Dimensions Of Absorptive Capacity Research Articles

Impact of dimensions of absorptive capacity on multinationals' reverse knowledge transfer: from an Indian context

Purpose The purpose of this study is to provide a holistic view of how the different dimensions of absorptive capacity (AC) impact reverse knowledge transfer (RKT). Although the importance of AC has been realized in knowledge and RKT literature, scholars have hardly explored the differentiated importance of each component of AC. When knowledge leads to competitive advantage, understanding the differentiated contribution will help enhance the impact of AC on RKT. This becomes even more important for emerging economy multinationals (EMNCs), which struggle in the global market and suffer from various liabilities. Therefore, this study focuses on the multidimensional impact of AC on RKT from Indian multinational subsidiaries based in developed nations to their parent firm. Design/methodology/approach This study is a quantitative study. The authors tested the research model using a structural equation modeling design based on survey data collected from subsidiaries (in developed economies) of Indian multinationals. Findings The results show that acquisition, assimilation and transformation components of AC have positive impact on RKT. However, the authors found that the exploitation dimension has no impact on RKT. Originality/value To the best of the authors’ knowledge, the research design is original and this is the first study on the impact of all components of AC on RKT. AC is one of the most widely researched variables in knowledge literature, including different versions of Zahra and George’s concept of AC. However, its impact has not been explored much in RKT literature. This study addresses this gap and extends the literature on AC and RKT. The advantages of this study can be seen at the team and organization level.

Absorptive capacity for market knowledge and knowledge creation outcomes: the case of Thai SMEs

ABSTRACT Absorptive Capacity (ACAP) helps firms acquire, assimilate, and utilise new knowledge. Drawing on crucial managerial perspectives, this study employs a Partial Least Squares-Structural Equation Model (PLS-SEM) to scrutinise the various dimensions of ACAP (e.g. routines versus extra work, organisational culture, leadership, and the trustworthiness of knowledge sources) concerning market knowledge and knowledge creation outcomes (e.g. knowledge creation activities and firm’s private knowledge) among small and medium enterprises (SMEs) in Thailand. The findings indicate that all dimensions, with the exception of extra work, contribute significantly to the augmentation of firm-specific knowledge. However, only routines and knowledge-oriented leadership demonstrate a positive association with knowledge-creation activities. The results suggested that managers and top executives of SMEs should emphasise non-financial rewards more, create knowledge learning routines, and support the learning culture to enhance the ACAP for market knowledge.

Understanding the role of organizational intellectual capital on developing absorptive capacity to strategize innovation ambidexterity

PurposeThe purpose of this paper is to empirically investigate the impact of organizational intellectual capital (IC) components on absorptive capacity (ACAP) such as potential absorptive capacity (PACAP) and realized absorptive capacity (RACAP). Furthermore, it attempts to investigate the mechanism through which PACAP and RACAP jointly influence innovation strategies (i.e.) exploitative and exploratory innovations.Design/methodology/approachThis is an explanatory research using a deductive approach. This study uses survey data from 184 manufacturing export firms analyzed through partial least squares structural equation modelling.FindingsThe results have found that the cognitive and social capital of a firm positively affects PACAP and RACAP, whereas relational capital has a significant effect on RACAP. Moreover, the study reveals that both potential and realized absorptive capacities considerably lead to the development of organizational exploitative and exploratory innovation strategies.Research limitations/implicationsThe research focused on two driving factors, i.e. IC components and ACAP dimensions, and overlooked how each component of IC and ACAP influences ambidextrous innovative strategy.Practical implicationsProviding managers with insights about the critical role of developing IC to facilitate the transfer and exchange of crucial absorptive capacity necessary for ambidextrous innovative strategy.Originality/valueThis study makes a significant contribution to the existing literature by highlighting the importance of ACAP and provides useful insights for firms in developing economies to improve their exploitative and exploratory innovation capability. This study likewise reveals the significance of the four dimensions of IC, which can facilitate bringing in knowledge from developing economies.

