Department of
Sociology

Center for
Innovation

About the Center for Innovation

Presently, the Center has three major missions that have emerged over the years. The first topic is obviously the namesake, innovation, which we now define as simply problem solving. Our current research effort in this topic area at the organizational level, is concerned with stimulating radical product and service innovations. Within this literature in our most recent book, (see below), we report interesting findings about another take on organizational innovation, namely organizational adaptiveness, and its impact on the effectiveness of organizations. Shifting to the meso level, the topic of innovation is explored via inter-organizational relationships and networks, which led to the theory about why the U.S. and other advanced industrialized countries are no longer innovative (Hage and Hollingsworth, 2000). At the macro level, our research focuses on institutional innovation with the idea of solving major societal problems as the heart of action theory.

Over time, radical innovation, whether product, process, or institutional, has become more and more necessary. The book Knowledge Evolution and Institutional Transformation: Action Theory to Solve Adaptive Problems (Hage, 2020) explains why. Essentially, knowledge growth makes issues much more complex that require more complex institutional innovations to resolve and for organizations to produce more radical product, service, and process innovations. The book identifies over 50 problems that must be solved around the more general theme of social equality including reducing a sense of alienation, powerlessness, and social isolation.

The second topic area of the Center for Innovation is health and welfare delivery systems with a particular focus on systemic coordinated inter-organizational networks as a special kind. This interest began with the publication of Organizations Working Together (Alter and Hage, 1993). Since then, several studies have been completed in developing countries. The Center has Wilbur Hadden, an expert in inequality in health care as associate director and with our collaboration with Joseph Valadez, Professor of Public Health, at the Liverpool School of Tropical Medicine, Liverpool England, we have just published an intensive study of a health care delivery system established in Nicaragua: Saving Society: Systematic coordinated inter-organizational networks, innovation and equality (Hage, Valadez, and Hadden forthcoming). The book provides many lessons for managers on how to start and maintain a systematic coordinated organizational network and adds contributions to the social science literation, reflecting our action theory focus. Presently the Center is examining the impact of Obama care on reductions in infant mortality and especially among black boys and girls at the county level.

Given these two most recent books, the third topic area is action theory, identifying problems and providing solutions. Presently, we have taken on two of three most critical problems facing society together: (1) the institutional crises in capitalism, (2) the institutional crisis in democracy, and (3) saving the planet. The first two crises must be solved before the third can be because presently many societies are blocked (an interesting exception is Sweden, but it uses the institutional solution we propose below) and therefore cannot take on all the radical product and process innovations that are necessary to save the planet.

Another distinctive feature of the Center for Innovation is the application of inter-organizational networks for solving the valley of death problem in the movement of scientific ideas into innovative products and services and creating more effective and efficient health care delivery systems. Starting with the landmark book Organizations Working Together (Alter and Hage, 1993), our most widely cited publication (see here), and continuing through “Strategy for Analyses of Idea Innovation Networks and Institutions” (Hage and Hollingsworth, 2000), the Center’s research, especially in rehabilitation and health care has focused on the importance of inter-organizational networks (see Health Care Delivery Systems). In addition, the arrival of Wilbur Hadden, an expert in health care inequality, has considerably strengthen the Center’s capacity in studies of these delivery systems.

The seriousness of the crises in capitalism and democracy have resulted in it making the news in recent articles (e.g. Szalai, 2023) and with a flurry of books, only some of which we cite here (Mettler and Lieberman, 2020; Streeck, 2016; Tucker, 2020; Vermeiren, 2021 and for a more complete list see Hage and Hadden “Solving the Twin Crises in Capitalism and Democracy”). Across these many books, there are several dominant themes: social inequality and populism and their interrelationships. Certainly, few would argue against the idea that there is rising social inequality (Piketty, 2022; Savage, 2021) and with it, it’s twin poverty (Desmond, 2023; Rank, 2023), which has always been a major concern of the Center. And obviously, the threat of populism is continually very much in the news. However, in these critical institutional reviews, while there are many proposals for reform, none focus on what we believe is a larger explanation for inequality and populism, namely specific kinds of market and state coordination failures in four arenas--rate of radical product and service innovation, enough skill set formation, sufficient social support and law and order. These modes of coordination were not designed for these more complex objectives.

