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Developing Innovation Capabilities: A Longitudinal Study of a Project at Volvo Cars

Many large firms are struggling to alter and develop their organizational capabilities. There are several discussions in the literature on what these capabilities comprise, and that there is a need to develop them. However, less attention has been paid to how companies can develop these capabilities in practice. The purpose of this paper is to contribute to organizational capability theory by providing insights derived from an empirical study of how organizational capabilities for innovation are developed in large firms, and how these findings compare to the theory. The paper is based on a longitudinal study of Volvo Cars conducted as a long-term collaborative research project. The authors were involved in a project called Vision 2020, which extended over a period of two and a half years, the findings from which highlight several activities that enabled the changes required for the development of organizational capabilities. The need to develop ‘management capability’ in terms of both cognition and the propensity to act is especially highlighted.