This paper attempts to propose a conceptual framework that explains the relationship between knowledge co-evolutionary mechanisms and innovation development. Combining strategic management, innovation management and organisational ecology theories, we try to review and explain the development of product innovation or process innovation through organisational knowledge interactions between two or more firms. We focus on the knowledge co-evolutionary cycle and suggest two sub-mechanisms that should be considered: the knowledge micro-evolutionary mechanism (intra-organisation) and the knowledge macro-evolutionary mechanism (inter-organisation). We illustrate this framework by discussing the case study of a leading semiconductor firm, United Microelectronics Corp., (UMC) in Taiwan. Combining its strategic partners' fundamental research knowledge systems, the vendor's IP knowledge systems, the customer's IC design knowledge systems, and UMC's process innovation knowledge system, UMC not only enhances the process innovation capability for itself but also accelerates its customers' product innovation performance to market. Through partnership in the co-evolutionary ecosystem, UMC generates and accumulates dynamic capabilities.
International Journal of Technology Management, 33(2), 183-195