Academic journal article Journal of Managerial Issues

Understanding the Multi-Dimensional Nature of Absorptive Capacity

Academic journal article Journal of Managerial Issues

Understanding the Multi-Dimensional Nature of Absorptive Capacity

Article excerpt

Researchers note that firm competitiveness is enhanced by assembling and leveraging idiosyncratic configurations of resources and capabilities (Prahalad and Hamel, 1990; Sparrow, 2001; Van Gils and Zwart, 2004). Hence, the ability to acquire and transform knowledge to create these unique configurations is critical to firm success (Wiklund and Shepherd, 2003). Absorptive capacity represents a set of specific capabilities employed by the firm to achieve these unique configurations. Cohen and Levinthal (1990: 128) define absorptive capacity as the firm's use of capabilities to "recognize the value of new, external information, assimilate it, and apply it to commercial ends." Although the manner in which absorptive capacity influences competitive advantage is addressed in extant literature, much remains to be understood about the multidimensional nature of absorptive capacity.

While researchers have referenced the dimensionality of absorptive capacity, the body of research is fragmented and inconsistent, citing the construct as consisting of two (e.g., Zahra and George, 2002), three (e.g., Lichtenthaler, 2009), and/or four internal capabilities (e.g., Sun and Anderson, 2010). The inconsistency evidenced in the literature is indicative of researchers' limited understanding of the knowledge conversion capabilities associated with absorptive capacity, which has stifled development in the field. Without knowing the precise capabilities associated with From a practitioner's perspective, managers struggle with understanding how firm-level factors (e.g., social integration mechanisms) are used to enhance the firm's ability to acquire and use new knowledge, and researchers are limited in offering recommendations given that a limited understanding exists of how the capabilities are related. Therefore, prior to offering insight specific to the influence of factors on absorptive capacity, researchers must first understand how the internal capabilities of the construct are leveraged. Studies that offer a better understanding of the capabilities associated with absorptive capacity will further consolidate and extend understanding of the absorptive capacity phenomenon. As a result of detailed investigations, managers will have a more defined blueprint of how to create firm value by leveraging the proper capabilities.

Scholars (e.g., Zahra and George, 2002; Volberda et al., 2010; Lewin et al., 2011) acknowledge that absorptive capacity is a dynamic capability (2) consisting of underlying capabilities used to leverage knowledge resources. A similar capability perspective is adopted in this study to advance absorptive capacity research by hypothesizing a four-factor capability model and examining the relationships among the underlying capabilities. More specifically, the objectives of this investigation are to confirm that a four-capability specification of absorptive capacity is the most appropriate conceptualization, identify linkages among the capabilities associated with absorptive capacity, and demonstrate that absorptive capacity, as conceptualized, positively influences firm performance.

The investigation begins with an overview of absorptive capacity, which includes a description of the four primary capabilities: acquisition, assimilation, transformation, and exploitation. Following, relationships among the capabilities are hypothesized, and structural modeling is used to conduct an empirical examination. Results confirm that a four-capability model offers an appropriate operationalization of the absorptive capacity construct. Further, the findings suggest that positive relationships exist between the (1) acquisition and assimilation capabilities, (2) assimilation and transformation capabilities, and (3) transformation and exploitation capabilities. Finally, the construct, as specified, is positively related to firm performance. The results of the study offer a unified conceptualization of absorptive capacity with implications for researchers and managers. …

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