Examination of the Theory of Change Framework in Strategy, Policy, and Social Innovation

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Organizations operating in complex social, economic, and policy environments face a fundamental challenge: demonstrating how their actions lead to meaningful and lasting change. Traditional planning and evaluation tools often focus on activities and outputs while leaving underlying assumptions implicit. The Theory of Change framework emerged as a response to this limitation by offering a structured way to articulate causal pathways between interventions and desired outcomes. At a doctoral level of analysis, Theory of Change should be understood not merely as a planning tool but as a methodological approach to sense-making, learning, and accountability in complex systems.

Williams and Hummelbrunner describe a Theory of Change as a detailed articulation and visual mapping of the processes through which and the reasons why intended outcomes are anticipated to occur within a specific setting. Applied to smart city initiatives, a Theory of Change supports the clarification of targeted outcomes, including enhanced operational efficiency, environmental sustainability, and increased citizen participation (Shin, et al., 2025). Furthermore, it facilitates the identification of the critical inputs and activities required to realize these outcomes, such as implementing digital technologies and establishing strategic partnerships and collaborative arrangements.

Adopting a realist evaluation perspective in combination with a Theory of Change framework enables evaluators to more rigorously assess public sector innovation and the effectiveness of smart city programs (Shin, et al., 2025). Although a Theory of Change offers a structural framework for linking inputs to outcomes and impacts, a deeper understanding of how value is generated and transmitted across multiple pathways calls for a service-oriented perspective. Service-Dominant Logic, a well-established approach in the services marketing literature, provides a useful lens for examining how diverse health care stakeholders from policymakers participate in value co-creation across different levels of the system (Miyazaki, et al., 2025). Rather than treating value as something inherently contained within a product or service, this perspective conceptualizes value as arising through interactions among actors who combine their resources, competencies, and institutional roles. Applied to Emotional Artificial Intelligence, this viewpoint underscores that such technologies do not create value independently; instead, they function as enablers of interactive and collaborative service processes through which value is collectively realized (Miyazaki, et al., 2025).

Intellectual Origins and Theoretical Foundations

The Theory of Change emerged during the late 1980s and early 1990s alongside developments in evaluation theory and practice, particularly within community-based action and development work. It functions as a strategic framework that offers a detailed explanation and visual representation of the mechanisms through which and the reasons why intended outcomes are expected to occur within a given context (Kayikci, et al., 2024). The approach emphasizes systematic mapping and reflective learning about what a program or intervention does and how its activities contribute to achieving intended objectives. This process begins with the articulation of long-term outcomes and then works backward to identify the necessary preconditions, as well as the causal relationships among them, that must be established for those outcomes to be realized (Kayikci, et al., 2024).

The Theory of Change framework draws from multiple intellectual traditions, including program theory, systems thinking, and evaluation science. Its development was influenced by critiques of linear logic models that failed to capture the dynamic and context-dependent nature of social change. Early contributors in the fields of philanthropy and development evaluation argued that effective interventions require explicit articulation of assumptions about how and why change occurs. From a PhD-level perspective, Theory of Change reflects a constructivist epistemology in which knowledge about causality is provisional, context-bound, and subject to ongoing refinement.

Causal Pathways and the Logic of Change

Social innovation can be understood as an instrument for advancing social transformation, closely connected to the ways in which utopian thinking can be incorporated into a broader social theory of change. This perspective involves examining the aspirations, visions, and imaginative goals of social innovators, as well as recognizing how these ambitions shape efforts to address societal challenges and generate meaningful change (Langergaard, et al., 2024). Viewing social innovation through this lens requires acknowledging it as a catalyst for social change and critically exploring how utopian ideas inform theories of transformation. Human motivation and the capacity to envision alternative futures play a central role in driving action, yet these factors are often undervalued in social innovation research that seeks transformational outcomes. Every transformative process has an origin point, and utopian thinking represents an initial impulse toward futures that have not yet been realized (Langergaard, et al., 2024).

At the core of the Theory of Change framework is the articulation of causal pathways linking actions to outcomes and long-term impact. These pathways describe sequences of change that are expected to unfold over time, often involving multiple actors and feedback loops. Unlike purely predictive models, Theory of Change emphasizes plausibility rather than certainty. At an advanced analytical level, causal pathways function as hypotheses about change processes that can be tested, revised, and contested. This positions the framework as both a planning instrument and a theory-building device.

Assumptions, Context, and Boundary Conditions

A distinguishing feature of Theory of Change is its emphasis on making assumptions explicit. These assumptions concern contextual conditions, stakeholder behavior, institutional dynamics, and external influences that shape whether and how change occurs. From a doctoral standpoint, this focus aligns Theory of Change with critical realism, which recognizes that outcomes result from interactions between mechanisms and context. By surfacing assumptions, the framework invites scrutiny and dialogue, reducing the risk of naïve or overly deterministic planning.

Outcomes, Impact, and Temporal Sequencing

Theory of Change differentiates between short-term outcomes, intermediate changes, and long-term impact. This temporal sequencing acknowledges that meaningful change often unfolds gradually and non-linearly. At an advanced level, this aspect of the framework resonates with developmental evaluation and complexity theory, which emphasize emergence and adaptation over time. Rather than treating impact as a distant and abstract endpoint, Theory of Change situates it within a continuum of observable and meaningful change processes.

