Abstract: From the long-term core competence perspective of organizations, this paper studies the impact factors and mechanism for organizational innovation model selection. Through two case studies of Dong-E E-Jiao Company in China and SANKYU in Japan, two-level core competences are identified which are Capability Pivot (CPT) and Capability Perimeter (CPR). As multiple innovation models commonly exist within single organization, the selection of innovation model shows the transformation of core competences. Close innovation and open innovation associate with CPT and CPR respectively. Innovation depth and innovation breadth are suitable to high-threshold exclusive competence periphery and low-threshold cluster competence periphery respectively. In comparison to currently innovation theory focusing on organizational strategy and decision making analysis, this core competence level of analysis framework opens the black box for innovation model selection in a micro level, therefore it gives underline explanation of organizational innovation behaviors.

Key words: open innovation, core competence, inbound, outbound, case study