Analyzing the Determinants of Firm's Absorptive Capacity


Book Description

This article proposes a new model for analyzing the determinants of absorptive capacity in companies. We suggest that absorptive capacity is determined not only by research and development activities, but also by a set of internal factors, which we group into three basic categories: organizational knowledge, formalization, and social integration mechanisms. In addition, we suggest that these factors may influence all components of the firm's absorptive capacity, and that the influence can be positive or negative depending on the applicability of the knowledge being absorbed. This paper thus advances the understanding of absorptive capacity by exploring a largely ignored aspect in the literature: the role of knowledge attributes. We show how the model can be operationalized and empirically tested and provide preliminary evidence supporting most of the propositions in the analytical model.




Absorptive Capacity - One Size Fits All? A Firm-Level Analysis of Absorptive Capacity for Different Kinds of Knowledge


Book Description

The paper empirically analyses the effect of Ramp;D activities, human resource and knowledge management, and the organisation of knowledge sharing within a firm on the absorptive capacity of innovative firms for three different types of knowledge, namely absorptive capacity to use knowledge from a firm's own industry, knowledge from other industries and knowledge from research institutions. Using data from the German innovation survey we investigate how firms are able to exploit knowledge from external partners for successful innovation activities. The estimation results show that the determinants of absorptive capacity differ with respect to the type of knowledge absorbed for innovation activities. In particular we find that the Ramp;D intensity does not significantly influence absorptive capacity for intra- and inter-industry knowledge. Additionally, our results suggest that absorptive capacity is path-dependent and firms can influence their ability to exploit external knowledge by encouraging individuals' involvement in a firm's innovation projects.




Absorbing the Concept of Absorptive Capacity


Book Description

The purpose of this Perspective Paper is to advance understanding of absorptive capacity, its underlying dimensions, its multi-level antecedents, its impact on firm performance and the contextual factors that affect absorptive capacity. Nineteen years after the Cohen and Levinthal 1990 paper, the field is characterized by a wide array of theoretical perspectives and a wealth of empirical evidence. In this paper, we first review these underlying theories and empirical studies of absorptive capacity. Given the size and diversity of the absorptive capacity literature, we subsequently map the existing terrain of research through a bibliometric analysis. The resulting bibliometric cartography shows the major discrepancies in the organization field, namely that (1) most attention so far has been focused on the tangible outcomes of absorptive capacity; (2) organizational design and individual level antecedents have been relatively neglected in the absorptive capacity literature; and (3) the emergence of absorptive ccapacity from the actions and interactions of individual, organizational and inter-organizational antecedents remains unclear. Building on the bibliometric analysis, we develop an integrative model that identifies the multi-level antecedents, process dimensions, and outcomes of absorptive capacity as well as the contextual factors that affect absorptive capacity. We argue that realizing the potential of the absorptive capacity concept requires more research that shows how “micro antecedents” and “macroantecedents” influence future outcomes such as competitive advantage, innovation, and firm performance. In particular, we identify conceptual gaps that may guide future research to fully exploit the absorptive capacity concept in the organization field and to explore future fruitful extensions of the concept.




Absorptive Capacity


Book Description




Absorbing the Concept of Absorptive Capacity


Book Description

The purpose of this Perspective Paper is to advance understanding of absorptive capacity, its underlying dimensions, its multi-level antecedents, its impact on firm performance and the contextual factors that affect absorptive capacity. Nineteen years after the Cohen and Levinthal 1990 paper, the field is characterized by a wide array of theoretical perspectives and a wealth of empirical evidence. In this paper, we first review these underlying theories and empirical studies of absorptive capacity. Given the size and diversity of the absorptive capacity literature, we subsequently map the existing terrain of research through a bibliometric analysis. The resulting bibliometric cartography shows the major discrepancies in the organization field, namely that (1) most attention so far has been focused on the tangible outcomes of absorptive capacity; (2) organizational design and individual level antecedents have been relatively neglected in the absorptive capacity literature; and (3) the emergence of absorptive capacity from the actions and interactions of individual, organizational and inter-organizational antecedents remains unclear. Building on the bibliometric analysis, we develop an integrative model that identifies the multi-level antecedents, process dimensions, and outcomes of absorptive capacity as well as the contextual factors that affect absorptive capacity. We argue that realizing the potential of the absorptive capacity concept requires more research that shows how "micro antecedents" and "macroantecedents" influence future outcomes such as competitive advantage, innovation, and firm performance. In particular, we identify conceptual gaps that may guide future research to fully exploit the absorptive capacity concept in the organization field and to explore future fruitful extensions of the concept.




