Components Of Absorptive Capacity Research Articles

The impact of potential and realized absorptive capacity on open innovation: the moderating role of knowledge-oriented leadership

Purpose This study aims to analyze the effects of the components of absorptive capacity (ACAP) – potential absorptive capacity (PACAP) and realized absorptive capacity (RACAP) on inbound and outbound open innovation (OI). In addition, this study investigates the moderating role that knowledge-oriented leadership (KOL) plays in the relationship between ACAP and OI. Design/methodology/approach This research adopts a quantitative approach, using structural equation modeling, in a sample of 218 companies in the Brazilian manufacturing sector, using a random sampling technique and self-administered questionnaire. Findings The results indicate that while PACAP positively influences inbound and outbound OI, RACAP has a significant relationship only with outbound OI. In addition, KOL moderates the significant relationships between PACAP and RACAP and OI, indicating that the development of a leadership that fosters learning and interaction between employees and sectors of the organization impacts the innovation results of companies in the manufacturing sector. Practical implications This study also shows that managers must have an active role in the construction of an organizational context that supports learning through initiatives that encourage the process of trial and error, teamwork and cooperation between employees. Originality/value This research advances previous studies by relating the two components of ACAP (PACAP and RACAP) with the two OI models (inbound and outbound), in addition to analyzing the moderating role that KOL plays in this relationship between ACAP and OI.

Absorptive capacity components: Performance effects in related and unrelated diversification

We study how firms can benefit from external knowledge resources contingent on absorptive capacity. We separate the three components of absorptive capacity – acquiring, assimilating, and exploiting external knowledge – and posit that the benefits of a firm's knowledge expansion through diversification into related and unrelated business domains differ by the firm's relative emphasis on the three components. We test our predictions on a panel of 153 large US-traded ICT firms. Our analysis broadly supports our hypotheses, highlighting the unique contribution of individual absorptive capacity components to organizational learning through diversification strategy.

How "gutsy" does an organization have to be to absorb new information?

Absorptive capacity was first defined in 1990 by Cohen and Levinthal as “an organization’s ability to identify, assimilate, and integrate new knowledge.”1(p.128) In 2002, Zahra and George2 expanded on this definition to emphasize the active process of transforming and exploiting that new knowledge.3 Their extended definition provided the basis for the 4 components of absorptive capacity: i) identify the new knowledge, ii) assimilate the knowledge, iii) integrate the knowledge into the existing knowledge base, and iv) use the new knowledge to change the organization in some way.3 The concept of absorptive capacity has its origins in biology4 and refers to the capacity of the gastrointestinal tract to absorb digested nutrients into the body. Somehow, this term leaked out of the gut and has been adopted by the business world where it is used to help understand and monitor an organization’s capacity to absorb new or innovative knowledge.1 In due course, the health care system also adopted this concept, hence the reason behind our review published in this issue of JBI Evidence Synthesis.3 In preparation for our scoping review, we engaged with all stakeholders and explored our understanding of the concept of absorptive capacity. Then, we examined the literature, seeking to establish how absorptive capacity is conceptualized and measured in the adoption of innovations in health care organizations. A scoping review methodology was deemed the most appropriate methodology to pursue this investigation, as it facilitated the breadth of inquiry required to inform both of these related issues. The review was conducted through the Strategy for Patient Oriented Research (SPOR) Evidence Alliance5 and was initiated by the Knowledge Translation Unit, Strategic Policy Branch of Health Canada. Colleagues from Health Canada were involved at multiple key points throughout the review.6 Most importantly, the entire team, including the Health Canada library scientist, Health Canada director, the Queen’s Collaboration for Health Care Quality research team, SPOR Evidence Alliance staff, and several graduate students, collaborated over multiple meetings to generate and refine the research question. Knowledge-user experts in the field of organizational change were also invited and included in the meeting discussions. Beyond refining the question, this integrated knowledge translation approach7 involved title and abstract screening, full-text review, and editorial contributions to the final report.6 None of the articles included in this review generated a new definition of absorptive capacity; rather, they investigated the influence of local health care contexts on this process. Each context required a different focus on the 4 components of absorptive capacity, and organizations drew attention to the factors that they found valuable to their particular process. It appears that organizations need to be more than just “gutsy” to absorb new information; expertise in each of the components of absorptive capacity is important to the success of this process, and understanding the contribution of context is essential. Measurement of the progress is crucial, and using the domains of absorptive capacity as a framework is beneficial in guiding this process of planning for and assessing the adoption of knowledge within the organization and any change that ensues as a result.

