The Relationship Among Organizational Symbols, Firm Absorptive Capacity, and Product Innovativeness

Abstract

This paper leverages the current literature on the antecedents and consequences of firm absorptive capacity by investigating the relationships between covariant organizational verbal symbols, including stories, metaphors, and common language, covariant firm absorptive capacity variables (e.g., external knowledge acquisition, assimilation, transformation, and utilization), and firm product innovativeness. By studying 203 firms and interviewing their managers, this paper demonstrates that (a) using heuristic metaphors, (b) telling process-related stories, and (c) developing a common language positively relate to firms’ absorptive capacity. Remarkably, this paper also shows that telling relationship-based organizational stories is negatively associated with absorptive capacity in these firms. The discussion also shows that absorptive capacity has a positive relationship to a firm’s product development efforts and a mediating effect on the relationship between organizational symbols and product innovativeness.