The Under-Developed Social Integration Mechanism as Moderating Factor of Two-Dimensional Absorptive Capacity Relationship: Systematic Literature Review

The study aims to answer how and what kind of the social integration mechanisms may influence the relationship between the two dimensions of absorptive capacity which is, potential absorptive capacity (PACAP) and realized absorptive capacity (RACAP). The social integration mechanism has been neglected from the discussion on how firm assimilate and transform external knowledge to advance their absorptive capacity. In doing so, we answer recent call for research about a more thorough systematic literature review of the absorptive capacity and social integration mechanisms and its definitions. We surveyed literatures published during the years 2010 to 2020 and only found 8 articles discussing moderating variable between PACAP and RACAP out of 277 articles on absorptive capacity. The aim of this systematic review is to evaluate what social integration mechanisms influence the relationship between PACAP and RACAP and how they help overcome barriers to knowledge sharing. The results showed social integration mechanism can be in terms of high commitment works system, knowledge ambiguity, organizational size, relational learning, and cultural balance. Therefore, more research underlines the importance of social integration mechanism should be encouraged.

Examining intellectual capital and knowledge absorptive capacity for high innovative performance

AbstractIn the contemporaneous business environment, intangible assets and capabilities are building blocks of an organization's innovative performance. Despite the rising importance of absorptive capacity in knowledge management and innovation literature, there has been limited focus on its dimensions, such as knowledge acquisition, assimilation, and transformation, particularly in relation to intellectual capital (IC) and innovative performance. This research unravels the mediating role played by the dimensions of absorptive capacity in connecting IC to innovative performance. This research offers a novel combination of individual mediation effects of absorptive capacity components on the relationship between IC and innovative performance. Data for this cross‐sectional research were gathered from 295 organizations through a Likert scale questionnaire. This research employs partial least square‐structural equation modeling to analyze the individual mediating pathways of absorptive capacity. This study shows that knowledge acquisition adversely influences the relationship between IC and innovative performance, which challenges conventional wisdom. Conversely, all other mediation paths, including knowledge assimilation, transformation, and exploitation, exhibit a positive influence on innovative performance. Furthermore, this study also offers valuable managerial implications and suggests potential areas for future research.

A Study on BI System: A Moderating Role of Organizational Learning

Organizational performance significantly depends on business intelligence. Business intelligence (BI) converts raw data into meaningful and useful information that managers use to make quick and improved assessments. Before implementing business intelligence in their firms, the manager must thoroughly evaluate it. Absorptive capacity (ACAP) and BI systems are closely related. We assessed the impact of the sub-dimensions of ACAP “acquisition, assimilation, transformation, and exploitation” on BI, Impact of BI on firm performance, and the moderating role of organizational learning. We adopted the quantitative method that comprises gathering secondary data from middle managers in Karachi’s banking industry and analyzing the data using partial least squares-structural equation modeling (PLS-SEM). The study found the dimensions of ACAP “acquisition, assimilation, transformation, and exploitation” positively affect the BI system. The BI system promotes firm performance. We also found organizational learning insignificantly moderates BI and firm performance. Managers can use the model to determine which areas of their company need more development before making the major financial commitment toward the BI system and to determine whether their company is ready to adopt it

Knowledge transfer within MNC hotel subsidiaries: An absorptive capacity perspective

This study explores the process of transferring knowledge from multinational-corporation (MNC) hotels to their subsidiaries to advance company strategies. In particular, it examines critical factors that can forestall knowledge transfer through the lens of absorptive capacity. This study revisits the four dimensions of absorptive capacity (acquisition, assimilation, transformation, and exploitation) to understand the challenges involved in transferring knowledge from MNCs to subsidiaries. We argue that several fundamental aspects of the process influence absorptive capacity, potentially interfering with knowledge transfer. Using a qualitative approach, semi-structured interviews were conducted with four different types of actors (expatriate and local managers, a regional executive, and a policymaker). The results reveal that competencies (e.g. education) regulate the process of acquiring knowledge, while insufficient experience (technical skills and expertise) and historical background (explicitly related to the consequences of colonisation, including a local inferiority complex) affect the assimilation and transformation of knowledge. Next, limited opportunities, notably a reluctance to hire local managers and local managers with uneven qualifications, affect transformation and exploitation. Finally, cultural discord (e.g. recognising cultural differences, such as ethnic groups, religion, and customs) and communication barriers (e.g. verbal and non-verbal communications) influence the acquisition, assimilation, and transformation process, which, in the end, arbitrate knowledge exploitation. The findings suggest that the country's historical experience has considerable ramifications for absorptive capacity.