Absorptive capacity and organizational performance in an emerging market context: Evidence from the banking industry in Turkey

Adopting the knowledge-based view (KBV), this study investigates how and when firms in emerging economies are able to generate greater performance from the absorptive capacity (AC). We distinguish between two core components of AC - potential absorptive capacity (PAC) and realized absorptive capacity (RAC) - and examine their independent as well as the joint effect on organizational performance. Then, we examine the moderating effects of environmental dynamism and branch network- as key boundary conditions. With data from 205 bank managers in Turkey, we show that the complementary effect of PAC and RAC on organizational performance is greater than the separate effect of each component. Moreover, the findings indicate that the combined effect becomes stronger when firms are part of an extensive branch network and function in a low level of environmental dynamism. We extend the KBV by demonstrating that innovation and knowledge resource development in emerging markets requires a collective effort and complementary learning processes to yield high results. Finally, we scrutinize the conditions under which firms in emerging markets can complement their learning processes efficiently to achieve greater performance.

The Structure of Absorptive Capacity in Three Product Development Strategies

This study develops and tests theory about different forms of absorptive capacity that support radical, differentiation and imitation product development strategies. Absorptive capacity theory provides a generalized explanation for how firms exploit their embeddedness in relationships with buyers and suppliers. We develop and test theory that relates combinations of four components of absorptive capacity (R&D capability, product development capability, cooperative embeddedness, and competitive embeddedness) to success rates in three product development strategies. We used data from the American pharmaceutical industry to estimate generalized linear mixed models. Our results confirm known relationships between R&D capability, alliance network position, and the development of radically new products, but reveal different sets of factors that influence differentiation and imitation. We describe a previously undetected influence of competitive embeddedness on the development of radically new products, a contrasting absorptive capacity structure for generic product development, and a mixed structure for differentiated product development.

Evolving Absorptive Capacity: The Mediating Role of Systematic Knowledge Management

Absorptive capacity is mediated through knowledge management capacity on innovation output and performance in technology-oriented firms. While prior research work has focused on the direct effect of absorptive capacity on innovation, in this paper, our model posits that absorptive capacity is more efficient in promoting firms' innovation provided that it is supported by systematic knowledge management practices. We tested this model that included all four components of absorptive capacity using a sample of 127 manufacturing and technology firms in Croatia. Structural equation modeling procedures were used to test hypotheses. Our findings confirm the significance of the relationship between absorptive capacity and knowledge management within firms. Furthermore, we found that firms with higher acquisition and transformation dimensions of absorptive capacity can enhance and replenish their knowledge management practices, which in return result in higher innovation output. These findings extend previous research work by explaining the sometimes-contradictory findings concerning knowledge management practices, which firms may adopt to enhance their absorptive capacity.

The Structure of Absorptive Capacity in Three Product Development Strategies

This study develops and tests theory about different forms of absorptive capacity that support radical, differentiation and imitation product development strategies. Absorptive capacity theory provides a generalized explanation for how firms exploit their embeddedness in relationships with buyers and suppliers. We develop and test theory that relates combinations of four components of absorptive capacity (R&D capability, product development capability, cooperative embeddedness and competitive embeddedness) to success rates in three product development strategies. We used data from the American pharmaceutical industry to estimate generalized linear mixed models. Our results confirm known relationships between R&D capability, alliance network position and the development of radically new products, but reveal different sets of factors that influence differentiation and imitation. We describe a previously undetected influence of competitive embeddedness on the development of radically new products, a contrasting absorptive capacity structure for generic product development, and a mixed structure for differentiated product development.

