Innovation & Management Review

ISSN: 2515-8961
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Universidade de São Paulo
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Rodrigues de Aro, Edson; Perez, Gilberto

Identification of dynamic capabilities in open innovation
Innovation & Management Review, vol. 18, núm. 2, 2021, -Junio, pp. 113-128
Universidade de São Paulo
São Paulo, Brasil

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Dynamic
Identification of dynamic capabilities in
capabilities in open innovation open
innovation
Edson Rodrigues de Aro
Faculdade de Administração e Ciências Cont
abeis,
Univerdade Federal de Mato Grosso, Cuiaba, Brazil, and 113
Gilberto Perez Received 15 October 2019
Revised 12 July 2020
Universidade Presbiteriana Mackenzie, São Paulo, Brazil 24 September 2020
3 November 2020
Accepted 15 December 2020

Abstract
Purpose – This study aims to understand the interaction between capabilities inherent in open innovation
and dynamic capabilities (sensing, seizing and transforming) as a source of competitive advantage.
Design/methodology/approach – Qualitative method and grounded theory were used as guidelines for
data collection and analysis.
Findings – The study identifies a set of capabilities in the practice of open innovation related to dynamic
capabilities, which indicates the importance of developing dynamic capability in the strategic management of
internal and external knowledge in the company.
Research limitations/implications – The number of interviewees approached herein do not allow
generalizations, but the use of grounded theory through various strategies of data collection in the interviews
allowed the triangulation of the data, increasing the credibility, validity and quality of the research.
Originality/value – This study presents capabilities identified in open innovation and their relationship
with dynamic capabilities, identifying the importance of the dynamic capability in the strategic management
of internal and external knowledge in the company as a source of competitive advantage.
Keywords Open innovation, Dynamic capabilities, Grounded theory
Paper type Research paper

1. Introduction
To obtain resources in open innovation, capabilities need to be understood and incorporated by
the company in the search for competitive advantage. One way the company has used to obtain
resources is the practice of open innovation as a strategic alternative to gain competitive
advantage through internal and external collaboration to identify opportunities and develop new
markets (Chesbrough, 2012; Bogers, Chesbrough, & Moedas, 2018). Thus, understanding
dynamic capabilities in open innovation can be a source of competitive advantage (Teece, 2018).
In this context, understanding the different levels of analysis – at the enterprise level,
such as structures and processes and individual levels such as individual capabilities –
facilitate the implementation or interdependence of open innovation between organizations

© Edson Rodrigues de Aro and Gilberto Perez. Published in Innovation and Management Review.
Published by Emerald Publishing Limited. This article is published under the Creative Commons
Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative
works of this article (for both commercial and non-commercial purposes), subject to full attribution to Innovation and Management
the original publication and authors. The full terms of this licence may be seen at http:// Review
Vol. 18 No. 2, 2021
creativecommons.org/licences/by/4.0/legalcode pp. 113-128
This paper forms part of a special section “Dynamic capabilities, entrepreneurship and innovation: Emerald Publishing Limited
2515-8961
exploring different levels of analysis”, guest edited by Adriana Takahashi and Marcos Correa. DOI 10.1108/INMR-10-2019-0120
INMR and various stakeholders in an innovation ecosystem scenario (Bogers et al., 2016).
18,2 Considering these levels of analysis, organizational and dynamic capabilities are jointly
developed in simple and complex routines in the form of dynamic package (Peteraf, Di
Stefano, & Verona, 2013); hence, the understanding of a company’s critical capabilities to
manage the knowledge that comes internally and externally in open innovation practices are
necessary (Lichtenthaler & Lichtenthaler, 2009).
114 Thus, there is little clarity as to the capabilities developed in the practice of open
innovation and its relationship with dynamic capabilities in strategic management
literature. Thus, it is argued that in the practice of open innovation capabilities are
developed and contribute to the strengthening of dynamic capabilities to manage internal
and external knowledge as a source of competitive advantage.
Based on these considerations, we aim to answer the following research question: How do
capabilities in the practice of open innovation relate to dynamic capabilities? To answer this
question, we must understand the capabilities related to the practice of open innovation with
dynamic capabilities (sensing, seizing and transforming) as a source of competitive advantage.
To increase the understanding on these phenomena (open innovation and dynamic
capabilities) through our study, qualitative method and grounded theory were used,
according to the criteria proposed by Charmaz (2009). The practice of open innovation and
capability development in the companies 3 M Brazil and Natura were chosen as units of
analysis. We expect our study to contribute to contemporary innovation literature published
in the journal Innovation and Management Review (INMR) by understanding the capabilities
developed in the practice of open innovation, expanding the discussions of Teece (2020) on
dynamic capabilities, approaching the findings of Öberg and Alexander (2018) and Bogers,
Chesbrough, Heaton, and Teece (2019) on open innovation, and exploring Lichtenthaler and
Lichtenthaler’s (2009) research on capabilities in open innovation for the management of
internal and external knowledge in the innovation process.
This paper is organized as follows. Section 2 brings the discussions in literature on
dynamic capabilities and open innovation. Section 3 approaches the methodological
procedures adopted in this study. Section 4 brings the discussion of the results, and, finally,
in Section 5 we present our final remarks and suggestions for future research.

