Firm Absorptive Capacity Research Articles

The effect of firm absorptive capacity on learning by importing: mediation role of industry policy-induced intermediate input import

The effect of firm absorptive capacity on learning by importing: mediation role of industry policy-induced intermediate input import

Disentangling the relationship between business model, absorptive capacity, differentiation strategy and performance. Evidence from a transition economy

PurposeThis paper explores the relationships between firm absorptive capacity, novel business model design (NBMD), product differentiation strategy and performance in a transition economy.Design/methodology/approachThe study uses structural equation modeling (SEM) to analyze firm-level data from a unique sample of Albanian manufacturing and service firms.FindingsThe study shows that absorptive capacity enables and shapes the NBMD that, in turn, leads to performance gains. The authors also find that the NBMD capacity mediates the impact of realized absorptive capacity on performance, whereas product differentiation strategy moderates the relationship between new business model and performance.Research limitations/implicationsAll variables were measured based on a self-assessed scale leading to potential method bias. Also, based on relevant literature, the study focuses on only one type of business model (BM) design.Practical implicationsSince dynamic capabilities are the foundation of NBMD, firms should invest carefully in developing such capabilities. Thus, the study results provide an integrative framework for understanding the role of absorptive capacity in NBMD adoption and for explaining the relationship between NBMD adoption and performance, an aspect that helps organizations in a dynamic environment.Originality/valueThis study strives to investigate the relationships between absorptive capacity, business model design, product strategies and performance by answering the call of Teece (2018) to “flesh out the details” of such relationships.

The effectiveness and externality of China’s outward foreign direct investment policy

This paper uses the China Foreign Investment Country-Oriented Industry Catalog as a policy shock to study the effectiveness and externality effect of China's OFDI incentive policy through the RD and PSM-DID model correspondingly. The results show that OFDI encouragement policy can effectively promote enterprises to carry out foreign direct investment. This also has certain externalities that (1) firms participate in OFDI, the promotion of productivity is not significant in the short term, but in the long term the promotion effect increases with time; (2) compared with non-policy-driven OFDI, policy-driven OFDI is more effective; (3) the externality effect show strong heterogeneity on level of the host country’s technology, the absorption capacity of home-based firms, and ownership of firms.

Sustainable Technology Diffusion Manufacturing Outwards FDI Firms: Evidence from China Using Numerical Simulation Methods

Technology diffusion plays an important role in the improvement of technological innovation capabilities and can provide strong support for sustainable economic development. This paper aims to analyze the influence mechanism of technology diffusion on sustainable development, such as the initial investment willingness, technology spillover effects and absorptive capacity, technology transfer prices and intellectual property protection, government subsidy support and penalties. However, there is a lack of systemic game mechanism and numerical simulation methods for heterogeneous enterprises. Based on the government, OFDI companies, and domestic companies that are not involved in FDI, we have proposed the evolutionary game model for technology diffusion on sustainable development. The results show that: (1) The government, OFDI firms, and domestic firms are influenced by each other’s initial willingness to a different extent; (2) Different combinations of technology spillover and absorptive capacity lead to different sustainable evolution results of technology diffusion; (3) Reasonable technology transfer pricing and enhancing the protection of property rights can improve the efficiency of the technology diffusion sustainable development system; (4) Both financial support and penalties encourage technology diffusion sustainable development, but excessive financial support reduces the government’s willingness to participate ultimately. Therefore, this paper proposes that the government should increase its willingness to participate and increase punishment for unreasonable pricing behaviors. The stronger the stimulus effect of OFDI firm technology spillover and domestic firm absorptive capacity, the stronger the stimulus effect; however, there is a certain threshold effect, at the same time increasing the property rights protection of OFDI firms and the penalties for opportunistic behaviors of domestic firms, and establishing a diversified financial support policy, will increase the efficiency of the technology diffusion sustainable development system.

The Effect of Firm Absorptive Capacity on Learning by Importing: Mediation Role of Industry Policy-Induced Intermediate Input Import.

The Effect of Firm Absorptive Capacity on Learning by Importing: Mediation Role of Industry Policy-Induced Intermediate Input Import.

