Studies of corporate strategy focus on how diversification and specialization drive structural design and subsequent value creation. However, there is a dearth of research regarding the micro-foundations of radical change in multi-business configuration and coordination capabilities. To address this gap, we conducted a longitudinal study of the Saab Group - a diversified corporation that underwent strategic renewal between 1995 and 2010 during periods of major environmental turbulence. Over this period, one of Saab’s business units – Saab Training Systems – played a key role in the corporation’s strategic renewal. We used an abductive case method approach that enabled us to discover five key insights regarding recursive interactions of corporate- and business unit-level capabilities that our initial theoretical focus had not anticipated.