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In this article, we argue that the concept of innovation capability has not been fully explored. In this way, we address the following research question: what are the nature and logics of the capabilities required to develop innovations within knowledge-intensive sectors? To study the addressed question, we develop a single case study and analyse its major implications for innovation management. Our case study focuses on the One Semi-Automated Forces (OneSAF) Objective System (OOS), a modelling and simulation technology to be used as a training and education system by the U.S. Army and parent services (Parsons and Wittman, 2005). By seeking to economise on resources dedicated to training and education technology, the U.S. Department of Defence have adopted a new strategy for software development, maintenance, updating and renewing (Herz, Lucas and Scott, 2006). Whether this new strategy becomes effective shall depend on the ability of the participants (e.g., user communities, military services, prime contractors, universities) to hold and develop appropriate capabilities. JEL Codes: O30, O31, O32, O39