Innovation Capability: From Technology Development to Transaction Capability

Abstract

The firm's role, besides producing goods and services, is to promote technological change and innovation.While academic research on technological capabilities has led to a better understanding of the process of technical change itself, there is no consensus on the ultimate definition of innovation capability.The purpose of this paper is to present a framework for innovation capability.This is formed by four key capabilities (technology development, operations, management and transaction) that enable firms to reach Schumpeterian profits.Given that the study is characterized as a theoretical paper, methodologically is supported on an extensive literature review.Our main findings can be summed up in three aspects: (1) every firm has all four capabilities; none of them are null; (2) to be innovative, at least one of the firm's capabilities must be predominant; (3) any firm, when established, is primarily technological or transactional, in a second stage, operational or managerial.

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