Managing Knowledge, Absorptive Capacity And Innovation


Book Description

Knowledge Management focuses on identifying, sharing, storing, and exploiting internal knowledge, whereas Open Innovation is more concerned with sources of external knowledge. However, this simple dichotomy between open and closed approaches is unhelpful and not realistic. Instead, it is the interaction between internal and external knowledge that creates dynamic capabilities and the ability to innovate. In particular, we need to better understand the interactions between internal and external knowledge, and how these influence innovation outcomes under different conditions. This edited volume, Managing Knowledge, Absorptive Capacity, and Innovation, provides an opportunity to combine contemporary interests in Open Innovation with the classic notion of absorptive capacity, to better understand how organisations can manage the absorption and exploitation of inbound external sources of knowledge in order to innovate.




Absorptive Capacity


Book Description

Discusses the notion that the ability to exploit external knowledge is crucial to a firm's innovative capabilities. In addition, it is argued that the ability to evaluate and use outside knowledge is largely a function of the level of prior related knowledge--i.e., absorptive capacity. Prior research has shown that firms that conduct their own research and development (R&D) are better able to use information from external sources. Therefore, it is possible that the absorptive capacity of a firm is created as a byproduct of the firm's R&D investment. A simple model of firm R&D intensity is constructed in a broader context of what applied economists call the three classes of industry-level determinants of R&D intensity: demand, appropriability, and technological opportunity conditions. Several predictions are made, including the notions that absorptive capacity does have a direct effect on R&D spending and spillovers will provide a positive incentive to conduct R&D. All hypotheses are tested using cross-sectional survey data on technological opportunity and appropriability conditions--collected over the period 1975 to 1977 for 1,719 business units--in the American manufacturing sector from Levin et al. (1983, 1987) and the Federal Trade Commission's Line of Business Program data on business unit sales, transfers, and R&D expenditures. Results confirm that firms are sensitive to the characteristics of the learning environment in which they operate and that absorptive capacity does appear to be a part of a firm's decisions regarding resource allocation for innovative activity. Results also suggest that, although the analysis showing a positive effect of spillovers in two industry groups do not represent a direct test of the model, positive absorption incentive associated with spillovers may be sufficiently strong in some cases to more than offset the negative appropribility incentive. (SFL).




The Flexible Firm


Book Description

The pace of change in the business world is becoming faster. This book provides a detailed account of the network-like organization forms that some firms are adopting to make themselves more flexible and responsive to changing technologies and customer demands. As these organizations become more pervasive, the winners will be those firms that develop the specific capabilities that are needed to thrive in a networked world. Paradoxically, such capabilities are developed not only at the firm level, but also in the relationships the firm has with its external network and in the operating units within the firm. This perspective has implications for the 'resource-based view of the firm' in the field of strategic management, suggesting that the development of capabilities is a more complex and multi-level process than was traditionally thought. This book brings together eleven chapters, each focusing on a particular aspect of capability development in the networked firm. It is based on research in five big Swedish firms (Ericsson, Volvo, Skandia, Pharmacia & Upjohn, SE Banken) as well as a number of other well-known firms such as HP and ABB. The book will be essential reading for advanced students in strategy and international business wanting to keep abreast of current thinking and company practices.







Organizational Culture and Absorptive Capacity


Book Description

Firms are increasingly collaborating with outside partners to access external knowledge that will enable them to successfully innovate and remain competitive in the marketplace. To apply external knowledge, they must have a distinctive capacity to absorb knowledge. One of the main influencing factors for absorptive capacity is a knowledge-friendly organizational culture, because the knowledge absorbing behavior of individuals can be better coordinated through implicit values and norms than through structural coordination instruments. When focusing on an organization’s overall behavior, it is important to investigate in detail how a knowledge-friendly organizational culture influences absorptive capacity. Therefore, the author analysis the relationship between organizational culture and absorptive capacity and shows how a knowledge-friendly organizational culture should be designed to support the absorption of external knowledge in SMEs.