Entrepreneurial orientation and SMEs performance in an emerging economy: the mediating role of absorptive capacity

PurposeThe purpose of this paper is to investigate the relationship between entrepreneurial orientation (EO) and firm performance (FP) through the mediating role of absorptive capacity (AC) in small and medium enterprises (SMEs) in the Kingdom of Saudi Arabia (KSA) as an emerging economy.Design/methodology/approachThis paper used a quantitative research design. Data was collected using a self-administered online questionnaire. The study was based on 366 samples from Saudi Arabian workers at SMEs. Statistical analysis was carried out using SPSS/AMOS 26.FindingsThe paper provides empirical insights. It suggests the positively mediating role of AC in the relationship between EO and FP. The authors found a full positive mediating role of AC in the relationship between EO and FP in SMEs in the KSA.Research limitations/implicationsThe study empirically confirms the role of EO through AC in enhancing a firm’s performance. Additionally, the research findings support SME owners and managers in increasing their firms’ performance by implementing AC dimensions (assimilation and acquisition) with existing entrepreneurial characteristics to boost and increase business and performance. Regardless of the implications, this paper has some limitations. For instance, this study was conducted only on SMEs in Saudi Arabia. Therefore, future researchers are encouraged to extend the study to other organization sizes or to extend the study to other industries.Originality/valueThis study contributes to the literature by demonstrating the importance of AC’s mediating role in EO’s impact on FP, extending the previous studies in the area. Moreover, this research investigates the study themes in a relatively new context, specifically SMEs in the KSA.

An integrated conceptual framework for analysing heterogeneous configurations of absorptive capacity in manufacturing firms with the DUI innovation mode

Scholars of different disciplines widely agree that firms follow heterogeneous innovation patterns, meaning that different types of knowledge are relevant for their innovation activities. Given this fact, it is reasonable to assume that firms are also characterised by heterogeneous absorptive capacity patterns that fit their innovation behaviour. However, existing research, which mainly focuses on absorptive capacity in terms of formalised R&D and technology-based innovation, neglects both: other modes of knowledge absorption and the potential heterogeneity of firms' absorptive capacity in the context of different innovation patterns. The main objective of this paper is to develop a conceptual framework that enables the analysis of the heterogeneity in manufacturing firms' absorptive capacity configurations, particularly for innovation patterns based on the Doing, Using and Interacting (DUI) mode of innovation. To reach this goal, we introduce and integrate different constitutive elements on the individual and organisational level and process dimensions of absorptive capacity taken from previous literature. We illustrate and apply the proposed framework using the example of three case studies with companies from the German manufacturing industry, each of which follows a distinct DUI-based innovation pattern. Our empirical findings provide support for the heterogeneity assumption and allow the differences in the configurations of absorptive capacity to be linked to the firm's dominant innovation pattern. Thus, by showing its potential to capture the heterogeneity of absorptive capacity in an empirical analysis, our framework can serve as a comprehensive basis for a more differentiated understanding of absorptive capacity and its improved measurement.

Commitment based human resources practices and knowledge creation in ambidextrous organizations: A moderated mediation study on expatriates working in India

AbstractThrough the lens of organizational learning theory, we develop and test a moderated mediation model of commitment‐based HR practices (CBHRP), absorptive capacity, organization structure and routines, and knowledge creation in ambidextrous organizations. We test two new individual‐level dimensions of absorptive capacity (AC) in ambidextrous organizations: ambidexterity and flow experience. This empirical investigation is based on 377 expatriates who responded to our survey over two time periods working in various multinational organizations' R&D centers in India. Our findings suggest that CBHRP is critical in predicting knowledge creation and AC in an ambidextrous organizational context. Furthermore, we find that AC mediates the linkage between CBHRP and knowledge creation, and organization structure and routines (OSR) act as a moderator. Focusing on expatriates in ambidextrous organizations, our study extends contextual understanding of ambidextrous organizations and integrates organizational learning and knowledge creation theory into strategic human resources management (SHRM) research.

Enhancing external knowledge search: The influence of performance measurement system design on the absorptive capacity of top management teams

External knowledge search is critical for innovation performance and centers on a firm's absorptive capacity. This study investigates whether and how two dimensions of absorptive capacity at the top management team (TMT) level, potential absorptive capacity and realized absorptive capacity, are influenced by two design choices of the performance measurement system (PMS), broad scope PMS and PMS integration, under different conditions of environmental dynamism. Based on cross-sectional survey data from firms in innovative industries, the results of our empirical study indicate that in more dynamic environments, a broader scope PMS is associated with higher potential absorptive capacity whereas higher PMS integration is associated with lower potential absorptive capacity. These associations are not observable in more stable environments. Moreover, broad scope PMS and PMS integration are both positively associated with realized absorptive capacity, independently of environmental dynamism. These findings highlight the relevance of PMS design choices for absorptive capacity, showing on the one hand the differences between the implications of broad scope PMS and those of PMS integration and, on the other hand, that the implications of PMS design choices for potential absorptive capacity (i.e. acquisition and assimilation of external knowledge) follow different patterns than the implications for realized absorptive capacity (i.e. the transformation and exploitation of such knowledge).

