A critical analysis of absorptive capacity research

The ability to absorb new external knowledge (ACAP) becomes a major source of innovation and competitive advantage. Despite the abundance of literature devoted to this concept, it remains shrouded in conceptual and empirical confusion. In this paper, we will attempt to shed light on this construct. Based on a thematic analysis of this literature, we identify five main themes covered by absorptive capacity research, such as: conceptualizations of ACAP, dimensions, measurement scales, main antecedents and organizational outputs of ACAP. The results show that, despite the efforts made in this field, the variety of conceptualizations, the diversity of measures used, the focus on “Content” of knowledge at the expense of “Processes”, “IT Systems” and “Context” of their integration, restrict our understanding of this concept. The paper then addresses some limitations of that works, and discusses avenues for future researches

Managing Potential and Realized Absorptive Capacity: How do Organizational Antecedents matter?

This study explores how organizational antecedents affect potential and realized absorptive capacity. Our study identifies differential effects for both components of absorptive capacity. Results indicate that organizational mechanisms associated with coordination capabilities (i.e. cross-functional interfaces, participation in decision-making, and job rotation) primarily enhance a unit’s potential absorptive capacity. Organizational mechanisms associated with socialization capabilities (i.e. connectedness and socialization tactics) primarily increase a unit’s realized absorptive capacity. Our findings reveal why units may have difficulties in managing levels of potential and realized absorptive capacity and vary in their ability to create value from their absorptive capacity

Firm Absorptive Capacity: Multidimensionality, Drivers, and Contextual Conditions

Purpose: This paper aims to enrich absorptive capacity literature by specifically highlighting and adding environmental conditions and internationalisation process to the original conceptualisation. Design/methodology/approach: The authors undertake a conceptual analysis and present an enhanced framework of absorptive capacity by integrating multiple literature streams. The authors have analysed the most relevant literature to provide underlying justifications for the proposed conceptual model. Findings: Absorptive capacity ensures the long-term survival and success of a business. To develop absorptive capacity successfully, firms should focus on its various dimensions and existing intangible assets and external environment. The multidimensionality and richness of absorptive capacity is an under-explored area in the existing literature. The authors revisit the conceptualisation of absorptive capacity and add environmental conditions and the internationalisation process to the original conceptualisation. Absorptive capacity does not lead to a competitive advantage independent of its environment. To successfully develop it, firms have to adopt a holistic approach by considering the multi-dimensions, drivers and contextual conditions of absorptive capacity. Originality/value: This study contributes by conceptualising absorptive capacity as a dynamic capability. It is one of the first studies to specifically propose a framework that combines antecedents (prior knowledge, combinative capabilities and IT capabilities), moderators (environmental conditions, namely, market and technological turbulence, competitiveness and the internationalisation process) and consequences (competitive advantage). The study offers a unique conceptualisation with implications for researchers and managers. As a result, managers will have a well-defined blueprint to create value by using firm capabilities

Extending Absorptive Capacity from the Microfoundations Perspective

Success in a competitive business environment can be a question of innovation skills. One way to explore a firm’s innovative capabilities is to measure its absorptive capacity: the ability to acquire, assimilate, transform and exploit knowledge. The purpose of this study is to discover the practices and routines that support the development of high absorptive capacity. Identifying the microfoundations of the construct provides practical information about ways to improve firm performance. The study provides an overview of the absorptive capacity construct, its antecedents and outcomes. The emphasis is on Zahra and George’s (2002) reconceptualization, which is used as the framework of the study. The empirical part is based on the four-dimensional model of absorptive capacity and it examines the practices of knowledge acquisition, assimilation, transformation and exploitation in the Finnish food manufacturing industry. Examples from five case companies with above average absorptive capacity help to explain what kind of mechanisms firms can use and what kind of efforts they must make in order to improve their absorptive capacity. The study contributes to the research of the microfoundations of absorptive capacity and supports the operationalization of the construct. The results indicate that while there are common factors that enhance absorptive capacity in general, each of the four dimensions have their specificities. Analyzing and comparing the case companies shows certain practices in each dimension that together build up to a high absorptive capacity and thereby to gaining a competitive advantage.fi=Opinnäytetyö kokotekstinä PDF-muodossa.|en=Thesis fulltext in PDF format.|sv=Lärdomsprov tillgängligt som fulltext i PDF-format

Absorptive Capability of Japanese and European MNCs : Balance between Autonomy and Control of R&D Subsidiaries in the US

This paper analyzes the capability of Japanese and European multinational companies (MNCs) to absorb technological knowledge from the United States through their R&D operation in the US. Employing the notion of “absorptive capacity”, this research defines the capability of a firm to absorb technological knowledge from abroad as “absorptive capability (AC),” and aims to examine the components of AC and their interrelationships using patent and sales data in the context of R&D management of Japanese and European MNCs at home and in the US. This paper also presents the taxonomies to show that a balance of autonomy and control is the key to increasing AC in the US and contributing to the US market sales by utilizing the home and host country technologies

Absorptive Capacity: Empirical Exploration on Trait of Organizational Structure and Absorptive Capacity Practices

