The article will present how action research may contribute to social innovation and empowerment in public welfare and cultural institutions (nursing homes and libraries) in a manner that supports the interests of marginalised citizens and local communities, and creates opportunities for positive change. First, we introduce the concepts of empowerment, action research and social innovation along with the roots of these concepts in critical social theory. Secondly, two case studies are presented to analyse two different methodological variants of action research in two different contexts. The first case is about action research in nursing homes, where the objective was to improve elder care through more autonomy and better quality of life for residents and employees. In this project (inspired by critical utopian action research), so called 'future workshops' were applied to create "free space" for reflection and creation of concrete suggestions of social innovation in elder care. The second case is about the transformation of a public library into a community centre. In this case, the aim was to break down barriers between citizens and public institutions in a deprived, multicultural urban area and thereby promote local community empowerment. In this project, 'empowerment evaluation' was used as an action research method. In the final part we compare the two approaches (utopian action research and empowerment facilitation), and discuss the danger of falling into the trap of localism, where successful social innovations: instead of being up-scaled and widely distributed, end up as oneoffs or simply die out at the very local level