Firms' Innovation Capabilities:Theoretical Definition and Construct Development from the Perspective of Managerial Cognition and Behavior-Oriented

In 21 stcentury,the greatest challenge faced to China is how to transform the development mode of the national economy.Indigenous innovation is one of the most powerful drivers for China's economy transition,while firms' innovation capabilities make the micro-foundation of indigenous innovation.However,most extant literature on firms ' innovation capabilities emphasizes on technological factors more than social factors of innovation,on the threshold of performance of firms' innovation capabilities more than that of flexibility of those.The shortages of extant literature have limited their instruction for innovative practice.To address the gap mentioned above,the present paper aims to unveil the black-box of firm's innovation capabilities themselves by redefining the construct and deconstructing its internal compositions from new perspectives.Based on literature review,absorbing views of dynamic capabilities,the present paper defines firms' innovation capabilities and their dimensions from the perspective of managerial cognition and behavior oriented theoretically.Then,the key to indigenous innovation has been analyzed based on the characteristics of a firm's innovation capabilities' compositions,which emphasize that the different capabilities supporting different innovative stages provide imbalanced contributions to Schumpeterian rent gaining.Based on dynamic theory of knowledge creation,takingsense—responsemodel as a reference,the present paper explores the items representing the construct of firms' innovation capabilities based on grounded theory.Using a high-tech firm named FPT,who's successfully growing is based on its sustainable innovation,as the object of research,we encode the primary materials collecting from multiple sources.Based on the codes analysis,items being to represent the construct of firms' innovation capabilities are listed.Using explorative factor analysis and confirmative factor analysis,the construct is validated empirically,using the data collecting from 419 domestic firms.Findings being got:( 1) Firms' innovation capabilities are composed of the capabilities of sense-making,information interpretation,decision-making,and implementation and realization.( 2) The construct developed in this paper shows the predictive validity to performance.This present paper contributes to innovation literature by redefining firms' innovation capabilities from the perspective of managerial cognition and behavior-oriented and validating the construct empirically.It makes firms' innovation capabilities to be measured in more details and systematically.This paper also contributes to a firm ‘s capabilities by combining the threshold of performance and that of flexibility into firms' innovation capabilities.The combination is particularly relevant in dynamic markets and growth oriented firms.The work we have done in this paper will provide a base for consequent research.Finally,we discuss the managerial implications and future research.