Resources and dynamic capabilities are among the main conceptual pillars of strategic management literature. More precisely, sensing the environment, seizing opportunities and reconfiguring resources to avoid rigidities, together represent the first-order dynamic capabilities described by Teece (2007). However, the underlying microfoundations that give rise to such dynamic capabilities including behaviours, practices and organizational components remain largely unspecified, particularly those affecting firm innovation. Our empirical qualitative approach is based on three case studies of innovative financial institutions. Three companies were selected to explore their innovation challenge in the context of environmental threats from the Big Tech (Facebook, Apple, Amazon, etc.) and Financial technology (Fintech) threat development. Our results show that microfoundations are found at the individual, group and firm levels along with their interactions across and within each of these levels. More specifically, formal and informal strategic intelligence processes as well as directed and undirected information research approaches are critical microfoundations of sensing. Second, individual internal and external network diversity and social integration mechanisms are microfoundations of seizing, to better capture innovation opportunities. Finally, we propose how reconfiguration microfoundations, namely organic structure and core self-evaluation interact to explain innovation capabilities.
