Cognition and Hierarchy: Rethinking the Microfoundations of Capabilities’ Development

This article identifies gaps in the microfoundations of capabilities research, particularly in work that is based on the framework of evolutionary economics. It argues that such research has focused excessively on the quasi-automatic, routine-based aspects of capability development, and largely neglected the roles played by cognition and organizational hierarchy. By deriving a model of search that jointly considers how routine-based and cognitive logics of action coexist within an organizational hierarchy to affect capability development, this article offers three contributions. First, it delineates the traits of a microfoundational structure for research on capabilities that begins to address these gaps.…