The differential effects of potential and realized absorptive capacity on imitation and innovation strategies, and its impact on sustained competitive advantage

Abstract

Drawing on the knowledge-based view of the firm and the theory of resources and capabilities, this study attempts to (i) investigate the differential antecedent roles of knowledge-based capabilities such as potential and realized absorptive capacity on imitation and innovation strategies, and (ii) to assess how such interactions lead firms to achieve a sustained competitive advantage. Using quantitative data from 211 managers in middle and top managerial roles, we conducted structural equation modeling via partial least squares. This paper contends that imitation and innovation strategies might be complementary while yielding competitive advantages, and that the degree to which organizations absorb external knowledge has an impact on this connection. Contrary to previous research, this novel focus treats innovation and imitation strategies as distinct, but not opposing, notions. The results of this study fill a knowledge gap in the field of innovation management and provide empirical evidence for the interplay between absorptive capacity and the two complementary business strategies—innovation and imitation—which aids organizations in maintaining their competitive advantages.