Unpacking absorptive capacity: when some of its dimensions are more relevant than others

To be effective in enhancing innovation performance, absorbing external knowledge enables firms to identify new technologies and apply the acquired technological knowledge appropriately and successfully in the creation of new solutions to customer needs. The notion of absorptive capacity (ACAP) with its multidimensional nature considers these aspects. Contributing to a thorough understanding of ACAP, this paper provides important insights into the underlying processes and dimensions of ACAP and their dependence on the nature of the environment in which firms operate. This study also investigates proactive MO as an important antecedent of the underlying processes of ACAP. Overall, the findings suggest enhanced innovation performance results from a proactive orientation towards markets that motivates and guides the absorption of technological knowledge that is valuable for developing effective customer solutions. Notably, the level of environmental turbulence changes the relevance of some ACAP dimensions for enhancing innovation performance.

HOW PSYCHOLOGICAL SAFETY ENABLES INNOVATION: THE EFFECTS ON POTENTIAL AND REALISED ABSORPTIVE CAPACITY

Although psychological safety has been long recognised as critical in the context of information sharing, risk-taking, collaboration, and the process of organisational learning, its effects on absorptive capacity (ACAP) have not yet been theorised and empirically tested. Consequently, the present study’s objective is to fill this important research gap by explaining the role of psychological safety in the context of two dimensions of ACAP–potential ACAP (PACAP) and realised ACAP (RACAP). To empirically test the hypothesised model, this study uses survey data that were collected in the healthcare industry. The study’s results confirm some of the main assumptions. Consequently, the paper’s findings advance past research on innovation management by expanding our understanding of how business organisations could better utilise their internal resources to support the development of innovative capabilities.

Effect of poultry absorptive capacity on the farms' economic and commercial performance

PurposeCorporate organizations could enhance their economic and commercial values through knowledge acquisitions and exploitations. The purpose of this study is to analyze the economic and commercial performance effect of poultry management absorptive capacity in Nigeria.Design/methodology/approachStructural equation modeling was used in the analysis of a random sample of 300 poultry managers and owners surveyed within the South-Eastern Nigeria. The scales that quantified the latent variables of the factors were tested for reliability and consistency using confirmatory factor analysis.FindingsThe study found evidence that the difference between economically and commercially viable poultry businesses and failing ones depends on the level of absorptive capacity. Absorptive capacity advanced innovations that resulted in higher economic and commercial performance of poultry farm. Poultry firms' profitability, sales growth and market shares were positively increased by absorptive capacity dimensions of acquisition, assimilation, transformation and exploitation.Research limitations/implicationsThe study was carried out within a region in Nigeria and thus could be limited by generalization to the developed country.Originality/valueThis study is the first to link four dimensions of absorptive capacity to the economic and commercial performance of poultry businesses in Nigeria. As such, it originally breaks new frontier of poultry farming from dynamic capabilities and absorptive capacity perspectives.

The role of international knowledge acquisition and absorptive capacity as a predictor of international performance

AbstractThe international business literature recognizes the central role of knowledge and learning as key determinants of the internationalization of firms. While the stages model underlined the influence of experiential learning, new research has shown that there are also other relevant types of knowledge acquisition, which can be structured following Huber's model (1991) as congenital, grafted, vicarious, and search knowledge acquisition. However, knowledge acquisition constitutes only a first step for learning. In this respect, absorptive capacity appears as a useful construct since it integrates knowledge acquisition, assimilation, transformation, and exploitation capacity. This paper analyzes the influence of the types of knowledge acquisition on international performance and considers absorptive capacity dimensions as moderator variables based on a sample of 200 Spanish SME exporters.

A Multidimensional Study of Absorptive Capacity and Innovation Capacity and Their Impact on Business Performance.

