This article illustrates how the term “social innovation” is used in the public policy domain in Hong Kong in relation to the new public management (NPM) reform of the social service sector, which originated in the early 2000s. Through document reviews and interviews, the role that social innovation policy has played in instigating changes in the contemporary social service field in the post-NPM era is identified. This includes facilitating emergence of “new” forms of social entrepreneurial activities to fill unmet social needs, empowering new actors in entering the social service sector, and reinforcing the government’s position in the NPM reform. Adopting historical institutionalism as the analytical framework, multiple path-dependent characteristics arising from the historical legacies of the incumbent social service environment – such as the longstanding partnership between the state and non-profits – are highlighted. These historical factors have weakened the efficacy of the policy efforts aimed at enacting institutional change. Overall, this article demonstrates how historical context matters in the emergence and framing of social innovation policy. It contributes to the theorisation of the role of social innovation in social service sector development in East Asia.