Concept Of Absorptive Capacity Research Articles

DESIGNING ABSORPTIVE CAPACITY? AN ANALYSIS OF KNOWLEDGE ABSORPTION PRACTICES IN GERMAN HIGH-TECH FIRMS

The concept of absorptive capacity was introduced by Cohen and Levinthal in 1989 as an important condition for high innovativeness. Since then it has been enhanced through reconceptualisations and extended by various empirical studies. Despite the growing interest in the concept, the processes and practices of absorptive capacity have largely remained a "black box". To fill this gap, the paper develops a practice-based approach of absorptive capacity and provides an in-depth empirical investigation to shed more light on the practice of knowledge absorption. Drawing on the case studies of two German high-tech firms, the paper focusses on practices designed by the management to facilitate knowledge absorption and shows how these practices were actually enacted. The paper contributes to a better understanding of the complex construction of absorptive capacity and gives useful insights for a successful management of knowledge absorption.

Exploring absorptive capacity in cross-sector social partnerships

Purpose – The purpose of this paper is to explore cross-sector partnerships (CSSPs) from a strategic perspective to consider collaborations that are long lasting and transcend initial objectives. The authors integrate the concept of absorptive capacity (ACAP) with the CSSP literature and derive two new antecedents of ACAP, trust and goal interdependency, with relevance to this context. This work responds to a call from ACAP scholars to consider the construct in alternative settings and from collaboration scholars to employ strategy research that approaches CSSPs from a viewpoint beyond a mere transactional approach. Design/methodology/approach – This manuscript presents a thorough analysis of the process literature regarding CSSPs and the construct of ACAP to consider the importance of knowledge sharing and participatory decision making in the success of collaboration efforts. The combination of these research streams results in a refined model of ACAP to be used in the CSSP context. Findings – This manuscript provides conceptual and theoretical insights into how knowledge is acquired and exploited within CSSPs. A model for ACAP in CSSPs is proposed and suggests that two new antecedents of ACAP, trust and goal interdependence, be explored in this context through subsequent empirical research. Research limitations/implications – This type of conceptual work can benefit greatly from subsequent empirical research to test the developed propositions. This model shows considerable promise for future testing, however, and has the potential to encourage additional research into knowledge sharing and long-term success of cross-sector collaborations. Practical implications – This paper fulfills the need to apply a strategic lens to CSSPs and invites future research into the mutual organizational benefits derived from collaborations that cross economic sectors. It suggests that internal organizational mechanisms exist to be developed by managers that have the potential to enhance a firms ability to recognize the value of external knowledge, acquire it, and transform it for commercial and/or social objectives. Social implications – As collaborations across economic sectors are proving vital for addressing complex social needs, this manuscript provides a new model to serve as a guidepost for successful partnerships. Originality/value – This manuscript fulfills a need to integrate strategy scholarship with CSSPs that transcends the heretofore transactional perspective. Through an exploration of the literature, a new model for ACAP is proposed including two new antecedents, trust and goal interdependence, with application to the context of cross-sector collaborations.

The Differential Relationship between Absorptive Capacity and Product Innovativeness: A Theoretically Derived Framework

The concept of absorptive capacity is one of the main drivers of new product development. However, absorptive capacity has been treated as a concrete, uni-dimensional proxy targeting RD acquisition, assimilation, transformation, and utilization of external information/knowledge have rarely been theoretically analyzed in relation to firm product innovativeness in the new product development (NPD) literature. Addressing this particular gap in the literature, we develop a conceptual model encapsulating the simultaneous but differential interrelationships between absorptive capacity variables and product innovation in particular. This study contributes to the literature in three ways. First, the theoretical framework proposed highlights the effects of absorptive capacity variables on product innovation. Hence the focus is, on distinguishing product innovation from other innovation types, and building a theoretical background for the relationship of absorptive capacity variables and product innovativeness. Second, based on the extended reconceptualization of absorptive capacity of Zahra and George (2002) this study aims to assess the differential roles of absorptive capacity variables in NPD efforts. Thus we propose the multidimensional operationalization of the construct through; acquisition, assimilation, transformation and utilization capabilities embedded within firm’s absorptive capacity. Third, this research integrates absorptive capacity literature to the knowledge management literature through offering a theoretical framework where absorptive capacity is a process consisting of organizational routines which not only acquires but also assimilates, transforms and exploits the knowledge leaning on the basic determinants of knowledge management.

