Even though absorptive capacity undoubtedly contributes to the effectiveness of companies strategic behavior, some analysts have been skeptical about the use of the. Open innovation and absorptive capacity are two popular concepts in contemporary innovation management literature. The differential relationship between absorptive capacity and. The investments a firm makes into its research and. Absorptive capacity acap is what enables an organization effectively to acquire, use, transform and implement information vital for the growth of a knowledgesharing. Absorptive capacity is the ability to recognize the value of external knowledge for personal development cohen and levinthal, 1990.
The role of absorptive capacity in acquisition knowledge. Since then, absorptive capacity has become one of the most influential concepts in contemporary. To our knowledge, they never have been connected to each other in a systematic way although it is straightforward that firms absorptive capacity, as it has been defined by cohen and levinthal 1990, determines their. In their paper, the authors provide three main aspects of absorptive capacity which help to better understand the construct. The concept of absorptive capacity was first defined as a firms ability to recognize the value of new information, assimilate it, and apply it to commercial ends by cohen and levinthal. They adjusted this macroeconomic concept to organizations and defined absorptive capacity as a firms ability to recognize the value of recent, external information, adopt it, and use it to commercial ends. Mar 09, 2018 absorptive capacity is an idea showing an organizations capacity to secure outside information, understand its value, absorb it and after that apply the new information for business purposes. Moreover, cohen and levinthals works suggest that the ability of companies to absorb external knowhow could be. The notion of absorptive capacity refers to the capacity of a recipient to assimilate value and use the knowledge transferred. Antecedents and outcomes of breadth and depth of absorptive. Cohen and levinthal 1990 absorptive capacity a new perspective on learning and innovation administrative science quarterly volume 35 issue 1 pg 128 152. Developing a firms absorptive capacity with mafiadoc. For them, absorptive capacity depends greatly on prior related knowledge and diversity of background.
The purpose of this perspective paper is to advance understanding of absorptive capacity, its underlying dimensions, its multilevel antecedents, its impact on firm performance and the contextual factors that affect absorptive capacity. Absorptive capacity, innovation, and financial performance. Absorptive capacity, the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities. The role of individual absorptive capacity, subjective. Absorptive capacity was introduced by cohen and levinthal in 1990. Zahra and george 2002 develop a model which concentrates on the internal processes of absorptive capacity, adding two main refinements to the original concept proposed by cohen and levinthal 1989, 1990. Cohen and levinthal 1990 define absorptive capacity as the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends cohen and levinthal 1990, p.
However, the way absorptive capacity is actually implemented in firms remains relatively poorly known. Following the processbased definition of absorptive capacity, this article identifies technological and market knowledge as two critical components of prior knowledge in the organizational learning processes of absorptive capacity. We suggest the reintroduction of the original first component of absorptive capacity, recognizing the value, as a step before acquisition. Organizational ambidexterity and absorptive capacity. Critical analysis of the use of absorptive capacity theory. Since the publication of cohen and levinthals 1989 work on absorptive capacity, numerous theoretical and empirical studies have analysed firms capacity to absorb knowledge. However, the contributions by cohen and levinthal 1989, 1990 are generally seen as the founding ones. The differential relationship between absorptive capacity. The concept of absorptive capacity concept has emerged as an underlying. Absorptive capacity was described by cohen and levinthal 1990 as a firms ability to recognize, value, assimilate, and apply new external knowledge to benefit the firm.
Cohen and levinthal 1990, a firms absorptive capacity is critical to its innovative capacity. The objective of this paper is to deepen our understanding of the role of absorptive capacity in enabling interorganizational new product development inpd. Then whatever conditions the firms incentives to learn i. For example, the external environment affects and evolves with absorptive capacity cohen and levinthal 1990. Absorptive capacity is the ability to make use of external knowledge through the sequential process of exploration, transformation, and application cohen and levinthal, 1990. Absorptive capacity, technological innovation, and product. Put another way, absorptive capacity is a limit to the rate or quantity of scientific or technological information that a firm can absorb. According to research on the concept by cohen and levinthal 1990, absorptive capacity as a capability is critical in supporting firms innovation.
Absorptive capacity is an important construct that influences strategic flexibility and various forms of innovation. Multilevel absorptive capacity and interorganizational new. Other work suggests that absorptive capacity may also be developed as a byproduct of a firms manufac turing operations. The increasing number of publications that apply, measure or extend their concept of ac. Data from a multiinformant survey conducted in 175 industrial firms show that exploratory, transformative, and exploitative. Absorptive capacity acap was first described in academic literature in the fields of management and organizational science as a construct for consideration at the organizational level by cohen and levinthal 1990. Jul 14, 2014 since the cohen and levinthal article on absorptive capacity was published, the ability to recognize the value of new information, to assimilate it, and apply it to commercial ends p. This paper introduces the concept or theory of absorptive capacity ac which the authors define as the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends.