Benefiting from Open Innovation: A Multidimensional Model of Absorptive Capacity*

While recent studies shed some light on the performance implications of open innovation, there is a gap in understanding how firms can translate their openness into innovation outcomes. In particular, it is unclear whether—and if so, how—firms can create a competitive advantage in product innovation by tapping into external sources of innovation. To address this gap, this study conceptualizes multidimensional components of absorptive capacity and develops a nomological network that explicates relationships between these components and competitive advantage in product innovation. By marrying the open innovation and absorptive capacity perspectives, higher‐order models of absorptive capacity are proposed which delineate the underlying processes to recognize, assimilate, and exploit external sources of innovation. The empirical analysis of the nomological network based on original survey data reveals important findings. First, there is a positive indirect baseline association between external technological resource access and competitive advantage in product innovation, mediated by the firm's technology‐related capabilities. Second, components of absorptive capacity modify this indirect baseline relationship. Recognition capacity is positively associated with external technological resource access and therefore, operates as an antecedent to the proposed baseline relationship. Assimilation capacity constitutes a relevant condition to the proposed baseline relationship. The indirect association between external technological resource access and competitive advantage in product innovation is dependent on the level of assimilation capacity. Exploitation capacity has an additional and independent direct positive association with competitive advantage in product innovation. This study contributes to the open innovation literature by delineating organizational processes that help to explain interfirm differences in benefiting from external sources of innovation. In addition, this study adds to the absorptive capacity literature by developing and validating a set of measures that captures, individually and in concert, three components of absorptive capacity.

The role of absorptive capacity in Chinese firms

Purpose This study aims to advance and test a multi-dimensional operationalization of absorptive capacity (ACAP) to ascertain its mediating role in the transformation of R&D expenses in actual performance. Design/methodology/approach This study departs from the conceptualization of ACAP as a reflective higher-order R&D-based construct, by specifying ACAP into its components and using an operationalization that encompasses both R&D and non-R&D measures to perform mediation analysis on a sample of 1,096 Chinese mainland firms. Findings This study's findings report evidence of positive but different roles of the components of ACAP, with specific reference to the positive but partial mediating role of realized ACAP between both R&D expenses and potential ACAP on a firm’s performance. Relevant research and practical implications for both management and policymaking are discussed. Originality/value The approach to ACAP conceptualization and measurement taken in this study provides empirical support to an often assumed and, incidentally, under-explored relationship. Moreover, it contributes with a multi-dimensional, non-exclusively R&D-based and process-oriented perspective to the analysis of the role played by ACAP in Chinese firms’ R&D effectiveness.

Opening the Black Box of Knowledge Transfer in International Acquisitions in China: A Stage Model

This article explores how foreign headquarters can enhance cross–border knowledge transfer to their acquired local subsidiaries as a way to foster post-merger integration. Grounded in the knowledge–based view, we propose and test a two stage model of knowledge transfer including knowledge exposure and practices use. Building on the stage concept of absorptive capacity from Zahra and George (2002), we develop a theoretical framework of how different HRM practices enhance different stages of the knowledge transfer process via different dimensions of absorptive capacity--acquisition, assimilation, transformation and exploitation. Our hypotheses are tested using PLS on a sample of acquired Chinese subsidiaries of 181 multinational corporations from USA, Germany, France, Sweden, UK, Singapore, and South Korea. The results support our hypotheses. The purpose of our study is to add to the literature by opening up the black box of knowledge transfer by recognizing and empirically testing that knowledge transfer occurs in stages and that different HR practices drive different components of absorptive capacity and in turn knowledge transfer.

Alliances with universities - how firms absorb and apply knowledge

Expanding on the notion that absorptive capacity is a multi-dimensional construct, we elaborate on a pivotal component of absorptive capacity, applying external knowledge (AEK), by examining the extent to which certain key internal and external factors are related to AEK. Using survey questionnaire data from senior executives in firms collaborating with university research centres our focus was AEK with respect to advancing new products, new processes, and improvements to existing products and processes. Results show that a more technologically uncertain environment is positively associated with AEK and the firm age is associated with AEK in a curvilinear, inverted U-shape fashion such that as firms mature they apply external knowledge better up to a certain point until diminishing returns come into play. We also found tacit knowledge and explicit knowledge moderate these relationships in different ways. We conclude with implications for future theory development, empirical research, and management practice.

