Developing Innovation Capability in Organisations: a Dynamic Capabilities Approach

International Journal of Innovation Management
Vol. 5, No. 3 (September 2001) pp. 377–400
© Imperial College Press

DEVELOPING INNOVATION CAPABILITY
IN ORGANISATIONS: A DYNAMIC
CAPABILITIES APPROACH

BENN LAWSON
Department of Accounting, The University of Melbourne
Victoria, 3010, Australia e-mail: [e-mail]

DANNY SAMSON
Department of Management, The University of Melbourne
Victoria, 3010, Australia e-mail: [e-mail]
Received 1 February 2001
Revised 18 August 2001
Accepted 21 August 2001
This paper draws together knowledge from a variety of fields to propose that innovation management can be viewed as a form of organisational capability. Excellent companies invest and nurture this capability, from which they execute effective innovation processes, leading to innovations in new product, services and processes, and superior business performance results. An extensive review of the literature on innovation management, along with a case study of Cisco Systems, develops a conceptual model of the firm as an innovation engine.
This new operating model sees substantial investment in innovation capability as the primary engine for wealth creation, rather than the possession of physical assets. Building on the dynamic capabilities literature, an “innovation capability” construct is proposed with seven elements. These are vision and strategy, harnessing the competence base, organisational intelligence, creativity and idea management, organisational structures and systems, culture and climate, and management of technology.
Keywords: innovation, dynamic capabilities, Cisco, new technology

Introduction
Ask many of today’s CEOs and they are likely to tell you that the ability to develop new ideas and innovations is one of the top priorities of their organisations (Porter,
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Stern & Council on Competitiveness, 1999). The emergence of the

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