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Current research has theorized that developing dynamic capability can be viewed as a problem-finding and problem-solving process in terms of a firm’s resource reconfiguration. However, there continues to be a scarcity of empirical research on how firms and managers solve innovation problems to develop capabilities. Building on the theoretical lens of problem-solving perspective (PSP) and dynamic capability literature, the purpose of this paper is to address this gap by examining how a large automobile company developed different types of capabilities (combining capability, replacing capability and evolving capability) and their underlying problem-solving processes.

An inductive multi-case design was used to investigate the problem-solving process in different types of capability development in the context of NPD. This methodology has a number of benefits, including accommodation of the rich data used to compare the inferences among cases, thus enabling researchers to extend the emergent theory.

The findings of a multi-case study show that managers tend to direct their attentions to searching for solutions among external resources when the problem is framed as a combination of existing capabilities. Conversely, managers direct their attention to facilitating organizational learning when the problem is framed as an extension of an existing capability. However, managers need to direct more attention to gaining legitimacy when the problem is framed as a replacement of existing capabilities. The findings thus respond to increasing calls for more investigations into the microfoundations underlying firms’ capabilities, by revealing different instances of PSP, and their connections with different actions that take to capability development.

By comparatively examining the unique problem-solving process underlying an established firm’s innovative challenges in developing capabilities, the findings identify different instances of PSP, and their connections with different actions that take to capability development. Thus, the findings respond to increasing calls for more investigation into the microfoundations of dynamic capabilities for organizational outcomes. The findings also add to the new product development literature by examining how a product innovation can be framed differently depending on the attributes of an innovation problem. As PSP is particularly useful in offering guidance to firms’ innovative search, it is important for managers to pay attention to the attribute of each product and its domain of solution in considering the effectiveness of value creation.

While extant research has highlighted the entrepreneurial strategy and resource barriers faced by new ventures, there is little understanding of how these new ventures will be able to overcome such obstacles and implement their strategic search. Building on the perspective of emergent strategy, the purpose of this paper is to investigate the evolutionary process of strategy formation in an entrepreneurial firm in the context of an emerging economy.

This study uses a longitudinal case study of Lenovo and examines how its strategic search unfolded during its formative years. It utilizes an explorative research approach with data gathered from many sources including published and unpublished documents, existing case studies, and primary data files and documents from Lenovo’s first chief engineer.

The case findings presented herein show that Lenovo’s strategic search process was progressive and emergent. As opposed to a deliberate strategy-making mode, in which ends and means can be planned in advance, this study presents entrepreneurial strategy as an emergent process of guiding experiment and learning, whereby firms and entrepreneurs increase the knowledge of their strategic vision over time.

There are limitations in the sampling and data analysis, further research could expand this paper’s findings to other industry settings or countries.

The findings offer important insights into how entrepreneurial firms identify and explore constraints and opportunities from the external environment and evolve their strategy over time. This implication is especially important in the context of emerging economies in which firms in their formative years are faced with resource and environmental constraints.

This paper provides unique insights on how an entrepreneurial firm in an emerging economy mobilizes resources and implements strategic search. Future empirical research can build on these qualitative findings to expand research agenda toward other contexts.