2. Literature review
2.1 Dynamic capability and open innovation
Literature on dynamic capabilities has been developed according to two distinct aspects that
seek to explain how companies achieve and sustain competitive advantage. The first strand,
from the seminal article by Teece, Pisano, and Shuen (1997), considers that dynamic
capabilities are relevant only for organizations operating in highly dynamic environments;
the other strand comes from the article by Eisenhardt and Martin (2000) and defends that
dynamic capabilities are also important for organizations that operate in moderately
dynamic environments.
To understand dynamic capabilities, we present the following concepts, definitions,
characteristics and elements discussed in strategic management literature. For Eisenhardt and
Martin (2000), dynamic capabilities are used as specific resources in the process of integrating,
reconfiguring and obtaining resources to match and even create a market change. For Denford
(2013), dynamic capabilities are used by companies to integrate, build and reconfigure their
organizational capabilities and are based on knowledge in three dimensions – internal/external
source, focus on exploration/exploitation and combinatorial capability. According to the
understanding of Dixon, Meyer, and Day (2014), dynamic capabilities are fundamental to foster
organizational transformations and are identified in the dynamic capability of adaptation
related to exploration routines, implementation and reconfiguration of resources and dynamic Dynamic
capability of innovation related to the creation of new capabilities through exploration capabilities in
processes and creation of paths.
Teece (2007, 2018) ranked in three components: sensing, seizing and transforming. In the
open
sensing process, scanning, learning and interpreting activities are identified, which allows innovation
access to information and knowledge that can create opportunities (Dobelin & Galina, 2019).
The organization depends on individual creativity and is based on organizational processes
of search, interpretation and creation. Therefore, we seek the identification, development, 115
co-development and evaluation of threats and technological opportunities in relation to
customer needs (Teece, 2007, 2018).
In seizing, companies seize what was obtained during sensing activities and represent
the company’s ability to respond to the environment (Dobelin & Galina, 2019). Thus, by
detecting a new technological or market opportunity, it should be capitalized through new
products, processes, or services. This almost always requires investments in development
and marketing activities, mobilization of resources to meet needs and opportunities and
capturing value. When making investments, it is necessary to create strategies around
investment decisions, set the time, increase the advantages of return and leverage products
and services from one application to another (Teece, 2007).
In the transforming process, the organization seeks continuous renewal, that is,
transformation or change (Teece, 2007). This component seeks to help the organization to
configure the organizational culture to accept high levels of internal change through
decentralization and flexibility and implementation of modern techniques of human
resources, knowledge management and learning mechanisms (Dobelin & Galina, 2019).
In this context, dynamic capabilities relate to complex routines and organizational
mechanisms, or in simple routines and management mechanisms. Both are active in the
company sequentially or simultaneously in the form of dynamic packages and it is
necessary to have a complete and interconnected view as a whole to understand dynamic
capabilities (Peteraf et al., 2013).
Bulgacov and Takahashi (2019) highlight that work routines and practices are the result
of a set of capabilities that, through mechanisms, facilitate or not the conditions to
continuously create capabilities. According to the authors, the appropriate combination
between organization performance through processes and routines and its relationship with
suppliers, customers, and other actors in the environment is at the heart of the dynamic
capabilities’ proposal. However, this ability to “feel”, “grasp”, “transform” and “reconfigure”
remains unexplored, and the understanding of micro-foundations are sources of competitive
advantage (Nayak, Chia, & Canales, 2019).
Thus, since the presentation of the concept of dynamic capability attributed to Teece
et al. (1997), the authors began to explore and point out alternatives to open innovation so
that companies could expand and innovate their business model adapting to the
environment using networks, alliances and partnerships as a way to meet current and future
needs (Teece, 2018).
Thus, discussions on capabilities in open innovation have been around the modes and
mechanisms of open innovation from an external and internal perspective (Bogers et al.,
2016; Peris-Ortiz, Devece-Carañana, & Navarro-Garcia, 2018). The challenge to be faced by
companies is to understand ways to manage the process of search, selection and
implementation and becomes a problem for learning and developing management skills
(Tidd & Bessant, 2015).
Chesbrough and Bogers (2014, p. 17) redefine open innovation as “a process of distributed
innovation based on knowledge flows purposely managed by organizational boundaries”,
INMR which resides at the organization level. Bogers et al. (2016) point out that in open innovation
18,2 one must identify elements at different levels of analysis such as intraorganizational,
organizational, extra organizational, interorganizational, industry, regional innovation
system and society. For the authors, these elements are found at organizational levels, such
as structures and processes, and individual levels, such as individual capabilities to facilitate
the implementation or interdependencies of open innovation between organizations and
116 various stakeholders in an innovation ecosystem scenario.
Öberg and Alexander (2018) point out that these links among levels are related to the
search for relationships and collaboration, market path and shared activities, with degrees
of formalization and levels of knowledge among the actors; the consideration of knowledge
management criteria and management strategies in different dimensions of openness is very
relevant.
Lichtenthaler and Lichtenthaler (2009) analyzed exploration, exploitation and knowledge
retention within and outside the boundaries of a company that propose a capability-based
structure for open innovation from the identification of knowledge capabilities as critical
capabilities of a company to manage internal and external knowledge in innovation
processes. This knowledge management capability is understood by the authors as a
dynamic capability that reconfigures and realigns knowledge capabilities over time.
Öberg and Alexander (2018) point out some relevant open innovation capabilities, such
as creation, negotiation, relationship, cooperation, collaboration and interaction in product
development with their partners. However, it is necessary to have the ability to translate and
assimilate the flow of knowledge generated for transferring from and sharing by the
organization.
So, as Bogers et al. (2019) claim, dynamic capabilities are needed to focus on specific
attributes related to leveraging and improving internal capabilities by boosting the business
model itself through open innovation from the inside out or exploring a new business model
through open innovation from the outside in.
Teece (2020) claims that open innovation and dynamic capabilities reinforce one another.
For the author, open innovation enriches the company’s knowledge base and its ability to
detect and grasp transformations in the company’s internal resources. Thus, the author
points out that strong dynamic capabilities allow effective practices of open innovation.

