Department of
Sociology

Center for
Innovation

Action Theory Solutions:
Systemic Coordinated Networks, New Technologies, and New Skill Sets

Why are action theory solutions necessary? The central argument in Knowledge Evolution and Institutional Transformations: Action Theory Solutions to Solve Adaptive Problems (Hage, 2020) is that as knowledge advances, it disrupts the institutional equilibrium and creates new problems. New programs, rules, technologies and skill sets must be developed to solve these problems. Starting in the 1960s, in a few sectors of the economy such as information and biological sciences, sophisticated technologies coupled with customization demands of postmodern consumers generated adaptive problems. Action theory is that in many cases systemic coordinated networks are required to overcome the growing complexity of these adaptive problems. In addition, previously successful programs in each of the institutional realms of society including primary education, agriculture, and politics have to be updated.

Beyond this, another implication of the thesis about knowledge evolution is that it makes contemporary theories of society contingent. The pandemic Covid-19 (also known as SARS-CoV-2) has raised numerous questions about how more quickly to develop cheap tests for the disease with rapid feedback, ways of determining who has antibodies, and above all vaccines. The answer to these issues is the idea innovation network action theory (Hage and Hollingsworth, 2000). If basic research is better connected to applied research, product development, etc. then more rapid breakthroughs will occur. Relative to solving some of the production problems, the creation of a national coordinating organization along the pattern of SEMATECH (Hage, 2011) would solve this problem. Beyond this in Hage (2020) are a number of examples of how to better organize the economy to encourage the develop of more innovation, which is sorely need now and encourage more small high tech organizations with creative ideas to emerge.

Another important aspect of action theory is explaining events that are occurring. Several important ones relative to the Covid-19 effects are who is resilient and adapting well to the crisis and who is demonstrating against solutions such as lock-down. Chapter Two in Hage (2020) indicates the four social contexts in which children are raised that allows one to predict who will adapt and who is demonstrating and why. Then in Chapter Ten is a discussion of how to improve mental health, a current problem.

Another task of the paradigm presented in Hage, 2020 is rethinking a number of important contemporary concepts. Here are some examples.

Rethinking the Concept of Social Capital

A theoretical rethinking appears especially timely because of various debates about whether social capital is increasing or decreasing (Adler and Heckscher 2006; Boggs 2001; Fine 2010; Putnam 2000 2001; Skocpol 2003). Presumably both are occurring simultaneously but as we shall argue they reflect different kinds of social capital and have distinctive causes.

Another reason to revisit the theory of social capital is to examine the relatively ignored connection between it and economic growth. Most of the debate has focused on social capital’s relationship with civil society and democracy (Boggs 2001; Fine 2010; Newton 1997; Portes 1998; Portes and Vickstrom 2011; Putnam 2000 and 2001; Skocpol 2003) yet the more interesting argument—at least for us—is its impact on economic growth and especially in the New Economy. This connection is timely given the current assessment of relative income stagnation among those who earn below median income, youth unemployment (O.E.C.D. Understanding the Social Divide 2017) and the general decline in productivity (Buttonwood 2016). Our argument is that these ills require more radical product and process innovations and a post-modern social capital is needed to stimulate the necessary social institutional innovations needed to resolve them.

The starting point in the construction of this new typology is the recognition of two major dimensions that can describe the patterns of social relationships in which people seek resources of one kind or another: the number of relationships and the degree of variations or heterogeneity in these relationships. To understand how individuals construct their social relationships requires us to examine the social contexts in which they were raised and their patterns of social relationships, which they tend to replicate in adult life. This origin point has been missing from discussions of social capital. Furthermore, to understand better how post-modern social capital impacts on the various problems in the economic system, we have to examine not just inter-personal relationships but also inter-organizational ones because of their importance for the New Economy. Again, this perspective has been absent from discussions of social capital.

A Typology of Social Contexts and Kinds of Social Capital
Number of Social Relationships
Degree of Variation Many Few Trust
Homogeneous Gemeinschaft (1)
Traditional obligation
e.g., rural areas, gay
ghettos, ethnic networks,
rich bubbles 		Anomic (3)
Mafia obligation
e.g., drug gangs,
terrorist networks,
religious cults 		Thick
Heterogeneous Innovative Regions (4)
Post-modern obligation
e.g., integrated neighborhoods,
bi-racial families,
inter-organizational
networks 		Gesellschaft (2)
Modern obligation
e.g., cities, suburbs 		Thin

Rethinking the Concept of Entrepreneurship

The benefits of entrepreneurship for the economy have long been extolled but its negative sides have been ignored. The role of entrepreneurship in “creative destruction” was postulated as an explanation for the survival of capitalism in Schumpeter’s seminal work (1975[1942]: Chapter Seven). Economic sociologists should build upon Schumpeter’s insight in several ways. First, by asking how do societies shape the form and rate of entrepreneurship? Second, just what is destroyed? Surely it is more than competitors in the economy. Indeed, the question needs to be broadened to include all society and more especially the contemporary destruction of democracy. Finally, and most interestingly, since evolutionary economists (Metcalfe, 1998) have been inspired by Schumpeter, we should examine these issues from a dynamic viewpoint. How is society evolving in the definition of entrepreneurship and how is creative destruction changing?

The angle of vision provided by an evolutionary perspective, much needed in economic sociology, poses three important theoretical problems. First how has entrepreneurship, especially that involved in creative construction, changed across time? The answer is towards much more complex arrangements. Second, how has the evolution of society resulted in the generation of faster rates of creative formation? The key idea is the better integration of diversity at the levels of the individual, the organization, and the region. And finally, what are the new forms of creative destruction in society. The loss of jobs of medium routine, the breakup of the family, and the decline of whole rural areas as well as rust-belt cities has led to the loss of civil society (as measured by trust) and doubts about democracy.

References

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

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

Hage, Jerald and J. Roger Hollingsworth. 2000. A Strategy for the Analyses of Idea Innovation Networks and Institutions Organization Studies (Special Issue: The Institutional Dynamics of Innovation Systems) 21(5):971-1004. [pdf]

Updated 1 April 2020