A micro perspective analysis of capability renewal through knowledge integration within product innovation projects

The aim of this paper is examine how firms renew their organisational capabilities based on micro organisational processes. Organisational capability development literature points to firms’ failure in capability renewal process. To overcome this inefficiency, it is proposed to integrate dynamic capability and ambidexterity perspectives by studying knowledge integration within product innovation. In this relation, applying micro perspective in studying technology diffusion within Iranian Auto industry revealed micro co-evolutionary relationships between knowledge integration within product innovation and capability development. Furthermore, based on near decomposability principals, the analysis suggested relationships among modularity of product architecture, modularity of organisational modularity and modularity of industry architecture in downstream and upstream value chain. Based on these micro-macro co evolutionary effects, capability development process underlying successful corporate entrepreneurship may be verified.