Re-examining the relationship between Foreign Direct Investment and Economic Growth in Nigeria

This study examined the impact of foreign direct investment on Nigeria economic growth at large using time series data from World Bank Development Indicators. The research employed Auto Distributed Lag Model (ARDL) to investigate the impact of FDI on Nigeria economic growth both in the short-run and long-run. It was revealed that foreign direct investment has positive significant impact on Nigeria economic growth within the period under review. The research therefore concludes, that foreign direct investment has significant impact on Nigeria economic growth collaborating the earlier findings in theoretical and empirical literatures. The research therefore, recommends among others that Nigeria government and other West-African countries should invest more in infrastructural development and on R&D to increase the country domestic firm absorptive capacity and inflow of FDI in the country.

How Does Partner Diversity Matter for Service Innovativeness?

The global and digital economy has witnessed a rising importance of the service sector. Along with this trend, service innovation has attracted growing academic attention. Service innovation is distinctive from product innovation in the manufacturing sector because service innovation involves more intangible characteristics and requires intensive interaction with partners. Previous studies on the linkage between partner diversity and product innovation indicate that partner diversity is a double-edged sword. How partner diversity matters for service innovativeness remains unclear. Utilizing a sample of 709 service firms in Taiwan, this study investigates how partner domain diversity and geographical diversity influence service innovativeness, and how firm absorptive capacity and scope of firm internationalization moderate the relationship between partner diversity and service innovativeness. The empirical result suggests that firm absorptive capacities and scope of firm internationalization matter for realizing the positive impact of partner diversity on service innovativeness. The study advances research in service innovation and has key implications for management practice.

Adoption of Artificial Intelligence and Cutting-Edge Technologies for Production System Sustainability: A Moderator-Mediation Analysis

Cutting-edge technologies like big data analytics (BDA), artificial intelligence (AI), quantum computing, blockchain, and digital twins have a profound impact on the sustainability of the production system. In addition, it is argued that turbulence in technology could negatively impact the adoption of these technologies and adversely impact the sustainability of the production system of the firm. The present study has demonstrated that the role of technological turbulence as a moderator could impact the relationships between the sustainability the of production system with its predictors. The study further analyses the mediating role of operational sustainability which could impact the firm performance. A theoretical model has been developed that is underpinned by dynamic capability view (DCV) theory and firm absorptive capacity theory. This model was verified by PLS-SEM with 412 responses from various manufacturing firms in India. There exists a positive and significant influence of AI and other cutting-edge technologies for keeping the production system sustainable.

Demystifying the role of absorptive capacity in achieving innovation-based performance: model development and empirical validation

PurposeThe purpose of this study is to explicate the relationship between knowledge-based dynamic capacities (KBDC) and innovation-based performance (INPF) in information technology (IT) firms in India by examining the mediating impact of absorptive capacity (ABCP). The paper aims to determine whether and how the ABCP of the firms is recognized as the essential facilitator of INPF.Design/methodology/approachA survey of 511 respondents from Indian IT employees at the upper and middle management levels was undertaken. In this study, the partial least squares (PLS) technique explored the causal links between constructs with the use of the software application SMART-PLS 3.0.FindingsThe outcomes of this study proved the existence of a statistically significant relationship between the ABCP and INPF of information technology firms. Furthermore, ABCP's influence as a mediator between KBDC and INPF is significant. Therefore, findings imply that ABCP mediates the relationship between KBDC and INPF, however, only to some extent.Research limitations/implicationsWith the dynamism of the global market, the research has made significant gains in illustrating the criticality of ABCP for strengthening its KBDC in a much-needed Indian context. Therefore, following the recommendations and findings of this study, practitioners should concentrate on strengthening both ABCP and KBDCs to improve their INPF. To do this, managers must proactively organize their resources, procedures, and structure to promote knowledge absorption and dissemination, fostering innovation.Originality/valueIt is a ground-breaking study that proposes that the ABCP plays a crucial role in enhancing the INPF of the firms. The software industry will likely benefit from this study by understanding ABCP's potential impact on its INPF and designing knowledge management methods accordingly.