Capturing Absorptive Capacity: Concepts, Determinants, Measurement Modes and Role in Open Innovation

Abstract Absorptive capacity (ACAP) enables firm to adjust to a rapidly changing environment and achieve sustained competitive advantage. This study contributes to the existing body of knowledge on ACAP by providing a comprehensive literature review of the various conceptual attributes of the construct, its determinants, outcomes, and positive and negative consequences of using its input-oriented, output-oriented, and perceptive measurement modes. Proposals for constructing ACAP based on the Community Innovation Survey (CIS) empirically illustrate for the conceptual part of the paper. Additionally, combining concepts of absorptive capacity and open innovation (which is still rare in the literature) provides a new perspective on the role of absorptive capacity in opening up the innovation process. This advances the understanding of both inter-related proposals. The article also identifies key problems and formulates future research directions to improve the multi-level characteristics of absorptive capacity.

The Relationship between Technological Capabilities and Interpersonal Trust: A Cross-Country Empirical Study

This study uses insights from the management literature to explain why countries with high levels of interpersonal trust have higher levels of economic development. The concept of absorptive capacity is used to show that the relationship between a country's technological capabilities and level of trust is path dependent. Trust allows countries to more efficiently convert human capital (such as formal education) into technological progress (such as patents). At the same time, the demand for higher technological capabilities increases the level of trust. A cross-country regression analysis is used to confirm these relationships. The income per capita is used as an example to show that, contrary to findings from previous research, the macro-economic effect of trust runs completely through the development of technological capabilities.

Absorptive Capacity and Its Role for the Company Growth and Competitive Advantage: The Case of Frauenthal Automotive Toruń Company

The aim of the paper is to study the role of absorptive capacity for the company growth and competitive advantage through open innovations. The case of Frauenthal Automotive Torun is used to explore how the routines and best practices associated with the firm absorptive capacity contribute to its success. The case study is to validate the thesis that through developing skills to recognize valuable knowledge in the environment, acquire this knowledge, assimilate, transform and develop it companies are able to apply and benefit from open innovations in order to grow and strengthen their competitive advantages. In order to achieve the aim of the paper the following research objectives have been set: (1) to identify the lessons and best practices applied in Frauenthal Automotive Torun in relation to the company absorptive capacity; (2) to analyze the relationships between the concepts of absorptive capacity and open innovation; (3) to exemplify and discuss the outcomes of the company absorptive capacity in regard to innovations, company growth and competitive advantage.

The knowledge capital of SMEs: The French paradox

This paper focuses on the innovation activities of French SMEs. We put forward a “French paradox”, expressed by a quite important effort in terms of R&D investments and poor results in terms of innovation as measured by traditional indicators. To explain this paradox, we study their strategy of knowledge capital building and valorization. To do this, we build a theoretical scheme by combining two key concepts related to the knowledge capital development – absorptive capacity and open innovation – to assess the innovation activities of firms. A review of literature is achieved to apply this scheme to SMEs and reveal their main characteristics. A single case study methodology is used to study the behaviors of French SMEs. The article shows the interest of linking the two concepts of absorptive capacity and open innovation in the analysis of knowledge capital building and valorization. The results of the case study reveal that apart from the structural characteristics of SMEs, one important reason to the French paradox lies in the integration of SMEs into innovation networks. The valorization of SMEs’ knowledge capital is thus not always achieved by the SMEs themselves but by other companies, notably larger ones, enriched by the specific knowledge of these SMEs.JEL Codes: O32, O34, L22, L25

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.

