Social innovation and sustainable development have become key concepts in addressing the multiple interrelated crises that our societies face. However, both suffer from a lack of theoretical foundations and their interplay remains unclear. Drawing on a transdisciplinary literature review, we propose a conceptual framework to fill this gap. We propose that sustainable development corresponds to a combination of micro-quality of life improvement and macro-quality of life sustainment, the latter requiring continuous identification and positive addressing of institutional paradoxical tensions of inclusion. We explain that such tensions can give rise to various types of responses, which contribute together to institutional change. We argue that social innovations correspond to one specific type of such responses, that is, agent-driven positive responses. We suggest that societies in which culture naturally leans towards awareness and acceptance of paradox tend to be more socially innovative. Finally, three theoretical contributions and one methodological one are highlighted and discussed.