<p>This study examines how firm innovation evolves through the joint influence of organizational search and alliance portfolio configuration. Drawing on longitudinal case studies of two Chinese firms, BOE Technology Group and Dongqi Steam Turbine Co., Ltd., we show that firm innovation unfolds and evolves as a cumulative, stage-based process. Incremental innovation constitutes a persistent foundation throughout firm development, while radical, disruptive, and breakthrough innovations emerge under different conditions as firms progress across stages. Specifically, firms move toward more transformative forms of innovation as they reconfigure the alignment between internal learning processes and external collaboration. Importantly, breakthrough innovation does not replace earlier forms of innovation but builds on them through evolving configurations of learning and coordination mechanisms. By conceptualizing firm innovation as an evolutionary capability-building process, this study advances research on firm innovation and dynamic capabilities and offers an integrated perspective on how multiple innovation types co-evolve over time.</p>