3. Methodological procedures
The research aimed to understand the relationship between the capabilities related to the
practice of open innovation and dynamic capabilities (sensing, seizing and transforming) as
a source of competitive advantage. For the design of the research, a set of procedures and
techniques proposed by Charmaz (2009) was developed through qualitative research and
guidelines of grounded theory. Grounded theory was used because it is a qualitative
research method that seeks to create conceptual schemes in the development of new
categories established sequentially and systematically and use of the comparative method
for analysis of the collected data sets.
The unit of analysis in this study was centered on the practice of open innovation by the
companies 3 M Brazil and Natura. Despite operating in different industrial sectors, these
companies were chosen for demonstrating in public and private disclosures and in
specialized segments the practice open innovation. The company 3 M Brazil describes its
understanding of open innovation on its website as follows:
The concept of collaboration is so strong at 3M that it goes beyond the company’s borders and covers
the relationship we establish with partners, clients, research centers, government entities, universities,
startups, investors and others. It’s what’s called Open Innovation [. . .] (3M, 2016, Brazil).
Natura describes its understanding of open innovation on its website based on one of its Dynamic
products – Natura Campus – as follows: capabilities in
Through Natura Campus, we work with open innovation sharing challenges with the scientific open
community in Brazil and abroad. This means that, in addition to scientists and internal research innovation
involving research and development, our business is strongly linked to partnerships with
scientific institutions in Brazil and the world to develop new concepts, methodologies, products
and processes [. . .] (Natura, 2016).
117
In this study, the in-depth interview was adopted as a means for data collection, which was
conducted through a semi-structured script with standardized and appropriate open
questions. Subsequently, we accomplished the process of initial, focused and theoretical
coding according to information obtained from the interview; the data collection and
analysis occurred from May to October 2016.
To increase the credibility, validity and quality of the research, an interview script was
used in all stages with different data collection strategies. The questions and topics were
based on the review of preliminary literature and developed from a validation matrix.
The interviews were conducted at three different moments with the managers of the
companies 3 M Brazil and Natura, as shown in Table 1 (initial coding), Table 2 (focused
coding) and Table 3 (theoretical coding). In the initial coding phase, the managers
interviewed in each company, in May 2016, were supposed to answer 13 questions, as shown
in Table 1.

