ABSORPTIVE CAPACITY: A REVIEW AND RECONCEPTUALIZATION.

Abstract

Researchers have used the absorptive capacity (ACAP) construct to explain various organizational phenomena. However, researchers have not been consistent in defining and measuring ACAP or in articulating the conditions under which it can enhance value creation. In this paper, we review the literature to identify the key dimensions of ACAP and offer a more definitive reconceptualization of this construct. Our model views ACAP as having four dimensions: knowledge acquisition, assimilation, conversion and exploitation. The model distinguishes between potential and realized ACAP where 'Potential ACAP' refers to the firm's capacity to acquire and assimilate external knowledge, and 'Realized ACAP' refers to the firm's ability to convert and exploit knowledge. The gap between realized and potential ACAP is attributed to a company's efficiency in using externally imported knowledge. The paper advances a model that links ACAP to value creation and outlines some conditions under which ACAP can generate competitive advantage. This model also addresses the existence of transformative capacity as well as the firm's ability to integrate different types of knowledge. Finally, the model considers moderators of the relationship between ACAP and value creation. These moderators include: knowledge activation triggers, technological opportunities and regimes of appropriability in the firm's external environment. The paper concludes with a discussion of areas that deserve attention in future research and methodological issues that should be addressed.