While innovation ecosystems have been proven effective for driving innovation in high-tech industries, their application in construction with cross laminated timber (CLT) products have received limited attention, with most studies adopting a broad perspective on ecosystems, encompassing the entire supply network around individual building projects. This study explores niche innovation ecosystems within the context of construction with CLT products. Data from 15 CLT-based building projects in mid Sweden were collected through observations and interviews and analysed using a method combining existing theory on innovation ecosystem structure with social network analysis. Innovation ecosystem structure was identified within five of the projects, encompassing two unique ecosystems. These ecosystems feature interorganisational links and actor-level expected value capture in two dimensions: value creation within the standard contractual framework of the projects and the innovation ecosystem superimposed on these projects. The novel method bridges the gap between innovation ecosystem research and CLT practices. The findings reveal that niche innovation ecosystems interact with CLT-based building projects through collaborative efforts across multiple projects and partners. These ecosystems feature alignment links that indicate both intra – and inter-project interdependencies, potentially driving innovation in construction. Role extensions within these ecosystems highlight the complexity and adaptability required in the construction industry.

Introduction: Despite growing recognition of engineered wood products as a critical enabler of low-carbon and circular construction, the diffusion of cross laminated timber (CLT) remains comparatively slow relative to its technical maturity and sustainability potential. This suggests that timber adoption is shaped not only as a design challenge but also by firms’ capabilities, collaborative practices, and the broader conditions under which innovations are developed and commercialized. Such conditions include organize renewal, manage interdependencies, allocate responsibilities, and align around shared value propositions across projects. This study explores how dynamic capabilities, understood as situated practices embedded in recurring cross-project interactions, may enable co-innovation in CLT-based new-build and renovation across projects within the contextual boundary of emerging innovation ecosystems (IE).

Methods: Drawing on an exploratory case study of Swedish CLT-based construction, the empirical material consists of transcribed interviews, focus groups and observation notes representing and contextualizing activities indicative of dynamic capabilities among collaborating firms. Thematic analysis was applied for developing activities into capabilities.

Results: Activities were developed into three levels: project-specific value proposition reconfiguration and resource coordination (Level 1, operational capabilities), joint development and technology implementation (Level 2, dynamic capabilities), and knowledge exchange and actor alignment (Level 3, dynamic capabilities). Capability development occurred through iterative adaptations, informal coordination, and relational negotiations rather than fixed or rule based processes, making it emergent and context-dependent.

Discussion: These findings show that IE structures may create conditions that facilitate collaborative adaptation and learning, potentially supporting innovation beyond individual projects. By foregrounding co-innovation at the firm level, the study shows how these dynamic capabilities can create conditions for scaling CLT adoption beyond isolated projects, supporting broader timber uptake and sustainability ambitions.