Theory of Change as a Strategic Planning Tool

Beyond evaluation, Theory of Change plays a critical role in strategic planning. By clarifying desired outcomes and the pathways to achieve them, organizations can better align resources, activities, and partnerships. At a PhD-level interpretation, Theory of Change serves as a strategic narrative that integrates vision, action, and learning. It enables organizations to move beyond compliance-driven planning toward more reflective and intentional strategy formulation, particularly in mission-driven and hybrid organizations.

Learning, Adaptation, and Organizational Sense-Making

Compensatory social enterprise represents the most widely adopted Theory of Change among social ventures and is oriented toward mitigating the shortcomings of the neoliberal market framework. In contrast, transformative social enterprise aims to confront and reform underlying societal structures, seeking to empower and liberate populations affected by systemic inequality through a combination of commercial activity and activist strategies (Oloke, et al., 2024). Characteristics of both compensatory and transformative models are reflected across established typologies of social entrepreneurship. In particular, the package dissemination and self-help approaches—commonly associated with social bricoleurs and constructionist entrepreneurs—can be situated within the compensatory category, as they pursue social impact and change while operating within the prevailing neoliberal economic system (Oloke, et al., 2024).

One of the most significant contributions of the Theory of Change framework is its capacity to support learning and adaptation. As interventions unfold, evidence can be compared against the articulated theory, revealing gaps, surprises, and unintended consequences. At an advanced level, this process aligns with theories of double-loop learning, in which underlying assumptions are questioned rather than merely adjusting tactics. Theory of Change thus functions as a living framework that evolves in response to new information and changing conditions.

Measurement and Evaluation Implications

Theory of Change has profound implications for measurement and evaluation. By specifying causal pathways and assumptions, it provides a foundation for selecting meaningful indicators and evaluation questions. At a doctoral level, this shifts evaluation from a retrospective assessment of outcomes to an ongoing inquiry into how change happens. The framework encourages mixed-method approaches that capture both quantitative trends and qualitative insights, reflecting the complexity of real-world change processes.

Critiques and Methodological Challenges

Despite its strengths, Theory of Change has been subject to critique. Some scholars argue that it risks becoming overly abstract or rhetorical if not grounded in empirical evidence. Others caution that power dynamics can shape whose assumptions are articulated and validated. From a PhD-level perspective, these critiques highlight the need for participatory and reflexive approaches to Theory of Change development. The framework’s value lies not in producing a polished diagram but in fostering critical dialogue and shared understanding.

Contemporary Applications Across Sectors

While Theory of Change originated in the social and development sectors, its application has expanded into business strategy, public policy, and social entrepreneurship. In corporate sustainability and impact investing, Theory of Change is increasingly used to articulate how financial activities generate social and environmental value. At an advanced level, this cross-sector diffusion underscores the framework’s versatility as a tool for navigating complexity and aligning diverse stakeholders around shared goals.

Conclusion: Theory of Change as a Framework for Thinking, Not Just Planning

At the doctoral level, the Theory of Change framework should be understood as a way of thinking about causality, complexity, and intentional action. Its enduring relevance lies in its capacity to make assumptions explicit, connect strategy to impact, and support continuous learning. Rather than offering definitive answers, Theory of Change invites disciplined inquiry into how change occurs and how it might be influenced. For scholars and practitioners alike, it provides a powerful lens for designing, evaluating, and refining interventions in an uncertain and interconnected world.

Keywords:

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References:

Kayikci, Y., Gozacan‐Chase, N., & Rejeb, A. (2024). Blockchain entrepreneurship roles for circular supply chain transition. Business Strategy and the Environment., 33(2), 197–222. https://doi.org/10.1002/bse.3489 

Langergaard, L. L., & Eschweiler, J. (2024). The Role of Social Dreaming – Utopia as the Unknown Variable in Social Innovation? Journal of Social Entrepreneurship, 15(3), 1039–1057. https://doi.org/10.1080/19420676.2022.2094990 

Miyazaki AD, Haderlie TC (2025;), "Emotional AI as a facilitator of co-created service value in a health-care ecosystem: a collective framework". Journal of Services Marketing, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JSM-01-2025-0041 

Oloke, I. (2024). Transformative and Compensatory Social Enterprise Theories of Change in Discussions of Practitioners in Manitoba. Journal of Social Entrepreneurship, 15(1), 263–282. https://doi.org/10.1080/19420676.2021.1961286 

Shin, J. E., Joe, M., Kim, E., Kang, N., Lee, J., & Lee, S. W. (2025). Unboxing the blackbox of human-centric and inclusive smart city initiatives: a theory based evaluation framework. Asian Journal of Technology Innovation, 33(2), 459–482. https://doi.org/10.1080/19761597.2024.2367762

ORCiD: https://orcid.org/0009-0006-6170-5532 

Virgen, M. (2026) Examination of the Theory of Change Framework in Strategy, Policy, and Social Innovation. Available at, Doctors In Business Journal