Company Interviewed

3M E13M Environment, Health and Product Safety Manager – EHS

Natura E1Na Administration and Innovation Networks Manager
Questions applied in the interviews
1 Talk about the company’s open innovation process
2 How research and innovation of products, processes, and services are managed
3 Talk about how the company adapts, integrates, and combines its skills, resources, and
functional skills to develop products, processes, and services to meet the demands of the market
4 Which are the capabilities required in the company to identify technological and market
opportunities?
5 Which capabilities does the company have to modify in its internal and external resource base to
meet the requirements of the business environment?
6 In this sense, have routines, practice, and learning patterns and their organizational and
strategic resource base been modified or reconfigured along the way to meet the demands of
technological and market opportunities?
7 How does internal and external knowledge contribute to the open innovation process?
8 Which capabilities are necessary in the company for the development of open innovation
processes?
9 Which developed capabilities allow you to benefit the most of and overcome challenges in open
innovation?
10 Capabilities were acquired, they were absorbed from external sources to complement the
company’s internal technology base. Talk about it
11 What are the company’s sources of open innovation? Which capabilities are identified and
developed for this process?
12 Which capabilities are used or developed in open innovation for your management?
13 Talk about the relationship with suppliers, internal and external customers, and competitors in
the open innovation process. Which capabilities are required? Table 1.
Respondents and
Source: Research data questions
INMR Company Interviewed
18,2
Natura E2Na Administration and Innovation Networks Manager
Natura E2Na Pro-innovation system manager
Natura E2Na Manager for Partnership, intellectual property, and promotion of innovation
Natura E2Na Strategic Planning Manager
3M E23M Environment, Health and Product Safety Manager – EHS
118 3M E23M Manager for technology-platform laboratories
3M E23M Senior Laboratory Specialist
Questions applied in the interviews
1 What is your company’s strategic approach that opens the door to an open innovation
opportunity?
2 How does the ability to analyze trend building and strategy influence open innovation? Search
for signs and trends, strategic tuning? What capabilities beyond these are relevant?
3 Is the ability to interpret resources that you have and do not have a capability that influences
the search for open innovation? Comment on this.
Table 2. 4 Talk about the ability to map partners and interaction in the innovation ecosystem. Do you have
other relevant capabilities related to open innovation in this ecosystem?
Interview with the 5 How does open innovation in the company’s innovation ecosystem influence the development of
focus group at capabilities/skills? Can you name a few of the most relevant ones that have been developed?
Natura and 3 M
Brazil Source: Research data

Company Interviewed

Natura E3Na Network and relationship manager

Questions applied in the interviews
1 The study revealed some relevant capabilities in open innovation: ability to map market trends,
ability to map internal resources and partner mapping, interaction, and relationship ability in
the innovation ecosystem
2 Comment on these capabilities
3 Would you add others?
Company Interviewed
3M E33M Environment, Health and Product Safety Manager – EHS
3M E33M Senior Laboratory Specialist
Questions applied in the interviews
1 The study revealed some relevant capabilities in the practice of open innovation: Mapping and
updating trends in the market; Analysis and definition of trends and strategies; Mapping of
internal resources; Establishment of what to do openly; Mapping of potential partners;
Partnership establishments; Implementation of the partnership; Two-level interaction
monitoring; Technical – within the project and relational – inside and outside the project, and
Evaluation of the result of interaction and relationship in the partnership
Table 3. 2 Comment on these capabilities
Individual interview 3 Would you add others?
at Natura and in duo
at 3 M Brazil Source: Research data
In the interviews, the participants’ definitions regarding terms, situations and events were Dynamic
emphasized to explore their assumptions, their implicit meanings and tacit rules in the capabilities in
coding phases analyzed in Section (4.1). open
After analyzing the data in the initial coding, we returned to the field research for a new
data collection with more subjects, totaling seven managers, four in Natura and three in the innovation
company 3 M Brazil. According to Charmaz (2009), in any study, questions can occur during
the research, which leads the researcher to create new methods of data collection and to 119
review previous ones. In this new data collection, we applied five questions of the semi-
structured interview, which were conducted in loco in June 2016, using as strategy the focus
group in the focused coding phase, as shown in Table 2.
After analyzing the data in the focused coding according to Section (4.2), new questions
were asked to the interviewees illustrated in Table 3, theoretical coding phase. At Natura,
three questions were asked in September via Skype to one of the managers based on the
initial encodings and focused on data saturation. In possession of the information answered
by the manager of the company Natura and better understanding of the meanings about the
necessary capabilities in the practice of open innovation, we carried out the last data
collection with two managers of the company 3 M Brazil in October 2016 via Skype, in which
three questions were applied, saturating the data in this last analysis of theoretical coding
according to Section (4.3).
Thus, during the entire development of data collection and analysis in the coding phases,
the NVIVOV R V11 program was used to understand the codes that were used in the analysis

of results.

4. Analysis and discussion of results

This section brings the results from the coding phases regarding the identification of the
capabilities developed by the companies 3 M Brazil and Natura in their open innovation practices.