Consistent with our mission to provide action theory, we are presently writing a major theoretical paper (Hage and Hadden “Solving the Twin Crises in Capitalism and Democracy”) to indicate how to solve these four coordination failures, building upon a long history of expertise in this Center relative to the problem of radical product and service innovation (see research area innovation at four analytical levels) and our research on systematic coordinated inter-organizational networks (see research area action theory). The paper contains a major critique of the theories of market and state coordination building upon what we have already said in the aforementioned book.

How best to describe the institutional crises in capitalism and in democracy? Figure One suggests three signs of failure in each of the four major arenas and then indicates what kind of systematic coordinated inter-organizational network should be created, that is what is the objective. The paper documents the extent of the crisis and also the solution of a specifically designed systematic coordinated inter-organizational network. For example, slow economic growth rates and resulting unemployment and underemployment has triggered other crises in society such as divorce and single mothers. Market coordination is not designed to produce radical product and process innovations because it can only handle price issues with simple standardized products for mass markets, e.g. Smith’s (1776) pins. The growth in science has made the problem of how to create radical new products and processes much more complex. The days of industrial laboratories being enough are over. We demonstrate that radical innovation is the real crisis by documenting the steady growth in the deficits of high-tech products across the last two decades, approaching now a quarter of a trillion dollars annually. More generally, the U.S.’s trade deficit in 2022 is a trillion, which means a loss of five million jobs. By constructing a systematic coordinated inter-organizational network along the idea innovation chain (Hage and Hollinsworth, 2000), we would increase our rate of radical product and process innovations and in the process produce more social equality and reduce populism, which originates in those areas that have become depressed because of globalization and the U.S. failure to be competitive. Nor is this only a U.S. problem. In the paper we document the extent of this specific capitalistic crisis in Western Europe.

Figure One: Signs of Coordination Failures in Capitalism and in Democracy
Signs of Coordination Failures Objective of Systematic Coordinated Inter-organizational Network
Institution of Capitalism
Slow economic growth, unemployment and underemploymentRadical innovation1 (product and process)
Lower productivity, stagnant incomes, lack of social mobilitySkill set formation (minorities and women)
Institution of Democracy (state coordination)
Shorter life spans, homelessness, child povertySocial support services (including mental health
Police brutality, community crime, extremist groupsLaw and order (community safety)
1 Innovation involves not only the development of new products or government services and their appropriate technologies but also means the creation of new research fields and occupations (see Hage, 2020: 15).

Then the paper moves through the other three crises, the last two being located in democracy and its failure to be able to coordinate effectively the social support system or law and order. Again, the extent of the problem is documented, and the solution proposed. Evidence on successful examples are also provided. In this context, especially relative the last three failures, there is underrecognized asset, namely the work of the NGOs in education, food banks, helping the homeless, and in various social movements such as Black Lives Matter. These organizations represent a hidden resource for solving some of the crises in capitalism and democracy. Research on NGOs has long been an interest of the Center.