Knowledge absorption capacity's efficacy to enhance innovation performance through big data analytics and digital platform capability

The 2018 Global Innovation Index ranks Pakistan 118 out of 126 in innovation. One of the main reasons why developing countries, such as Pakistan, fail to innovate is their improvisation of astute and concurrent knowledge. This study explores the contemporary hurdles that lead to manufacturing firms' low agility and innovation performance. Based on the theory of dynamic capability view and the theory of absorptive capacity, we propose that the knowledge absorption capacity of firms can help them organize or utilize dynamic capabilities, such as big data analytics and digital platform capability, to enhance their agility and innovation performance. However, in the presence of a diversified organizational culture (i.e., flexibility orientations and data-driven culture), the desired outcomes may be affected. For this purpose, this study performed a questionnaire survey to collect data for validating the theoretical model. The collected responses from 325 manufacturing firms were analyzed using structural equation modeling, and empirical results reveal a positive relationship between the knowledge absorption capacity, agility, and innovation performance of firms mediated by big data analytics and DP capabilities. Flexibility orientations also showed a significant moderating role, but the role of data-driven culture was not significant. Statistical results reject the hypothesis. This study enriches the scope of the theories mentioned above and comes up with several other interesting theoretical and managerial implications valuable for academicians and policymakers.

Firm absorptive capacity: multidimensionality, drivers and contextual conditions

Purpose This paper aims to enrich absorptive capacity literature by specifically highlighting and adding environmental conditions and internationalisation process to the original conceptualisation. Design/methodology/approach The authors undertake a conceptual analysis and present an enhanced framework of absorptive capacity by integrating multiple literature streams. The authors have analysed the most relevant literature to provide underlying justifications for the proposed conceptual model. Findings Absorptive capacity ensures the long-term survival and success of a business. To develop absorptive capacity successfully, firms should focus on its various dimensions and existing intangible assets and external environment. The multidimensionality and richness of absorptive capacity is an under-explored area in the existing literature. The authors revisit the conceptualisation of absorptive capacity and add environmental conditions and the internationalisation process to the original conceptualisation. Absorptive capacity does not lead to a competitive advantage independent of its environment. To successfully develop it, firms have to adopt a holistic approach by considering the multi-dimensions, drivers and contextual conditions of absorptive capacity. Originality/value This study contributes by conceptualising absorptive capacity as a dynamic capability. It is one of the first studies to specifically propose a framework that combines antecedents (prior knowledge, combinative capabilities and IT capabilities), moderators (environmental conditions, namely, market and technological turbulence, competitiveness and the internationalisation process) and consequences (competitive advantage). The study offers a unique conceptualisation with implications for researchers and managers. As a result, managers will have a well-defined blueprint to create value by using firm capabilities.

Technology Spillover and Absorptive Capacity of Firms and Countries

Technology Spillover and Absorptive Capacity of Firms and Countries

On the ‘ENGO + focal firm’ governance strategies of pollution of small and medium suppliers

Presently, the environmental pollution problem, especially that of the small and medium-sized enterprises, has become a bottleneck restricting the high-quality development of China’s economy. It is imperative to accelerate the construction of a collaborative governance system with multiple subject participation. The behavior modes of Environmental Non-governmental Organizations (ENGOs), a key player in environmental care, in collaborating with core enterprises to control pollution from small and medium-sized suppliers should be explored. Therefore, we constructed a collaborative governance system consisting of ENGOs, focal firms and small and medium-sized suppliers. Then a two-stage game model was established to analyze the strategies of the governance system. Specifically, we studied the collaborative green cooperation strategy and antagonistic pressure supervision strategy between ENGOs and focal firms, analyzed factors influencing the strategic choices of each subject, and gave the advantages of the cooperation strategies through further comparisons. The results showed that: Under the cooperation strategy, ENGOs provided knowledge of environmental protection to the focal firms, then both the audit efforts of focal firms and the environmental protection efforts of small and medium-sized suppliers were effectively improved. Since ENGOs could not fully obtain the pollution information of small and medium-sized suppliers or accurately trace it from their downstream focal firms, it was difficult to drive the supply chain’s endogenous governance by this external monitoring of ENGOs, making the effect of pressure supervision strategy limited. The effectiveness of green cooperation strategy was positively correlated with the knowledge absorption capacity of focal firms, the unit product revenue, and the focal firms' violation penalties for small and medium-sized suppliers. When ENGOs' violation penalties for small and medium-sized suppliers were higher, or the reputation loss of focal firms was higher, more unfavorable conditions of green cooperation strategy could be achieved. Accordingly, ENGOs should choose to cooperate with focal firms with strong knowledge absorption ability and high profit per product; focal firms should learn environmental protection knowledge to improve the screening standards and review capabilities, and promote the achievement of green cooperation strategy conditions by strengthening active information disclosure; the government should promote the collaboration between ENGOs and focal firms by issuing environmental guidelines.