4.1 Initial encoding

In the first stage, initial encoding, the transcriptions of the interviews with E13M and E1Na
were read to identify the initial codes and their relationships. Table 4 indicates the eight
codes and the relationship among them identified at this first moment; the narratives were
used to better understand the meanings of these data. These codes and relationships show
the capabilities that are developed by the companies 3 M Brazil and Natura in their open
innovation practices.
The interviewees E1Na and E33M indicate some capabilities that were developed in
the company during the development of open innovation, among them: to seek signals
and trends, to identify, organize and make investments to obtain return from megatrends,
to identify problems, to deliver solution in megatrends and to have strategic harmony.
In addition to these, one must have the ability to interpret internal resources that the
company does and does not have, know the own organization and all its resources and to
acknowledge one’s own competence and ability to pursue new skills to identify innovation
opportunities.
According to E13M, the company should be oriented to identify business opportunities
that are likely to succeed, that generate value:
We always start with the business strategy and then, from the business strategy we see the
opportunities, usually the business emphasizes a lot the need for innovation, and then the pace,
differentiation, and guidelines. (E13M)
INMR Codes Relationships
18,2
Cod1: Analysis of trend and strategy Search for signs and trends
construction Ability to interpret resources
Oriented to identify business opportunity
Strategic tuning
Cod2: Innovation ecosystem Ability to interact
120 Ability to map partners and opportunities
Cod3: Investment and technological Ability to translate other companies’ competencies into
competence the enterprise model
Cod4: Culture, behavior, and communication Ability to talk in the innovation ecosystem
Cod5: Combination of skills Ability to identify your core and new competencies
Cod6: Open innovation as a complement to Complementary competence: people, technologies, or
the innovation process projects
Cod7: Possible forms of relationships Collaboration and learning
Establishment and construction of partnerships
Cooperation
Networks
Vendor, licensing, and contracts
Table 4. Cod8: Open innovation as a strategic Differentiation and speed of something complementary
Initial codes (nodes) alternative in the innovation process
and their
relationships Source: Research data

