Abstract
This paper explores the determinants of firms' external technology sourcing mode. Instead of focusing on opportunistic behaviour in knowledge transactions and assuming minimising transaction costs as a firms' objective, I focus on firms' absorptive capacity and emphasise gains from knowledge transfer in technology sourcing. I analyse how a firm matches a sourcing mode with its absorptive capacity to enhance knowledge transfer in technology sourcing, and I find positive relations between a firms' absorptive capacity and interactive technology sourcing modes.
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