Technology Management/ Information System/ EntrepreneurshipOpen innovation literature argues that firms need to identify new knowledge and collaborate it through the innovation process. In line with the issue, absorptive capacity has been highlighted in the various fields such as technology management, strategic management, international business and organizational economics. But the component, outcomes, antecedents and definition of absorptive capacity is diverse and somewhat ambiguous. Relevant to this issue, many studies attempted to conceptualize absorptive capacity with different definitions and dimensions. However, few undertake dealing with other antecedents such as characteristics of organizational structure. In this paper, we aim to empirically explore the antecedents of absorptive capacity, namely formalization, decentralization, and coordination capability, those which possibly affect the potential absorptive capacity and realized absorptive capacity. Further, we try to find effect of absorptive capacity practices on absorptive capacity. By doing so, findings are expected to allow firms to better understand how absorptive capacities can be developed.ope

The Relationship between Knowledge Transfer and Competitiveness in “SMES” with Emphasis on Absorptive Capacity and Combinative Capabilities

In order to improve SMES’ competitiveness, introduction of Knowledge into all aspects of production process and management levels is essential. The question is how the knowledge can be transfer into firms? The purpose of this study is to examine the role of knowledge transfer in Firm’s competitiveness. Firms’ need to manage resources flow effectively to be able to survive and to grow in competitive business environment. How can they do this? Over the last decade, the knowledge- based view has rapidly seized a prominent role in strategy research. The knowledge – based view explains that tacit knowledge is the critical component of the value that a firm adds to input , and that a firm’s ability to transfer this tacit knowledge is the essential source of sustained competitive advantage. Firms which have a good absorptive capacity and combinative capabilities are able to compete effectively. Absorptive capacity and combinative capability are main aspect of knowledge - transfer which has captured the attention of numerous studies in recent years. Large firms have possibilities to invest a large amount of money into R&D and to monopolize the knowledge which they have explored and then to exploit it, but the questions are: What about SMES? Are they able to explore and to exploit new knowledge? What are the advantages of K-T in SMES’ competitiveness? With consideration of SMES’ expansion in developed and developing countries, growth and survival of them depend on K-T in these firms and its relationship with firms’ competitiveness. When firms interact with external constituents, be they suppliers or customers, they seek to acquire and/or maintain access to knowledge that otherwise would not efficiently available. Based on the literature review a theoretical model of Small and medium enterprises (SME’S) competitiveness relating to that knowledge transfer is a function of absorptive capacity and combinative capability that characterize the competitiveness. Small and medium enterprises (SMEs) are assumed to play a key role in social and economic development. The theoretical model that was developed in this study predicted that knowledge transfer is a function of absorptive capacity and combinative capability that characterize the SMEs’ competitiveness. Absorptive capacity refers to the capability to understand and use new knowledge. Results from this study indicate that two dimensions of absorptive capacity, available complementary knowledge and prior related experience, are both important antecedents of knowledge transfer. Combinative capability refers to a firm’s capacity to combine and recombine existing knowledge. The theoretical model predicted that this capacity is a function of the opportunity, motivation, and ability to share knowledge. Key words: Competitiveness; Firm; Tacit; Strategy; Absorptive; Combinative; Knowledge; SMES; Capability; Capacity; Motivatio

Searching for innovation in market and transition economies: evidence across Europe

Searching for externally available knowledge has been characterized as a vital part of the innovation process. The availability of such innovation impulses, however, critically depends on the environment a firm is operating in. Little is known on how institutional infrastructures for innovation differ with respect to the munificence in providing innovation impulses. In this paper, we suggest that these differences are particularly pronounced between established market economies and transition economies. We argue that these differences shape a firm's search pattern and that the search pattern subsequently moderates the relationship between innovation inputs and outputs. Based on a sample of more than 4,500 firms from ten European countries we find that search strategies differ considerably between established market and transition economies. Search in transition economies is characterized by much more variety. However, management capacity in these countries is a particularly scarce resource which is why focused search strategies turn out to be most successful. --Search strategies,open innovation,transition economies,institutional infrastructure for innovation

Subsidiary driven innovation within shifting MNC structures: identifying new challenges and research directions

The multinational (MNC) as an arena primed for the creation and sharing of innovations is well established. Within this arena, the creation of innovations is borne from leveraging the unique knowledge and opportunities of its globally dispersed subsidiaries. The recent emergence of more transactional and cost focused approaches to the allocation of organisational activities within the MNC, under what is termed a ‘global factory’ structure, now challenges this dominant view whilst also providing a good vantage point to look back at research to date and to project the future impact of these changes. In the absence of research which hybridises recent literature on innovation with current insights from the international business domain this review paper contributes to our understanding of the impact of this shift by analysing current theory and practices to identify how narrower subsidiary roles, increased monitoring and constraints on combinative capabilities all have implications for managing innovation across the MNC. A key contribution is presented via the modelling of current inhibitors of subsidiary innovation, advancing new and compelling insight into how a shift towards the fine slicing of value chain activities across the organisation threatens not only subsidiary driven innovation but also has longer term implications for MNC competitive advantage. We conclude the paper by highlighting critical issues for management in this emerging MNC landscape and by identifying the rich opportunities for relevant and responsive research presented by these new challenges

Valuing Strategic Alliances in the Pharmaceutical/Biotechnology Industry

In an era of rapid and changing technological advances, a firm's survival and growth depends on its' ability to introduce products to the market. Since a firm's growth and survival depends on its' ability to develop products and services over time (Penrose, 1959), the question posed by this study is what determines a firm's ability to introduce products to market? In this study, a firm's ability to introduce product to markets are influenced by its' "absorptive capacity" to identify and internalize the resource benefits of its' alliance partners. Such an integrated view is absent in firm level and strategic alliance studies of product development. A conceptual model of firm product introductions is developed and empirically tested. Results generally support the hypotheses of this study.Research and Development/Tech Change/Emerging Technologies,