The concept of Absorptive Capacity has been identified as an important tool for firms to sustain, grow and
compete in their markets. A few authors have adopted the concept in their study in various dimensions.
However, many of the researches emphasized on big firms with complex operating structures and strong
research and development background. Not much research has addressed the theory in the perspective of Small
and Medium Sized Construction Firms. Construction has been referred to as transaction-oriented business
changing from the normal design-bid and builds process, to performance and innovative capacity based business.
Due to the urge for Small and Medium Sized Construction Firms to acquire competencies and capabilities
required for their sustenance in the face of increased competition by absorbing new skills, knowledge and
technology through the recognition of valuable external information, acquiring and translating them through
innovation to be able to successfully attain competitive advantage over others. The purpose of this study is to
carry out a detailed literature review aimed at understanding the Absorptive Capacity of Small and Medium
Sized Construction Firms as presented by earlier previous authors in this area of research. This study adds to
existing body of knowledge on Absorptive Capacity by pointing out some important dimensions that are
connected to the concept and adoption of new techniques in the perspective of Small and Medium Sized
Construction Firm