Nineteen years after the cohen and levinthal 1990 paper, the field is. The organizational and geographic drivers of absorptive. Although, cohen and levinthal view of absorptive capacity is not. The notion of absorptive capacity refers to the capacity of a recipient. One year later, cohen and levinthal 1990 redefine the construct as the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends. Essential to the concept of absorptive capacity is the. Zahra and george 2002, which may influence the different processes of absorptive capacity. Conceptually, it is similar to information processing theory, but at the firm level rather than the individual level. Absorptive capacity and knowledge management in small and. While cohen and levinthal 1990 proposed recognizing the value of new external knowledge, zahra and george 2002 use the term acquisition of new external knowledge. In this process of innovation, imitation is important which can be a capacity that is acquired from external environment. However, cohen and levinthal 1990 contribution is accepted as the founding paper. Almost half of the 98 papers use absorptive capacity as theoretical support, and the remaining papers use absorptive capacity in the research model percent of papers or as a theoretical base 5 per cent of papers. The unfinished legacy of cohen and levinthal the ac construct has precursors and it is placed in a broad space of neighboring constructs and research streams, such as organizational learning, creativity, and capabilities.
Organizational learning and absorptive capacity in. Critical analysis of the use of absorptive capacity theory in. Network based absorptive capacity david dreyfus abstract this paper builds on the absorptive capacity model to analyze the implications of relaxing the assumption that information search costs are free. Absorptive capacity is regarded as an important factor in both corporate innovation and general competitive advantage. Absorptive capacity, environmental turbulence, and the. Absorptive capacity is a firms ability to recognize the value of new, external information, assimilate it, and apply it to commercial ends. A new perspective on learning and innovation, asq, 35 1990, 128152. Absorptive capacity is defined as the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends cohen and levinthal 1990, p. A new perspective on learning and innovation, authorwesley m. Since the pioneering work of cohen and levinthal, 1989, cohen and levinthal, 1990, an emerging body of literature is studying the importance of a firms ability to acquire, assimilate, and generate commercializable outputs from new external knowledge. Recently, zahra and george 2002a, 2002b proposed a. Specifically, despite the fact that cohen and levinthal 1989, 1990 propose a theoretical framework where absorptive capacity leads to innovative capabilities, and some studies in the literature attempt to explore the relationship between absorptive capacity and product innovativeness stock et al.
Public technology transfer, commercialization and business. Organizational learning and absorptive capacity in managing. One year later, cohen and levinthal 1990 redefine the construct as the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends in their paper, the authors provide three main aspects of absorptive capacity which help to better understand the construct. Zahra georgia state university gerard george university of wisconsinmadison researchers have used the absorptive capacity construct to explain various organizational phenomena. Cohen and levinthal introduced the notion of absorptive capacity as the firms ability to value, assimilate, and apply new knowledge for improving organizational learning.
Absorptive capacity and organizational learning springerlink. In their seminal papers, cohen and levinthal define absorptive capacity henceforth, ac as the ability to identify, assimilate, and exploit knowledge from the environment 1989. Pdf cohen and levinthal 1990 absorptive capacity a new. Despite the strategic importance of absorptive capacity, its origins remain only partially understood. Nordic journal of comparative and international education.
Cohen and levinthal 1989,1990 assigned the term absorptive capacity to the general capability of individuals, groups, and firms to recognize the value of new information, choose what to adopt, and apply it to innovation. First, they distinguish between potential absorptive capacity pacap, which includes. Knowledge spillovers and absorptive capacityinstitutional. Thirtyseven percent of the studies 37 papers use cohen and levinthal as a minor citation. Absorptive capacity, strategic flexibility, and business. Consistent with the absorptive capacity framework cohen and levinthal, 1989, 1990, we show that it spillovers are more likely to accrue to firms with prior related investments in advanced enterprise software, and less likely to accrue when the external. Finally, the findings indicate that superintendents can play important roles through boundaryspanning and gatekeeping activities. Since the cohen and levinthal article on absorptive capacity was published, the ability to recognize the value of new information, to assimilate it, and apply it to commercial ends p. Absorptive capacity ac theory, on the other hand, does refer to the different inter and intra organizational stages of learning lane et al. We contend that despite what is known about the benefits of absorptive capacity to innovating firms, this research is dominated by firmlevel analyses using crosssectional data.