Absorptive capacity

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In business administration, absorptive capacity is theory or model used to measure a firm's ability to value, assimilate, and apply new knowledge. It is studied on multiple levels (individual, group, firm, and national level). Antecedents are prior-based knowledge (knowledge stocks and knowledge flows) as well as communication. It is studied involving a firm's innovation performance, aspiration level, and organizational learning.

Absorptive capacity is also said to be a reason for companies to invest in R&D instead of simply buying the results (e.g. patents). Internal R&D teams increase the absorptive capacity of a company.

The theory was first introduced in 1990 by Cohen and Levinthal.[1] It involves organizational learning, industrial economics, the resource-based view of the firm and dynamic capabilities. This theory has undergone major refinement, and today a firm's absorptive capacity is mostly conceptualized as a dynamic capability.[2]

Two concepts related to absorptive capacity are:

  • Receptivity: The firm's overall ability to be aware of, identify and take effective advantage of technology.[3]
  • Innovative Routines: Practised routines that define a set of competencies the firm is capable of doing confidently and the focus of the firm's innovation efforts.[4]

[edit] See also

[edit] Notes and references

  1. ^ Cohen and Levinthal (1990), "Absorptive capacity: A new perspective on learning and innovation", Administrative Science Quarterly, Volume 35, Issue 1 pg. 128-152.
  2. ^ Zahra and George (2002), "Absorptive Capacity: A Review,Reconceptualization,and Extenstion", "Academy of Management Review",Volume 27, Issue 2,pg.185-203
  3. ^ Seaton & Cordey-Hayes (1993) - incomplete citation
  4. ^ Nelson & Winter (1982) - incomplete citation