Moderating Effect of Proactivity on Firm Absorptive Capacity and Performance: Empirical Evidence from Spanish Firms

The purpose of this study was to understand how proactivity can affect the relationship between absorptive capacity and organisational performance. Most previous studies have ignored the role of proactivity in this relationship and have not considered the multidimensional nature of absorptive capacity. A questionnaire was sent to 800 CEOs of Spanish companies from different sectors, procuring a response rate of 38.25%. A structural equation model was applied to test the hypothesis. This study confirms the positive effect that absorptive capacity has on business performance and the moderating role of proactivity in this relationship. Companies that develop their capacity to absorb information from the environment achieve better results. Furthermore, if they engage in proactive behaviour within their company, this relationship is stronger. Future research should include more capacities that are related to knowledge and business performance (i.e., learning capability, innovation capacity, etc.). This study contributes to the understanding of how to manage a company’s knowledge in an appropriate way. It sheds new light on how knowledge management should be conducted, emphasising not only the gathering of information but also the promotion of a proactive attitude on the part of employees to achieve the goal of better performance.

Playing Defense or Playing Offense? CEO Regulatory Focus on Firm Exploratory Innovation

This study draws on the regulatory focus theory to postulate that CEOs who are predominantly promotion focused would demonstrate more innovation in novel technological areas, while CEOs who are predominantly prevention focused would not do so. We further investigate contextual factors would moderate the effect of CEO relative regulatory focus including CEO education, firm absorptive capacity, and industry technological uncertainty. Results based on three high-technology industries in the U.S. suggest that the extent to which a CEO is more promotion than prevention focused will motivate the CEO to generate innovation in new technological fields. Our results also indicate that this effect is contingent on certain boundary conditions including CEO education, firm absorptive capacity, and industry technical uncertainty. The findings suggest that the degree to which a CEO is relatively promotion focused influences his or her motivation in engaging in exploratory innovation.

Exploring redundancies in multichannel knowledge sourcing in high-technology industries

ObjetivoColaborações científicas representam links externos informais que, juntamente com alianças formais de P&D, constituem uma rede de fornecimento de conhecimento multicanal em indústrias baseadas na ciência. Embora essa fonte multicanal de conhecimento beneficie as empresas ao fornecer um acesso mais completo a fontes externas, ela também envolve redundâncias potenciais significativas que merecem consideração. Essas redundâncias resultam da sobreposição de conhecimentos específicos e requisitos de recursos chave semelhantes, incluindo orçamento e pessoal de pesquisa. Apesar de sua importância, a literatura não fornece uma descrição completa das possíveis causas e contingências dessas redundâncias. O presente estudo dá um passo nessa direção, primeiro verificando sua existência, seguido por um estudo das contingências-chave que determinam a extensão dessas redundâncias.Design/Metodologia/AbordagemEste é um artigo empírico que usa o contexto da indústria farmacêutica para testar a interação entre colaborações científicas e alianças de P&D como impulsionadores do desempenho inovador de uma empresa farmacêutica manifestada na produtividade de suas patentes.ResultadosA análise empírica revela que o efeito das colaborações científicas e alianças de P&D é de fato parcialmente substituto ou redundante, e que a referida redundância é maior para empresas com baixa capacidade de absorção, utilização desequilibrada dos dois tipos de links externos e seu tamanho.Originalidadeesta é uma das primeiras tentativas empíricas de explorar os efeitos substitutos de colaborações científicas e parcerias de P&D no nível da empresa. Incorporar contingências importantes, como capacidade de absorção, utilização equilibrada de relacionamentos e tamanho da empresa, aumenta ainda mais a novidade e originalidade de nossa pesquisa.

