Introduction

The challenge of innovation is clear – if businesses fail to change what they offer or the ways in which they create and deliver those offerings (product and process innovation), they risk being outpaced in an increasingly competitive global environment. Even those with the capacity to innovate their products and processes risk challenge from others with alternative business models or marketing propositions. So innovation is important – but the key issue is not in the innovation itself, but rather the capability within the organization to repeat the trick, to produce a continuing stream of innovation in a dynamic and shifting environment.

We have a growing understanding of the elements that make up such ‘innovation capability’ (IC) derived from extensive research on the innovation process. From a comparatively early stage interest grew in looking at innovation not simply in terms of its nature (i.e., radical or incremental) or the sources (i.e., knowledge push or demand pull), but rather how the process was organized and managed (Tidd et al. 2005). A variety of studies began to draw attention to the range of managerial and organizational factors that affected whether and how a firm innovated (Carter and Williams 1957; Langrish et al. 1972; Rothwell 1977; Cooper 2001).

Other strands of research have also contributed to our understanding; for example, development studies focused extensively on issues of learning and of technology transfer and helped us understand the nature of the capabilities needed to move from a position of technological dependence to one of strength (Lall 1992; Bell and Pavitt 1993; Figuereido 2001).