Another important part of the puzzle is to recognize how the evolution in demand and supply for these four objectives has changed in each of these four arenas, specifying the character of the basic divide in developed societies today. To complete our argument about coordination failures, we need to explain how values of customers and citizens have also changed over time and why. To oversimplify, knowledge growth has led to an expansion in higher education, starting in the 1960s, and again in all advanced industrialized countries. Those with higher education have made a number of new demands in both the marketplace and in the public sector arenas, specifically they want innovative products, but they also want these products to have multiple dimensions: reduce safety concerns, pollution, energy consumption and the use of scare resources, that is green products (Hage, 2011). The failure to produce these kinds of radical new products is cited by same as an example of the crisis in capitalism (Fraser, 2022). And in this way solving the institutional crises in capitalism relative to radical product and process innovation speaks to the third major threat to societies today, namely global warming and scare resources. With their broader vision, the educated section of the populations in the advanced economies and democracies have also demanded extensions in minority rights, greater social equality, and are open to immigration. In contrast, those with less education, have experienced high unemployment, lower incomes and prefer low-cost products. They want better safety net protections and have resentments towards women and minority groups that they think are being given preferences and of course are opposed to immigration. The problem of police brutality has also become a major issue in social equality, a dimension not normally considered, the application of the law, and involves again a fundamental divide between largely working-class men and minority populations. This analysis of the different kinds of demand being made by segments of the population provides understanding of the seeds for partisanship, populism and movements towards autocracy and away from democracy in many advanced industrialized countries (Berman and Snegovaya, 2019; Hage, 2020: 324-326). Authoritarian leaders feed on the resentments of white working-class men who have been left behind and thus a resurgence in the white supremist movement. But the threat to democracy is not only from the right, it is also from the left, that encourages presidents to exercise executive aggrandizement, which Mettler and Lieberman (2020) argues is as big a threat to democracy as polarization and income inequality. The growing divide between right and left has led to individuals' social identity becoming bound up with either one or the other side of the issues discussed above (Mason, 2018).

Systematic coordinated inter-organizational networks, besides providing radical product and process innovations, better multiple skill set formation, more effective social nets and law and order, thus reduce the crises in capitalism and in democracy by reducing social inequality and populism also begining to reconstruct society on a new basis, building social trust in others and in our institutions, and providing social capital, an essential pillar of democracy (Putnam, 2000) and another major research interest of the Center.

References

Alter, C, and J Hage. 1993. Organizations Working Together. Newbury Park, CA: Sage.

Berman and Snegovaya Berman, S., and Snegovaya, M. 2019. "Populism and the Decline of Social Democracy." Journal of Democracy 30 (3):5-19. doi: 10.1353/jod.2019.0038.

Desmond, M. 2023. Poverty, by America. New York: Crown.

Fraser, N. 2022. Cannibal Capitalism: How Our System Is Devouring Democracy, Care, and the Planet. New York: Verso Books.

Hage, J. 2011. Restoring the Innovative Edge: Driving the Evolution of Science and Technology. Stanford, CA: Stanford University Press.

Hage, J. 2020. Knowledge Evolution and Institutional Transformations: Action Theory Solutions to Solve Adaptive Problems. New York: Anthem Press.

Hage, J, and JR Hollingsworth. 2000. A Strategy for the Analysis of Idea Innovation Networks and Institutions. Organization Studies 21 (5):971–1004. doi: 10.1177/0170840600215006 [pdf].

Mason, L. 2018. Uncivil Agreement: How Politics Became Our Identity. Chicago: University of Chicago Press.

Mettler, S., and Lieberman, R. C. 2020. Four Threats: The Recurring Crises of American Democracy. New York: St Martin’s Press.

Piketty, T. 2022. A Brief History of Inequality Translated by Steven Rendall. Cambridge, MA: Belnap Press, Harvard University.

Putnam, R. 2000. Bowling Alone: The Collapse and Revival of American Community. New York: Simon and Schuster.

Rank, M. 2023. The Poverty Paradox: Understanding Economic Hardship among American Prosperity. Oxford: Oxford University Press.

Savage, M. 2021. The Return of Inequality: Social Change and the Weight of the Past. Cambridge, MA: Harvard University Press.

Streeck, W. 2016. How Will Capitalism End? Essays on a Failing System. London: Verso.

Smith, A. 1776. The Wealth of Nations. Copenhagen: Filibooks.

Szalai, J. 2023. "Is the Marriage between Democracy and Capitalism on the Rocks?" New York Times, February 18. Retrieved from www.nytimes.com/2023/02/15/books/review/books-democracy-capitalism.html.

Tucker, A. 2020. Democracy against Liberalism: Its Rise and Fall. Cambridge: Polity Press.

Vermeiren, M. 2021. Crisis and Inequality: The Political Economy of Advanced Capitalism. Cambridge: Polity Press

Updated 16 April 2023