The term 'absorptive capacity' (Cohen and Levinthal, 1990), which describes the
ability to assimilate new knowledge and skills, has been widely adopted in the study
of collaborative links between organisations. In this paper the concept is used to
examine the process by which participation in a Teaching Company Scheme (now
know as TCS) helped develop managerial capabilities in a small manufacturing
company over a two-year period. RSL is a family-owned business which has been in
existence for forty years, has approximately 70 employees, and manufactures office
supply equipment. It is concluded that improving absorptive capacity requires the
introduction of new organisational routines which help codify tacit knowledge.
Within RSL, such changes helped increase turnover by almost 25 per cent during the two
years the TCS programme was in operation
