3. Social innovations: Structural and power perspectives Risto Heiskala INTRODUCTION The world economy is currently going through a third industrial revolution characterized by rapid development and diffusion of ICT; globalization of economic activities through foreign direct investments, international trade and cross-border alliances; increasing specialization, complexity and knowledge-intensity of production processes; growing differentiation of demand patterns in consumer and producer markets; and the spread of cooperative network organizations (Hämäläinen, 2003; Hämäläinen and Heiskala, 2004). This transformation increases the importance of innova- tions as the key determinant of economic competitiveness and growth. So far academic research and public discourse on innovations have focused mainly on technological innovations. We argue that, in addition to the chal- lenge of techno-economic adjustment, the third industrial revolution calls for social innovations that would transform the regulative, normative and cultural aspects of social systems, and their interplay with each other and the techno-economic structure. This chapter contributes to the study of social innovations and collective learning processes by developing the concept of social innovation and some related concepts such as social struc- ture, institution and social change. The aim of our conceptual analysis is to provide tools for empirical research and thus support the development of policies that facilitate the creation of reflexive social organization with the capacity of constant collective learning and adjustment. Theoretically we begin with the assumption that societies can be under- stood as structured totalities of action. This means that societies would not exist without the activities of various actors and even the activities of collective actors must, in the last instance, be understood as actions of individual human beings (Weber, 1968 [1922]; Coleman, 1990). Actors, however, are not free to do whatever they wish. Instead, their actions are linked to several types of structures that both facilitate and direct them (the enabling and constraining dimensions of structures). Actors normally 52 M843 HAMALAINEN TEXT M/UP.qxd 1/3/07 11:49 AM Page 52 Gary Gary's G4:Users:Gary:Public:Gary