The Effects of Foreign Direct Investments on Transition Economies: The Balkans Case

(ProQuest: ... denotes formula omitted.)IntroductionFollowing the painful 90s, stabilized economic growth becomes the predominant objective for most of the Balkans. In this direction, some of the Balkan countries such as Croatia and Bulgaria have managed to get aboard to the European Union (EU) train. But for many others, the train has not arrived yet. Moreover, being a economy in the Balkans creates additional burdens to these counties. Having experienced the harsh Bosnian War and the lagged effects of it, those countries are still struggling to find their way into the long road of development.As an international political instrument Foreign Direct Investments (FDIs) are playing an increasingly important role in economic development. By means of FDIs, the host countries may be affected positively through externality effects and capital enhancement (Alfaro, Chanda, Kalemli-Ozcan, and Sayek, 2006; Sun, 2002). However, FDIs can also create adverse effects such as external-dependency and imbalances in local markets. The outcome on the host economies basically depends on the level of absorptive capacities in these countriesi. Thus, the effects of FDIs in host countries with solid administrative, financial and economical infrastructures differ from the effects in countries lack such structures. These structural differences create a long range of effects on the host countries.In this paper, the effects of FDIs on economic growth of economies in the Balkans are investigated through an absorptive capacity perspective. The distinction between EU member Balkan countries and non-EU member Balkan countries has been made in the paper with transition concept taken into account; since EU members would be expected to have a better absorptive capacity due to EU obligations has to be fulfilled in order to reach EU standards. Thus, this paper concentrates only on non-EU member economies in the Balkansii. Accordingly, the FDIs in the host countries that have some level of absorptive capacities may have some effects that accelerate the growth, while, the FDIs in countries that lack such absorptive capacities, may not promote the growth. Moreover, there is a mutual relationship between absorptive capacities and FDIs. On one hand, absorptive capacities can stimulate the effects of FDIs to both positive and negative sides; on the other hand, FDI flows to a country are in line with the absorptive capacity of that country; as the capacity increases the possibility of increased FDI flows arises (Alfaro et al., 2004; Alfaro et al., 2006). Therefore, the absorptive capacities of the host countries are of vital importance when it comes down to FDIs. Through the absorptive capacity perspective the aim of this paper is to empirically reveal to what extent economies in the Balkans can utilize FDIs. Given the potential significance of FDIs on economic development, this paper not only offers an overall guideline on the matter for the economies in the Balkans but also presents a new technique to measure the absorptive capacities. Through the new technique employed to measure absorptive capacities, the study aims at contributing to the literature.Following the introduction, the FDI movements in Balkans are handled in the second part. In the third part, a comprehensive reasoning for the concept of absorptive capacity and its ties with FDIs takes place along with the empirical analyses applied to the sample. Findings of the analysis are also presented in this part. In the final conclusion part, the results of the analyses have been studied and the paper has been concluded.FDIs in the BalkansThe International Monetary Fund (IMF) listed economies in 2000 (International Monetary Fund, 2000). According to this list; Croatia, Bulgaria, Albania and Macedonia were listed as economies. Later, the World Bank added Bosnia Herzegovina and then Serbia and Montenegro as economies as well in 2002 (The World Bank, 2002). …

Spatial diffusion and the formation of a technological innovation system in the receiving country: The case of wind energy in Portugal

This paper investigates how energy technologies diffuse spatially through the examination of wind growth in Denmark (core) and Portugal (follower). The research draws on the empirical historical scaling dynamics to compare patterns of diffusion, and proposes an explanation for these patterns with the help of the technological innovation systems (TIS) theoretical framework. The analysis uncovered an acceleration of diffusion when the technology attained the new market. The mechanisms that allowed rapid adoption were found to be, among others, transnational linkages and an improved absorptive capacity. The latter benefited from past investments in knowledge development, imports of state-of-the-art technology and construction of a local industry assembling available competencies. Targeted policies (e.g. tender-based feed-in scheme) were effective to stimulate technology transfer and boost diffusion. The linkages with the global TIS and the concept of absorptive capacity improve the understanding of the processes involved in the formation of a TIS in receiving countries.

Absorptive capacity and smart companies

Purpose: The current competitive environment is substantially modifying the organizations’ learning processes due to a global increase of available information allowing this to be transformed into knowledge. This opportunity has been exploited since the nineties by the tools of “Business Analytics” and “Business Intelligence” but, nevertheless, being integrated in the study of new organizational capacities engaged in the process of creating intelligence inside organizations is still an outstanding task. The review of the concept of absorptive capacity and a detailed study from the perspective of this new reality will be the main objective of study of this paper. Design/methodology/approach: By comparing classical absorptive capacity and absorptive capacity from the point of view of information management tools in each one of the three stages of the organizational learning cycle, some gaps of the former are overcome/fulfilled. The academic/bibliographical references provided in this paper have been obtained from ISI web of knowledge, Scopus and Dialnet data bases, supporting the state of affairs on absorptive capacity and thereafter filtering by Intelligence and Analytics. Specialized websites and Business Schools` Publications there have also been included, crowning the content on information management tools used that are currently used in the strategic consulting.

