Innovation capacity: working towards a mechanism for improving innovation within an inter‐organizational network

Improving the innovation capacity of firms is dependent upon various factors, among which the continuous supply of innovation resources and the accumulation of innovation knowledge are crucial. Utilizing the interaction between the two factors within an inter‐organizational network, a firm should be working towards a mechanism for improving innovation capacity (MIIC) which benefits the process of research and development (R&D) for new products, not only to meet customer needs but also to create new markets. This paper examines the experience of a firm in improving its innovation capacity through the initiation of a collaborative project with one other network member. The result implies that the two factors dynamically interact within inter‐organizational networks creating a cycle of improvement and contributing to the development of innovation capacity for improved organizational competitiveness.