Innovation Capabilities of the Firm: The Brazilian Experience

The firm plays a central role in the economic system. It promotes technological change and innovation. While academic research on technological capabilities of the firm has led to a better understanding of the technical change process itself, there is no consensus on the ultimate definition of innovation capabilities. The purpose of this paper is to understand innovation capabilities as the firm’s ability to transform technological, operational, managerial and transactional efforts into positive economic outcomes. For this we analyze four Brazilian cases in order to show that the firm’s innovative performance is affected by four different types of internal capabilities: the technological, operational, managerial and transactional. Although the technological capability of a firm is an important component for the innovation process, it is insufficient to explain how a firm turns internal invention into market transactions, thus innovation. The results show that, to exist, all firms must develop in some degree all four capabilities described, but their innovative performance is based in the predominance of one of them.