The capabilities developed in the practice of open innovation arise from sources that
include programs, universities, companies, suppliers, consultancies, consumer, sales
channel, open innovation events and startups. The interviewee E1Na reports the need
to identify capabilities to face some critical success factors and lessons in open
innovation such as, “to clarify your goal, what you want to do openly, the reason why,
have a clear strategy, and based on it you must define what you want to do more open,
with whom you want to do it, and how to seek these partners, in addition to the ‘support
of senior management’”.
Some lessons are pointed out in open innovation practices and the capabilities that must
be created, such as the ability to learn that there is intelligence inside and outside the
company and in this learning process value knowledge is generated:
The innovation ecosystem within the company must have a very large integration with the
functions, understand how innovation is linked to the company’s strategy, business strategy,
investments, and everything else. I have to innovate for the end customer, I have to innovate in
the business model, in the channel, and I do not innovate alone (E13M).
The interviewees E13M and E1Na highlight that the culture of practices and the culture of
the environment contribute to the development of capabilities, which requires
entrepreneurial behavior, collaboration, good communication, recognition, creative freedom
and ethical inflexibility of both commercial and technical parties. For the interviewee, what
happens with open innovation is that it is part of the innovation process, it has flows and
processes that must be managed throughout the process, and it must be in accordance with
the strategic planning.
This context corroborates the findings of Chesbrough and Bogers (2014, p. 17), who
redefine open innovation as “a process of distributed innovation based on knowledge flows
purposely managed by organizational boundaries”.
 From the understanding of the narratives of the interviewees E13M and E1Na in this Dynamic
first stage of initial coding, the capabilities identified so far in the practice of open innovation capabilities in
opened will be deepened in the focused coding stage. open
4.2 Focused coding
innovation
This stage aimed to identify in the narratives of the interviews with E23M and E2Na the
capabilities developed in the practice of open innovation by these companies in a more 121
targeted and selective way that relate to dynamic capabilities. For this verification,
categories of capabilities necessary in the practice of open innovation were formed, which
were identified by the researchers during the recursive process of analysis in the data
collection phase of the initial coding (E1Na; E13M) and in-depth interviews in this stage of
focused coding with (E2Na; E23M), who reported through their routines and management
processes the identification of capabilities in the company. These capabilities in the practice
of open innovation are confronted with the foundations advocated by Teece (2007, 2018)
regarding the activities of sensing, seizing and transforming.
Therefore, the capabilities of mapping and updating trends in the market (Cat1), analysis
of and setting trends and strategies (Cat2) and mapping of internal resources (Cat3) are
understood as capabilities related to sensing activities.
4.2.1 Cat1 – capability to map and update market trends. This capability, according to
the interviewees, is understood as an essential capability to succeed, because the company
needs to choose its partners well, it needs to establish a few criteria; it is precisely from the
mapping of internal resources that we establish what to look for, what to find and who will
be the potential partners:
We have this concern that this mapping has to be done very carefully, because people tend to map
to justify what they’re already doing, and not to identify new trends, so these are the things that
need to be taken care of in mapping (E2Na).
The E23M interviewee reports the company’s experience in a project that related to the
exchange of Banco Real’s flag by Santander in 2011, and the creation of the company 3 M
Services, which demanded numerous partnerships to execute this project:
This experience generated a much broader look for the opportunity provided by the service
sector, this specific experience is related to a project where we were partners with several
companies and which has become a center that develops the competence of service offers, opening
doors to various business divisions (E23M).
Therefore, for the respondents, having the ability to map trends in the market is an ability
that the company must have to update itself to develop open innovation in the company. As
Teece (2007) states, the organization depends on individual creativity and is based on
organizational processes of search, interpretation and creation.
4.2.2 Cat2 – capability to analyze and define trends and strategies. This capability is
reported by the interviewees as a relevant ability to identify, organize and make investments
to obtain returns from megatrends, to identify problems and to deliver solution. An example
can be verified in the narrative of E23M:
An automaker for urban mobility, this is a megatrend, what does this reflect on the automaker?
Cars have to be more economic, you spend a lot of time in traffic jams, they need to provide more
fun, etc. That’s a thing for the car, and what about the citizen? What about the City Hall? It’s
something else. So, depending on each project, the same strand may have completely different
needs.
INMR The definition of themes derived from the market generates the need for the capability to
18,2 analyze trends, megatrends and strategies, which influence the way of working more closely
or more openly at any stage of the project in the innovation process and in the relationship
with the innovation ecosystem according to the interviewees. As E2Na reports:
We may be looking for a technological solution in which France is more advanced, but the
business area may be looking at Mexico and seeing how marketing leaders worked on the
122 introduction of the same project, that is, open innovation is happening in all dimensions involved
with innovation and at 360 degrees as well.
As Teece (2007) points out, the organization must detect a new technological or market
opportunity, it must be capitalized through new products, processes, or services.
4.2.3 Cat3 – capability to map internal resources. This capability is identified as a way of
mapping the competencies installed in the company. Thus, according to E23M, “it is
necessary to have the ability to interpret the internal resources that it does or does not have,
in addition to having the knowledge of its own organization and all its available resources, it
must have the knowledge of its competence and seek new skills for innovation
opportunities”. As the E23M reports:
You have a specific project, software development, and we do not have the competence, but that is
fundamental to the project, I will seek a partner to do this, you have a project schedule and the
resources must be found. I realize that internally I do not have this competence, that is, neither
3 M Brazil nor worldwide (3 M world), so I look for it outside the organization.
E23M points out that “it is important to have this capability, because when you are looking
for a partner in the network, there has been no previous experience”.
These narratives support the statement of Dobelin and Galina (2019) that in sensing
scanning, learning and interpretation activities are identified, which allows access to
information and knowledge that can create opportunities.
After identifying these capabilities, we checked the transition of activities from
sensing to seizing in the practice of open innovation and development of capabilities in
this environment. The capabilities of establishing what to do openly (Cat4), mapping