E-learning Readiness and Absorptive Capacity in the Manufacturing Industry

The manufacturing industry constantly strive to develop the competencies of their expert production engineers in order to achieve and maintain a competitive advantage. Research shows that the absorptive capacity of a firm is central in order to reach such a goal. The absorptive capacity is the firm´s ability to recognize the value of new external information, assimilate it, and apply it to commercial ends, and thereby exploit the conditions for innovation. In this paper the concept of absorptive capacity is used as a lens for analyzing managerial rationales for engaging in technology enhanced competence development projects. Through interviews with key informants in 15 manufacturing firms we study the capabilities and readiness that organizations need for participation in e-learning initiatives. We present a framework of readiness for technology enhanced competence development comprised of the following interrelated constructs; awareness, e-learning maturity, dynamic capability and co-creativity. Results show a broad variation of levels within the constructs among the firms. Notable is the low level of e-learning maturity and dynamic capability. We argue that e-learning maturity is dependent on all four constructs.

Leveraging fitness and lean bundles to build the cumulative performance sand cone model

This study examines the relationship between bundles of lean practices and cumulative performance, as described by the sand cone model. Based on the literature, hypotheses relating lean bundles to cumulative performance are proposed. They are tested using a sample of 317 plants in three industries and ten countries, based on structural equation modeling. The results indicate a set of direct and indirect relationships that illustrate: (1) the importance of organizational fitness at the base of the sand cone of practices, (2) the cumulative relationship of competitive performance, supporting the sand cone model, and (3) the cumulative relationship between lean bundles and the sand cone sequence of cumulative performance. Testing alternative models of cumulative performance lends further support to these results. The findings are discussed in terms of implications for managers seeking guidance in competing on multiple dimensions of competitive performance simultaneously, particularly in terms of establishing a foundation of organizational fitness for the cumulative implementation of lean bundles. It contributes to the literature on manufacturing strategy and lean by providing additional support for the sand cone of cumulative performance, expanding research on the sand cone of practices that support cumulative performance, describing the role that external resources like suppliers can play in mastering lean cumulatively and separating previous research on lean bundles into those related to fitness and those with a more specific goal orientation, building on the strong foundation provided by the extended resource based view and the concept of absorptive capacity.

Knowledge asset similarity and business relational capital gains: evidence from European manufacturing firms

This paper leverages the concept of absorptive capacity to explore whether similar configurations of intellectual capital (IC) are associated with the performance of relational capital in firms. It proposes a novel implementation of graph theory to analyse similarities in knowledge assets. We use Community Innovation Survey data to examine 5813 manufacturing firms in 13 business sectors and 13 European countries. While firms rely on external relations to compensate for a lack of internal assets, we find that a company’s propensity to cooperate in innovation is associated with its own IC profile. In particular, firms with common knowledge assets are more likely to benefit from business relational capital. The main contribution of this study lies in a holistic approach to understanding how similarities in knowledge assets are linked to gains in business relational capital.

The Evaluation on the Three Critical Models of Absorptive Capacity: A Case Study on Logistics Company in Korea

Knowledge transfer is regarded as a critical element for successful business. Cohen and Levinthal initially proposed the concept of absorptive capacity in 1989. Absorptive capacity is the ability to transfer and exploit external knowledge and it has become one of the most critical theories for two decades. The main purpose of the study is to identify the most appropriate model of absorptive capacity via statistical analyses. The three major models of absorptive capacity will be examined through the three core reconceptualization papers performed by Cohen and Levinthal (1990), Zahra and George (2002), and Todorova and Durisin (2007) in order to highlight a need for greater clarity about the construct of absorptive capacity. As a result, model3 proposed by Todorova and Durisin (2007) was the most reasonable in this study.

