A Review of Absorptive Capacity

A Review of Absorptive Capacity

César Camisón Zornoza, Beatriz Forés Julián, Montserrat Boronat Navarro
Copyright: © 2015 |Pages: 10
DOI: 10.4018/978-1-4666-5888-2.ch436
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The globalization of markets, rapid technological change, shortening of product life cycles and the increasing aggressiveness of competitors have changed the competitive arena in business environments in many ways. These changes have prompted not only fast-moving, high-tech industries to react, but even industries that were assumed to be stable are now heating up.

In this context, the firm’s capacity to acquire and absorb external knowledge represents a critical capacity to innovate (Cohen & Levinthal, 1990), and to develop and sustain competitive advantages (Camisón & Forés, 2010; Zahra & George, 2002). The problems that organizations face in attaining self-sufficiency in knowledge creation and the path-dependence nature of external knowledge absorption (Cohen & Levinthal, 1990) contradict research that posits high levels of one learning process (e.g. internal) would imply low levels of the other process (e.g., external) as firms compete for scarce resources (Gupta et al., 2006). In contrast, they support the perspective that organizational learning processes are not mutually exclusive, high levels of internal and external learning may coexist, and their conjoint development will enhance organizational success and innovation (Cassiman & Veugelers, 2006).

Absorptive capacity has become one of the most significant constructs in the last twenty years precisely because external knowledge resources are so important. Since the publication of Cohen and Levinthal’s (1989) work on absorptive capacity, numerous theoretical and empirical studies have analysed firms’ capacity to absorb knowledge.1

Nonetheless, despite the huge growth in the absorptive capacity literature, certain important gaps still remain. Specifically, there is a certain ambiguity in the definition of the construct, its measurement and its antecedents (Lane, Koka, & Pathak, 2006). This controversy lies behind our objective to compile a “state of the art” of the absorptive capacity construct.

The article is structured in four parts. First we present a review of the literature on the construct and the definitions it offers in order to provide the foundations on which to construct and measure an integrating, multi-dimensional and theoretically grounded concept. Second, we examine the major external and internal antecedents of firm’s absorptive capacity. Finally, we report the study conclusions and implications.

Key Terms in this Chapter

Potential Absorptive Capacity (PACAP): Integrates a firm’s efforts expended in valuing, acquiring and assimilating new external knowledge.

Assimilation Capacity: Is defined as the processes and routines that allow the new information or knowledge acquired to be analyzed, processed, interpreted, understood, internalized and classified.

Absorptive capacity: Is defined as the systematic, dynamic capacity that exists as two subsets of potential and realized absorptive capacities.

Acquisition Capacity: Is a firm’s ability to locate, identify, value and acquire external knowledge that is critical to its operations.

Application or Exploitation Capacity: Is defined as the organizational capacity based on routines that enable firms to incorporate acquired, assimilated and transformed knowledge into their operations and routines not only to refine, perfect, expand and leverage existing routines, processes, competences and knowledge, but also to create new operations, competences and routines.

Transformation Capacity: Is a firm’s capacity to develop and refine the internal routines that facilitate the transference and combination of previous knowledge with the newly acquired or assimilated knowledge. Its main objective is to establish how to adapt the new knowledge to the reality and needs of the organization.

Realised Absorptive Capacity (RACAP): Captures the firm’s capacity to integrate and reconfigure the existing internal knowledge and the newly assimilated knowledge and to incorporate this transformed knowledge into firm’s systems, processes, routines and operations.

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