The role of absorptive capacity and opportunity capture in latecomer firms’ innovation catch-up

Abstract

ABSTRACT Relevant literature tends to take innovation catch-up of emerging markets’ latecomer firms almost for granted. However, not all catch-up efforts are successful and some of these firms remain stuck in catching-up or exit from the market. In the search for explanations, this paper investigates the mediating effects of opportunity capture against those of technological innovation in the relationships with the performance of single dimensions of absorptive capacity. Hypotheses about the different ways in which absorptive capacity can be deployed are tested on data collected from 166 manufacturing firms in Guangdong Province (China). Findings support a stronger mediation effect of opportunity capture between absorptive capacity dimensions and firm’s performance than that of technological innovation. By using bootstrapped multiple mediation analysis and a multi-dimensional operationalisation of absorptive capacity, the study provides evidence of the relationships investigated, sheds light on some of their unintended effects on latecomer firms’ innovation catch-up and draws practical implications.