Microfoundations of dynamic capabilities for innovation: a review and research agenda

Abstract This paper provides a conceptual overview of the microfoundations of dynamic capabilities for innovation. A critical evaluation of dynamic capabilities theory highlights its contested nature and significant limitations in its application. Notably, there is little understanding of the mechanisms determining the origin and evolution of dynamic capabilities, while the role of employees has been neglected. In an effort to address this deficiency, the paper draws on literature from HRM and innovation management to trace the microfoundations of dynamic capabilities for innovation. This highlights the importance of incorporating the perspectives and motivation of employees as a central part of analysis and as a basis for more direct managerial interventions in building capabilities.