Conceptualising an Organisational Innovation Capability

Abstract

Innovation is regarded as the principal source of sustainable competitive advantage, yet many firms approach innovation haphazardly and without discipline. These firms appear poorly equipped to implement a comprehensive innovation strategy as they focus only on incremental innovation and are committed to preserving the status quo. A dynamic capabilities approach was selected because of its focus on the development of management capabilities. This research has answered the call for fine-grained qualitative case studies to look at the detail of how dynamic capabilities are deployed to better understand how these capabilities work in practice and whether and how they might differ across firms. By the analysis of three embedded business units in the one case organisation this research has opened the innovation “black box” and provided a capability framework for strategic managers to build, systematise and replicate within their organisations. It is a higher order capability which provides managers with the capacity to manage the component capabilities of the Organisational Innovation Capability framework together with their linkages and interdependencies to impact the firm’s existing resource base. It also identifies strategic entrepreneurship, organisational learning capability and alliance building capability as the essential preconditions for innovation capability renewal. In summary, this research is part of the increasing momentum in understanding the “how” of dynamic capabilities. It provides learning for management practice on how dynamic capabilities originate, how firms built and deployed their Organisational Innovation Capability and how distinctive processes support the creation, modification, reconfiguration and augmentation of firm resources to achieve competitive advantage. Most importantly, it has provided a framework for an Organisational Innovation Capability which can be applied in practice.