The aim of this paper is to understand how absorptive capacity and innovativeness influence business performance. Most previous studies have not considered the different dimensions of absorptive capacity and innovativeness. As a consequence, they have not analyzed the relationships between these dimensions, such as potential and realized absorptive capacity (RACAP) and product and process innovation. In our study, we analyzed the relationships between each of these dimensions and their effect on organizational performance. To achieve this, in addition to the theoretical foundation provided by the working hypotheses, a questionnaire was sent to 800 CEOs of Spanish companies in different sectors, obtaining a response rate of 38.25%. Structural equation modeling was applied to test the hypotheses. This study confirms the positive effect of absorptive capacity on innovation capacity, which in turn has a positive effect on business performance. Moreover, different dimensions of absorptive capacity and innovativeness play an important role in these relationships. This study contributes to a better understanding of how potential and RACAP influence the innovativeness of firms, both in their ability to innovate products and to improve business processes. In addition, it explores how these different innovations impact business performance and provide firms with knowledge on how to invest resources to increase profits. Future research should further study the inner workings of each of the dimensions analyzed to determine the importance of each dimension for business performance.

Antecedents of absorptive capacity in the development of circular economy business models of small and medium enterprises

AbstractMost firms, especially small and medium enterprises (SMEs), find it difficult to integrate circular economy strategies within their business models. Moreover, there is a lack of research on approaches for the successful implementation of circular economies in SMEs in the field of manufacturing. To fill this gap, we investigate the antecedents of absorptive capacity in successful circular economy business cases using a qualitative multiple‐case study. Focusing on the horticultural sector, we interviewed six Italian SMEs using NVivo 12 for the analysis. The data were then classified into first‐order and second‐order categories and then sorted into absorptive capacity dimensions. Our results highlight the significant contribution provided by absorptive capacities to the circular economy in SMEs. We highlighted three antecedents for each absorptive capacity dimension and explored their key concepts. Our study contributes to the academic literature on the links between absorptive capacity and corporate sustainability by providing insights into the role of acquisition, assimilation, transformation and exploitation capabilities in the successful implementation of circular economy practices.

Absorptive capacity dimensions and the measurement of cumulativeness

Absorptive capacity (AC) has the potential to explain performance and competitive advantage. The cumulativeness feature of AC has been broadly covered in theory but remains underdeveloped in empirical assessments. This paper aims to revisit the relationships between AC and its knowledge dimensions and to contribute to measurement theory on AC. We adopt an existing survey instrument and confirm through structural equation modelling that the relationships between AC and its knowledge dimensions are better represented by a formative model, as opposed to the more used reflective model. Based on a simplex model and the Mokken scale, we also confirm that AC is an ability, developed cumulatively through a sequence of knowledge processes. The paper contributes to construct convergence by developing and illustrating guidelines for measurement that are congruent with the seminal definitions of AC but are underrepresented in the literature. It contributes to practice by highlighting the roadmap for developing AC.

Keeping together: Which factors characterise persistent university–industry collaboration on innovation?

This paper investigates what distinguishes persistence in relation to university–industry collaboration on innovation from the initiation and discontinuation of a collaboration. The underlying premise is that if a firm continues to collaborate with a university, it must consider that collaboration to be valuable. A quantitative analysis of over 2600 firms reveals that persistence is relatively common in university–industry collaborations on innovation, with more than a third of firms that engage in university collaboration continuing to collaborate with the same university over two consecutive periods. In addition, the analysis shows that firms’ investments in collaborative capabilities and different dimensions of absorptive capacity are instrumental for persistent collaboration with a university. Furthermore, persistent collaboration with a university is strongly associated with the strategic choice to engage in sustained collaboration with a broad range of partner types. Finally, the analysis reveals that geographical proximity between a firm and a university may facilitate the initiation of a collaboration, although the nearest university is not necessarily the most suitable partner. This is illustrated by the finding that geographical proximity between a firm and a university does not matter for keeping together in a persistent collaboration.

The effect of absorptive capacity on the financial performance of Brazilian and Portuguese companies in a low technological intensity sector

The digital transformation has driven a more assertive absorption of external information and knowledge in all economic activities, especially in the low technological intensity sector, where competition has been fierce. In this way, the use of information and knowledge can provide companies with higher performance before its competitors. Thus, this study seeks to verify the effect of absorptive capacity (ACAP) on the financial performance of Brazilian and Portuguese companies that operate in low technological intensity sectors. The study is part of initial research that addresses ACAP in sectors that do not release innovations in the market. A survey was carried out based on validated scales, but adapted to the low technology sector. Then, a new validation of the scales was carried out and a t-test was performed to check if there are differences and regression analysis to answer the hypotheses. The results showed that ACAP has an effect on financial performance, both in the Brazilian and Portuguese context, being higher in Portuguese companies. In addition, it was also shown that the two dimensions of ACAP have different influences on financial performance, when considering the two contexts. It can be concluded that ACAP can be applied in sectors of low technological intensity, as this has an influence over the financial performance of companies.