are not only good for society but also enhance individuals' capacity to act."

Social Innovation has an inter-sectoral approach and is universally applicable. Social Innovations are launched by a variety of actors, including research institutions, companies and independent organizations, which tend to use their respective definitions of Social Innovation. Therefore, it is worth discussing what distinguishes it from other forms of social work or innovation.

Social Innovation focuses on the process of innovation, how innovation and change take shape (as opposed to the more traditional definition of innovation, giving priority to the internal organization of firms and their productivity). It likewise centers on new work and new forms of cooperation (business models), especially on those that work towards the attainment of a sustainable society.

Social innovation can take place within government; the for-profit sector, the nonprofit sector (also known as the third sector), or in the spaces between them. Higher education institutions, such as the Cambridge Centre for Social Innovation, Cambridge Judge Business School, University of Cambridge, leverage the power of research to support this aim. Research has focused on the types of platforms needed to facilitate such cross-sector collaborative social innovation. Historical studies suggest that transforming any system may take many years, and requires not only the capacity for multiple partnerships, but also for engaging policy, legal and economic institutions.

Social entrepreneurship, like social enterprise, is typically in the nonprofit sector excluding both for-profit and public organizations. Both social entrepreneurship and social enterprise are important contributions to social innovation by creating social value and introducing new ways of achieving goals. Social entrepreneurship brings "new patterns and possibilities for innovation" and are willing to do things that existing organizations are not willing to do.