potential partners (Cat5) and establishing partners (Cat6) are reported as seizing
activities.
4.2.4 Cat4 – capability to establish what to do openly. This capability emphasizes the way
the company prepares and the ability to relate and to establish the models and advance
initiatives with the ecosystem and combine it all internally and externally to succeed in open
innovation.
In the definition of what to do openly, the interviewees pointed out the concern with
contractual relationships. For E1Na, “it is necessary to take certain care in the
establishment of an employment contract in open innovation, this requires a need to
develop guidelines, clear policies, internal norms that facilitate the establishment of
this partnership.”
For E23M, the practice of open innovation includes the client, the perception of its
curiosity that contributes to the definition of what to do openly. As exemplified by the
interviewees:
The Brazilian market uses one type of packaging on the outside, one type of varnish, in Europe it
is another one, in the United States it is another one, in Asia another one. So, in the same project
you have to look at each of them in terms of open innovation, what are the characteristics of your
market, your customer, you will ask the customer, and you will be his partner, you make the
project dedicated to the customer (E23M).
As Chesbrough (2012) and Bogers et al. (2018) point out, one way the company has used to Dynamic
bring these complements has been the practice of open innovation as a strategic alternative capabilities in
to gain competitive advantage through internal and external collaboration to identify
open
opportunities and develop new ones.
4.2.5 Cat5 – capability of mapping potential partners. This capability arises from the innovation
moment the company has mapped, analyzed and defined trends. Based on such assumption,
according to E2Na, “it has already been verified who is working with whom, who has filed 123
the most patents, they begin to identify which are the potential partners who can later
establish the partnership”:
By understanding which resources and skills they have internally, from looking at the ecosystem
to view external resources and capabilities, potential partners are identified to build a partnership
strategy. Thus, it is necessary to have the ability to know where the partners are, which is this
ability to map partners (E2Na).
For collaboration and partnership to occur, several forms of relationship and interaction
must be developed in the innovation ecosystem with upstream and downstream supply
providers and in networks, at open innovation events as mentioned by E23M below:
In the Tech Forum we join the technical community to discuss a particular subject. The goal was
to bring in the big suppliers, great partners for them to show what they are working on in the
future as well. In Tear Down we bring the product of the customer with a multifunctional team,
multidisciplinary, and we disassemble the product that will signal several opportunities for
innovation with the customer.
As Teece (2007) states, it is necessary for the organization to make investments to create
strategies around investment decisions, set the time, increase the advantages of return and
leverage products and services from one application to another.
4.2.6 Cat6 – capability to establish partnerships. This capability is considered relevant
because the company must know who it is dealing with in the partnership, it needs to know
ways of interaction, it needs to address a number of issues, such as intellectual property,
financial plan and plan of work. According to E2Na:
In addition to having the ability to know where the partners are, which is the ability to map, it is
also relevant to know how you interact with that partner, how you create this relationship, how
you establish the partnership, how you deepen, see and draw paths that are more flexible to meet
the needs of the company.
Regarding the relationship in the partnership, according to E2Na, “it occurs at various
levels, it can start with an informal approach with the partner and can be a more
institutional approach”. However, according to the interviewees E23M and E2Na, the
establishment of the partnership entails respect and compliance to what was agreed and
what is the value for each one involved. In a formalized way, the company must create the
partnership and establish the type of relationship and interaction previously agreed on.
These reports corroborate the findings of Öberg and Alexander (2018), who highlight
that the links among the levels in the organization are related to the search for relationships
and collaboration, the market path and shared activities, with degrees of formalization and
levels of knowledge among the actors. It is relevant to consider knowledge management
criteria and management strategies in different dimensions of openness.
As Dobelin and Galina (2019) affirm, in the stage of seizing the companies seize what was
obtained during sensing’s activities and represent the company’s responsiveness to the
environment.
INMR Next, the transforming activities are identified in partnership implementation
18,2 capabilities (Cat7), monitoring the interaction at two levels – technical, within the project
and relational inside and outside the project (Cat8). Subsequently, we will identify the
evaluation of the results stemming from the relationship with partners (Cat9).
4.2.7 Cat7 – capability to implement the partnership. This capability arises from the
requirement of an integrative and strategic effort with all interfaces that interact internally
124 and externally in the relationship with partners in the innovation ecosystem. For the
respondent E23M, “this learning comes in practice and over time with an improvement that
requires great effort when developing open innovation”. This learning “arises from the
relationship, how much the company can understand how things happen externally and
bring them into the house” (E2Na). As reported:
It is much easier to evolve in some processes internally and learn from what is being done in the
interaction, how much the company can absorb knowledge and improve the implementation
internally. Always go to the next step and do not go back, and then you must go through it all
over again (E2Na).
In transforming, the organization seeks continuous renewal, that is, transformation or
change (Teece, 2007).
4.2.8 Cat8 – capability of monitoring Two-Level Interaction – Inside project and
relational technician inside and outside project. This capability comprises the monitoring
of interaction and relationship, it is the monitoring from the moment the partner is
hired until the relationship begins to get established, as it happens with interaction in
the project. Thus, according to E2Na, there are two levels of relationship, “one that is
the technical level, that is inside the project, and the other is to see how the relationship
among people and among institutions is”. This understanding can be verified in the
following report:
Monitoring the interaction is carried out in the relationship position and works as a condition
when defining a project (E33M). This monitoring of interactions takes place when working with
the provision of service, total outsourcing, buying from a partner, working with scientific
cooperation with universities, etc. (E2Na).
In this context, organizational culture influences the way organizations operate in open
innovation. According to E23M, “it is the culture that gives this strong foundation for open
innovation to be present all the time in actions, it is an internalized thing that is already
within the company’s own culture”. According to the E23M:
Our culture strengthens collaboration too much, we know and believe that innovation comes from
collaboration and diversity, it affects the way open innovation is made, even internally. People
have a huge predisposition to collaboration because of culture, it has the culture of 15% that lets
you think of the new, the abstract, the completely different.

