Mechanisms of capability evolution in the Finnish forest industry cluster

In recent years researchers have shown increasing interest in capabilities as the foundation of competitive advantage in the forest industry. However, we still do not know how these capabilities change in the firms and in their interactions. Therefore we ask: through what mechanisms do capabilities evolve in the forest industry context? The study was conducted by interviewing 30 forest industry experts and the data was analyzed qualitatively. We find that the main mechanisms of capability evolution include capability gaps, capability selection, capability development and capability outcomes. The study contributes through a rich description of capability evolution and by identifying theoretically meaningful mechanisms through which capability evolution takes place. Furthermore, several implications for practitioners are presented.