By the Book or Out of the Box? Top Decision Maker Cognitive Style, Gender, and Firm Absorptive Capacity

Despite scholars’ early emphasis on the role people play in fostering firms’ absorptive capacity (AC), research has not deeply explored the individual-level antecedents of this important capability. We draw on adaptive-innovative theory to explain how top decision makers’ cognitive styles can influence the degree to which their firms develop AC. Top decision makers who have high adaptive cognitive style prefer to adhere to existing norms, follow established procedures, and rely on current knowledge, and we argue that these attributes will strengthen those dimensions of AC based on firms’ existing knowledge and knowledge-assimilation abilities. Top decision makers who have high innovative cognitive style are more likely to reframe information, experiment with new problem-solving approaches, and take risks by violating norms, and we argue that these attributes may strengthen those dimensions of AC based on firms’ acquisition of new knowledge and the assimilation of knowledge throughout the firm. We also argue that gender differences may moderate these effects. Empirical results support our hypotheses.

Which forms of R&D internationalisation behaviours promote firm's innovation performance? An empirical study from the China International Industry Fair 2016–2018

ABSTRACT Chinese enterprises are increasingly operating R&D internationalisation to promote their innovation performance in forms of cross-border R&D collaboration, setting up offshoring R&D centres and transnational merger and acquisition (M&A), but the existing literature has not yet discussed this topic thoroughly regarding the effect of various forms of R&D internationalisation behaviour. Based on 738 Chinese enterprises examined using a questionnaire survey at the China International Industry Fair (CIIF) 2016–2018, this study analyses the impacts of different R&D internationalisation behaviour on firms’ innovation performance and the moderating effect of a firm's absorptive capacity and international experience on the relationship. The empirical results reveal (1) that three different forms of R&D internationalisation behaviour all contribute to enhancing a firm's innovation performance, (2) that Chinese enterprises can capture their innovation performance by operating multiple R&D internationalisation behaviour forms simultaneously, and (3) that a firm's absorptive capacity only exerts a positive moderating effect on the relationship between the cross-border R&D collaboration and the firm's innovation performance, which implies to some extent that operating R&D internationalisation in the form of cross-border R&D collaboration for Chinese firms demands higher absorptive capacity in comparison to setting up offshoring R&D institutions and transnational merger and acquisition (M&A).

Boas Práticas de Gestão e Capacidade Absortiva: Impactos na Produtividade das Firmas

RESUMO Contexto: poucos são os estudos que visam a calcular a produtividade em nível microeconômico e uma das variáveis que contribuem para isso é a capacidade das firmas de absorver o conhecimento externo - capacidade absortiva. Contudo, outra variável também vem ganhando poder de explicação nessa direção - a das boas práticas de gestão. Ocorre que não se encontra facilmente estudos que tratem essas duas variáveis em conjunto e que as relacione com a produtividade. Objetivo: o objetivo desta pesquisa é entender como se dá a interação entre boas práticas de gestão e a capacidade absortiva das firmas e seu impacto sobre a produtividade. Método: foi utilizado o método multicasos, tendo este sido aplicado em indústrias transnacionais e nacionais. Resultados: os resultados apontam que a existência de boas práticas de gestão atua como uma influenciadora da capacidade absortiva, e que tal relação gera um impacto positivo sobre a produtividade das firmas. Ademais, foi revelado que os processos de gestão nas empresas transnacionais contribuem de forma mais efetiva quanto à capacidade absortiva e produtividade do que nas empresas nacionais. Conclusões: como contribuição, é apresentado um modelo de análise que demonstra as relações entre as variáveis estudadas, podendo-se evidenciar a importância das boas práticas de gestão como determinante ao desenvolvimento da capacidade absortiva e à melhoria das condições de produtividade das firmas.

국내기업의 혁신역량과 흡수역량이 기업성과에 미치는 영향에 대한 관계 연구: 탐색적 접근

국내기업의 혁신역량과 흡수역량이 기업성과에 미치는 영향에 대한 관계 연구: 탐색적 접근