4.2.9 Cat9 – capability to evaluate the outcome of interaction and relationship in

partnership. This capability is identified after establishing what is contracted and after
monitoring the interaction or relationship in the partnership. Thus, according to the
interviewees, in this relationship and interaction with the partner, it is important to evaluate
the resources and capabilities involved, the knowledge and value generated in the
partnership to define, or not, future partnerships. For E2Na:
[. . .] as people get to know the company and its way of doing innovation, they get to know what it
offers or can contribute to the process of collaboration with the different actors becoming a
 partner of choice, they understand that when something very relevant arises, people will look for Dynamic
a partner to develop the relationship.
capabilities in
In interaction and relationship with stakeholders, sustainability is an important factor in the open
organization. As E2Na reports: innovation
When talking about partners or public institutions, you run into some limitations (policies and
guidelines of each partner) and have to have flexibility, a power of evaluation, how far we want to
go with that relationship. 125
In this context, transforming activity is identified in the routines and processes of the
interviewees in Cat7, Cat8 and Cat9. According to Dobelin and Galina (2019), transforming
activities aim at helping the organization to configure the organizational culture to accept
high levels of internal change through decentralization and flexibilization and the
implementation of modern techniques of human resources, knowledge management and
learning mechanisms.

4.3 Theoretical coding

The theoretical codes and categories are integrative and outline the categories and focal
codes gathered (Charmaz, 2009). Thus, the various routines and organizational processes of
the companies were understood from the interviewees’ reports in the coding stages that
allowed relating capabilities in the practice of open innovation with the dynamic capabilities
of sensing, seizing and transforming, according to Teece (2007, 2018).
To saturate the data of what we understood from the findings regarding the
identification of capabilities in open innovation related to dynamic capabilities analyzed and
discussed in the coding phase in the Section (4.2), we sought in this stage of theoretical
codification to reinforce this understanding with the interviewees E3Na and E33M,
respectively.
Noteworthy, as reported in the interview with E3Na:
I think that to understand the mapping capability you’ve identified, we do not call this part
tracking interaction and relationship as mapping. Mapping to us is when you are mapping to
establish, to delete. We do not use mapping for this other part. It’s really a follow-up of the
relationship, the interaction. Mapping for us comes in the beginning, it practically comes when
you already know what you want to do, then you already have the strategic choice, and you start
mapping who the potential partners are.
It is also relevant to transcribe a part of the interview carried out with participant E33M:
I identify our performance in all these capabilities in general. I cannot now think of the lack of any
capability in this process of interaction with external partners. It seems to me that all of them are
reported here. I cannot think of anything additional. They are somewhat fundamental to drive the
kind of open innovation you want.
The abilities identified in this study and related to dynamic capabilities of sensing, seizing
and transforming arise from the understanding of the company in its condition of contour in
the ecosystem to talk, guide and discuss themes and models in the process of collaboration
and partnership in the practice of open innovation. As discussed by Teece (2020), open
innovation and dynamic capabilities reinforce one another. Thus, the relationship and
interaction in partnerships are influenced by how much the company can have the
capability of openness (Öberg & Alexander, 2018) in the channels of communication and
feedback for the improvement of ideas, development of hierarchies, routines and
INMR organizational processes at the management level and by the ability to orchestrate resources
18,2 (Teece, 2007) or dynamic package (Peteraf et al., 2013).
In the practice of open innovation, cognitive and non-cognitive micro-foundations are
developed (Nayak et al., 2019), and it is necessary to have knowledge management
capability (Lichtenthaler & Lichtenthaler, 2009) that triggers constant reformulation and
superior performance in achieving competitive advantage (Teece, 2018).
126 This set of capabilities combined in the practice of open innovation contributes to the
strengthening of dynamic capabilities. In this sense, it is necessary to develop strategic
management capabilities of internal and external knowledge to obtain competitive advantage.
This strategic management capability is understood as a dynamic capability that combines the
strategic performance of the organization in the search and use of resources, competencies,
technologies and value knowledge for processes and routines that arise from relationships,
collaboration and interaction with stakeholders in the environment of open innovation.
This understanding corroborates the findings of Bulgacov and Takahashi (2019), who
state that the appropriate combination between the organization’s performance through
processes and routines and its relationship with suppliers, customers and other actors in the
environment is at the heart of the proposal of dynamic capabilities; and of Teece (2020), who
states that open innovation enriches the company’s knowledge base and its ability to detect
and seize to transform the company’s internal resources.

5. Final considerations
The general objective of this article was to answer the following research question “How do
capabilities in the practice of open innovation relate to dynamic capabilities?”. In the practice
of open innovation carried out by the companies 3 M of Brazil and Natura, we could identify
nine capabilities that relate to the dynamic capabilities of sensing, seizing and transforming:
Sensing (capabilities of mapping and updating trends in the market, analysis and definition
of trends and strategies and mapping of internal resources); seizing (capability to establish
what to do openly, to map potential partners and to establish partners); and transforming
(capabilities related to partnership implementation, monitoring interaction at two levels:
technical within the project and relational inside and outside the project and evaluation of
the result of interaction and relationship in partnership).
This set of capabilities present in open innovation indicates the development of the dynamic
capability to strategically manage internal and external knowledge. We identified that these
combined capabilities are relevant in the configuration of routines, processes and internal and
external relationships as a critical capability for the management of the company.
Our paper presents a few theoretical and practical contributions. It contributes to the
evolution and consolidation of INMR’s innovation literature, to the extent that it allows to
understand the capabilities developed in the practice of open innovation, broadens
discussions on dynamic capabilities (Teece, 2007, 2018, 2020), open innovation (Öberg &
Alexander, 2018; Bogers et al., 2019) and emphasizes internal and external knowledge
management capabilities in the innovation process (Lichtenthaler & Lichtenthaler, 2009).
The limitation of the study refers to the number of interviewees approached; therefore,
our findings do not allow generalizations. However, the use of grounded theory through
various data collection strategies in the interviews allowed the triangulation of data,
increasing the credibility, validity and quality of the research.
We suggest for future studies to verify whether these capabilities in the practice of open
innovation, related to dynamic capability, are understood by managers in organizations
operating in different segments and with different sizes.
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Corresponding author
Edson Rodrigues de Aro can be contacted at: [email protected]

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