Organizational capabilities of large industrial firms constitute a pillar in Alfred Chandler's theory of the emergence of managerial capitalism. Science based firms represent one important sector within such an economic context. This dissertation describes the evolution of the large electrical manufacturers and their involvement in the power transmission equipment business between 1878-1990. In electrical power transmission technology, there was an initial "battle of the currents" regarding the choice of alternating current (AC) or direct current (DC) technology. This battle was won by AC. However, after World War II, an alternative technology was developed in high voltage DC (HVDC). Concurrent with this technological evolution, the electrical manufacturing industry was characterized by increasing concentration. In electrical manufacturing the largest firms diversified and grew into corporate giants. However, by the end of the 1980s, several of the initial giants had exited the power transmission equipment business, while some of the smaller, more focused, firms had amalgamated into new transnational giants. Departing in aknowledge-based theory of the firm, it is suggested that organizational capabilities can be analyzed in terms of management-based, technology-based, and market-based activities. Using this framework, these activities are discussed as knowledge-based and related to properties associated with organizational learning and path-dependency.