The Co-Evolution of Firm-Centered Knowledge Networks and Capabilities in Late Industrializing Countries: The Case of Petrobras in the Offshore Oil Innovation System in Brazil

Summary This paper addresses neglected questions about the long-term co-evolution of capabilities and networks at the heart of latecomer innovation systems, examining the case of Petrobras, the Brazilian oil company between the late-1960s and the early-2000s. The paper demonstrates the existence of accumulative, non-recursive, and self-reinforcing relationship between capabilities and networks. The firm's capabilities at a particular time enabled and constrained the forms of networks that were possible, while increases in capabilities functioned as "entry tickets" to participate in new network forms. In turn, knowledge networks at any time helped to consolidate emerging levels of capabilities, and also reach higher capability margins.