Abstract: Power generation companies in China are facing both opportunities and challenges amid the sector’s large-scale growth, low-carbon transformation, and market-oriented reform. There arises an urgent need to build these companies’ capabilities to cope with the challenges. However, previous studies are insufficient in how to build a company’s capability for better performance, and lacks empirical supports. This paper presents an analysis of the status quo of the companies’ capability building, and integrates strategic alignment and organizational alignment innovatively. A capability building model is developed and verified for the companies from alignment perspectives, and the influence mechanism among strategic alignment, organizational alignment, capability building, corporate performance, and sustainable development is revealed. Three influencing paths: (a) strategic alignment → engineering and technical capabilities → corporate performance; (b) strategic alignment → organizational alignment → learning and innovative capabilities → corporate performance / sustainable development; (c) strategic alignment → organizational alignment → learning and innovative capabilities → business and managerial capabilities / engineering and technical capabilities → corporate performance / sustainable development are identified. Combined with a case study, this paper gives strategic suggestions to build the capability.

Key words: power generation company, strategic alignment, organizational alignment, capability building, firm performance