Model of Absorptive Capacity and Implementation of New Technology for Rural Construction SMEs

Absorptive capacity has been acknowledged as a critical component for organisations to sustain, grow and compete in their markets. Many researchers have used the concept of absorptive capacity in their analysis at different levels: individual, organisation, industry and country. However, most of the studies focus on very large organisations with sophisticated structures and strong R&D orientation. Very few studies address the theory of absorptive capacity in the context of SME organisations. This paper presents part of the findings of research that investigated absorptive capacity in the context of Malaysian rural construction SMEs. The aim of this paper is to prescribe a model of absorptive capacity for rural construction SMEs. The model is based on validation drawn from five case studies of construction SMEs operating in the rural area in Malaysia. The developed model serves two functions: Firstly, to help rural construction SMEs to understand the issues and process related to absorptive capacity and the implementation, and use of, new technology; secondly, to provide a mechanism for policy makers to transfer new technology to rural contractors. This research contributes to the body of knowledge of absorptive capacity by highlighting issues related to absorptive capacity and implementation of new technology in the context of rural SMEs. Keywords: Absorptive Capacity, Malaysia, Rural Construction, Small and medium sized enterprise (SME).

Identifying thresholds in aid effectiveness

In this paper, the author focuses on the nonlinear nature of the aid to growth relationship to show that the “Big Push” hypothesis is consistent with capacity constraints in the understanding of aid effectiveness. The Big Push hypothesis proposes the existence of one threshold below which aid is not effective, whereas the constraints inferred by the concept of absorptive capacity suggest the existence of a second threshold above which aid is no longer effective. This paper addresses the issue of these thresholds which characterize the aid to growth relationship. Using a semi-parametric econometric method, the author finds that aid becomes effective only above a critical level, but what is more it becomes detrimental to growth at high aid flows. The author also investigates how the quality of institutions and economic vulnerability modify the level of these two thresholds. He finds that economic vulnerability is a key factor conditioning aid effectiveness.

Managing Throughout Time: A Dynamic Model of Organizational Adaptation to Environmental Changes

While often considered as aberration, organizational adaptation to environmental change represents a critical challenge in today’s business world. Building on the absorptive capacity concept, this paper presents an entrainment model of organizational adaptation to environmental change. Using an entrainment lens, we theoretically reflect on the “when” and “how fast” organizations adapt to repeated situations of environmental change over time. This paper responds to prior calls to adopt a time lens perspective when studying organizational adaptation and contributes to management research by providing a theoretical framework that conceptualizes the role of potential and realized absorptive for firm-environment co-alignment over time. Moreover, we stimulate future research to further explore the role of knowledge and routines in adaptation to competitive dynamics over time.

Absorptive capacity development in Indonesian exporting firms: How do institutions matter?

This paper addresses how firms from an emerging market characterized by a challenging and variable institutional environment learn about internationalizing. Building on the organizational learning and institutional literatures, and the concept of absorptive capacity (AC), and using a sample of Indonesian manufacturing-sector exporters we identify two dimensions of internationalization-related AC: international market and international strategic operation. Unlike previous literature, we find that indirect, or second-hand, experience contributes more than the firm's own experience to the development of international market AC. Furthermore, the second-hand experience feeds Indonesian manufacturing exporters’ learning in both positive (e.g., buyers) and negative (e.g., suppliers and foreign multinationals in Indonesia) ways. In contrast, the development of international operation strategy AC appears to be driven internally, with minimal contribution from either first- or second-hand experience. We posit that these outcomes are influenced by the rapid and substantial changes in the domestic institutional environment faced by the Indonesian manufacturers.

The Innovativeness and Heterogeneity of Foreign‐Invested High‐Tech Companies inShanghai

AbstractChina has taken a foreign direct investment‐based approach toward increasing its capital and knowledge base, and developing into an innovative economy. However, little quantitative evidence exists about the factors that drive innovations of foreign‐invested enterprises (FIEs) there. This paper uses survey data from high‐technology firms inShanghai to discuss factors affecting their innovativeness. It takes the concepts of absorptive capacity, export orientation, and innovation‐related cooperation as a starting point. It highlights how the interplay of strategies and resources affects innovativeness and heterogeneity ofFIEs. The most innovativeFIEs are endowed with a strong human capital base andR&Dactivities, which at the same time target export markets and whose cooperative partners involve firms other than their parent company. The results underline the necessity to differentiate between the different types ofFIEs when examining their innovativeness.