The Impact of Corporate Culture on the Absorptive Capacity and Innovative Capacity of Companies

The purpose of this study is to gain a better understanding of the influence of corporate culture in the absorptive and innovative capacities of Spanish enterprises. This is an exploratory study conducted involving top managers from a sample of 53 large Spanish companies. An empirical analysis is performed using a structural equations model and bootstrapping methodology. The paper highlights the role of corporate culture as a concept that has a significant influence on the absorptive capacity and also on the innovative capacity of enterprises. The absorptive capacity is presented as a system that makes a work of observation, identification, collection and use of information and knowledge from abroad, which is considered essential to achieving and sustaining competitive advantage. The research performed shows how the different components of absorptive capacity, found in the literature are significant configuring the capacity as a latent variable with economic sense. Furthermore, regarding the sample studied, corporate culture has a significant influence on the innovative capacity. The model explains the influence of culture in the innovative capacity, and in the two components of it, incremental and radical innovation. The investigation has found also some interactions not included in the model proposed, as for example the relationship between the recognition as the part of the absorptive capacity component more related with radical innovation. The empirical model performed need to be replicated with other samples for further findings and possible generalization. Deconstructing corporate culture in eight dimensions permits to use some of them in a prescriptive way. The adoption of certain cultural values and attitudes and the use of management strategies designed to promote these values and attitudes, encourage the company to more easily benefit from the opportunities of their environment, increasing the ability to manage information of the environment.

Effects of Absorptive Capacity and Turbulent Environments on the Market Orientation-Performance Link

Numerous studies emphasize the critical role of a company’s absorptive capacity (ACAP) in leveraging valuable external knowledge for innovation and performance, but a specification of what determines the value of external knowledge is lacking to date. While some studies focus on the absorption of valuable market knowledge, others relate ACAP to technological knowledge. To resolve this issue, we suggest that a company’s proactive market orientation which leads to profound market knowledge motivates companies to absorb external technological knowledge and makes such absorption purposeful, because it determines which technological knowledge becomes valuable for companies to absorb. We also investigate the interrelationships between the components of ACAP and analyze the relevance of the individual components depending on the extent to which the environment in which companies operate is turbulent. Our conceptual framework receives supporting evidence from an empirical study conducted among middle and top mana...

The Contagious Power of Innovativeness: A Comparison of Different Types of Firm Partners

Continuously innovating is known to provide firms with a competitive edge over rival firms. As innovations are often created in networks, a firm's partners exert an influence on the focal firm's innovative outcome. Although many studies deal with innovation networks and open innovation as a means to explore external knowledge and exploit knowledge externally e.g., dealing with characteristics of partnership agreements, there is virtually no research regarding characteristics of external partners. Namely, whether a focal firm's partners are innovative themselves and what the effects of this innovativeness on a focal firm's innovative outcome might be. This study considers different types of partners such as customers and suppliers and deals with the differential impact of partners` innovativeness on a focal firm's knowledge stock, absorptive capacity (ACAP), and innovation success. Drawing on literature on open innovation and ACAP and employing a survey in the manufacturing industry, we show whether a certain partner types' innovativeness is linked to innovation success, knowledge stock, and ACAP of a focal firm. E.g., we found that only the innovativeness of firms organized in clusters is positively and directly linked to innovation success, while customers' innovativeness influences positively and directly certain components of ACAP and knowledge stock.

Applying External Knowledge from University-Industry Relationships

Expanding on the notion that absorptive capacity is a multi-dimensional construct, we elaborate on a pivotal component of absorptive capacity, applying external knowledge. We examine the importance...

New Venture Innovation in Dynamic Markets

The important relationship between knowledge and innovation is well established in the literature. However, little is known about how new ventures' acquisition, assimilation, transformation, and exploitation of knowledge (i.e., their absorptive capacity) affects innovation. We examine the role of the individual components of absorptive capacity on innovation on a sample of new firms in the Swedish telecom, IT, media, and entertainment sectors. Our results suggest that the direct effects of the components of absorptive capacity on innovation are more complex than previously anticipated or articulated in the literature. We also find that while the four components of absorptive capacity are important for explaining innovation in new ventures, acquiring new technological knowledge and employing mechanisms for exploiting new knowledge are of greatest importance.