Research uncovering the behavioural and cognitive foundations of capability development has gained traction in recent years. However, the emotional foundations of capability development have not been adequately addressed. This is an important gap; if emotions impact decisions and actions of key organisational actors, this suggests an influence on capability development processes in organisations, with implications for their survival and evolution. In this paper, we therefore explore ‘how do the emotions of key strategists enable and/or hinder capability development?’ Our in-depth qualitative research, based on five small- and medium-sized enterprises (SMEs), shows that emotions of key strategists, including emotional tensions and ambivalence, have multi-faceted effects on capability development depending on the activation level of pleasant and unpleasant emotions experienced. This adds to extant understanding of idiosyncratic foundations of capability development and extends conversations regarding the internal dynamics behind organisational survival and evolution.

The literature on capability development has focussed on either the content or process of capability development. Such a partial explanation of the capability development phenomenon has created some flaws in the literature. This paper argues that integrating the content and process of capability development is the way ahead in theorising in this field. Analysis of the methodological development in parallel to theory development reveals the critical role of microprocesses in such integration. To develop an integrative view of capability development we propose a conceptualisation of capability development processes through internal and external strategic fit and emphasise the role of knowledge and innovation processes. We also argue that a critical realism approach is of high relevance to researching such an integrative view.