Define $R = \oplus_N R^n$ where $R^n:=R(S_n)$ is the vector space of class functions defined on $S_n$. According to Sagan, we can define a ring structure on $R$ that makes $R$ into a graded algebra, isomorphic to the algebra of symmetric functions.
For each $n\in \mathbb{N}$, the irreducible characters of $S_n$ form a basis for $R^n$ so it is enough to define a product of characters and then extend bilinearly.
For characters $\chi, \psi$ of $S_n$ and $S_m$, respectively, we define their product as $$ \chi \cdot \psi := (\chi \otimes \psi)\uparrow_{S_n\times S_m}^{S_{n+m}}. $$
My question is: why this product is associative? I have tried computing, when $\theta$ is an additional character for $S_k$, \begin{align*}(\chi \cdot \psi)\cdot \theta &= \left((\chi \otimes \psi)\uparrow_{S_n\times S_m}^{S_{n+m}} \otimes \theta\right)\uparrow_{S_{n+m}\times S_k}^{S_{n+m+k}} \end{align*} but I can't see how the "induced part" interacts with the tensor product.
Here is a rather concrete approach:
Suppose $\chi_m,\chi_n,\chi_k$ are characters of $S_m,S_n,S_k$, respectively. To show that the induction product is associative, it suffices to show that $$ \uparrow_{S_{m+n}\ \ \times S_k}^{S_{m+n+k}}((\uparrow_{S_m\times S_n}^{S_{m+n}}\chi_m\times\chi_n)\times\chi_k)=\uparrow_{S_{m}\times S_n \times S_k}^{S_{m+n+k}}(\chi_m\times\chi_n\times \chi_k).\tag{1} $$
Notice that the right side can be written as: $$ \uparrow_{S_{m}\times S_n \times S_k}^{S_{m+n+k}}(\chi_m\times\chi_n\times \chi_k)=\uparrow_{S_{m+n}\ \ \times S_k}^{S_{m+n+k}}(\uparrow_{S_m\times S_n\times S_k}^{S_{m+n}\ \ \times S_k}\chi_m\times\chi_n\times\chi_k). \tag{2}$$ Compare this with the left side of (1), it now suffices to show that $$ (\uparrow_{S_m\times S_n}^{S_{m+n}}\chi_m\times\chi_n)\times\chi_k=\uparrow_{S_{m}\times S_n \times S_k}^{S_{m+n}\ \ \times S_k}(\chi_m\times\chi_n\times \chi_k)\tag{3}. $$ But this follows exactly from the definition of the induced character. Indeed, for any $h\times h'\in S_{m+n}\times S_k$, we want to show that (3) holds by showing that both sides of (3) give the same value evaluated at $h\times h'$.
We compute that: \begin{align} ((\uparrow_{S_m\times S_n}^{S_{m+n}}\chi_m\times\chi_n)\times\chi_k)(h\times h')&=\left(\frac{1}{m!n!}\sum_{g\in S_{m+n}}(\chi_m\times\chi_n)^\circ\underset{\in S_m\times S_n}{(g^{-1}hg)}\right)\times\chi_k(h'), \end{align} whereas, \begin{align} (\uparrow_{S_{m}\times S_n \times S_k}^{S_{m+n}\ \ \times S_k}(\chi_m\times\chi_n\times \chi_k))(h\times h')&=\frac{1}{m!n!k!}\sum_{g\times g'\in S_{m+n}\ \ \times S_k}(\chi_m\times\chi_n\times\chi_k)^\circ\underset{\in S_m\times S_n\times S_k}{((gg')^{-1}hh'gg')}\\ &=\frac{1}{m!n!k!}\sum_{g\times g'\in S_{m+n}\ \ \times S_k}(\chi_m\times\chi_n\times\chi_k)^\circ\underset{\in S_m\times S_n\times S_k}{((gg')^{-1}hgh'g')}\\ &=\frac{1}{m!n!k!}\sum_{g\times g'\in S_{m+n}\ \ \times S_k}(\chi_m\times\chi_n\times\chi_k)^\circ\underset{\in S_m\times S_n\times S_k}{((gg')^{-1}h(gg')(g'^{-1}h'g'))}\\ &=\frac{1}{m!n!k!}\sum_{g\times g'\in S_{m+n}\ \ \times S_k}(\chi_m\times\chi_n)^\circ\underset{\in S_m\times S_n}{(g'^{-1}(g^{-1}hg)g')}\times\chi_k(h')\\ &=\frac{1}{m!n!k!}\sum_{g\times g'\in S_{m+n}\ \ \times S_k}(\chi_m\times\chi_n)^\circ\underset{\in S_m\times S_n}{(g^{-1}hg)}\times\chi_k(h')\\ &=\frac{k!}{m!n!k!}\sum_{g\times g'\in S_{m+n}}(\chi_m\times\chi_n)^\circ\underset{\in S_m\times S_n}{(g^{-1}hg)}\times\chi_k(h')\\ &=\left(\frac{1}{m!n!}\sum_{g\in S_{m+n}}(\chi_m\times\chi_n)^\circ\underset{\in S_m\times S_n}{(g^{-1}hg)}\right)\times\chi_k(h')\\ &=((\uparrow_{S_m\times S_n}^{S_{m+n}}\chi_m\times\chi_n)\times\chi_k)(h\times h') \end{align} where we have used the commutativity of elements from two different components in the internal direct product of groups for several times, and finally we are done.