Absorptive Capacity 2.0: The Link between Knowledge and Innovation in Firms

Innovation by introducing new products to the market is often accepted as a necessity for firms' long-term survival. The research in the field on management science emphasizes the role of knowledge as a central source of innovation. In particular, absorptive capacity as a firm's "ability to recognize the value of new information, assimilate it, and apply it to commercial ends" has been proposed as vital for firms' innovation performance. The knowledge base on absorptive capacity is however highly fragmented preventing scholars and managers from drawing clear-cut conclusions from the research. Therefore, the goal of this book is to answer the following questions: What is absorptive capacity and (how) does it enhance firms' (innovation) performance? In particular, the antecedents, mechanisms, and outcomes of absorptive capacity are investigated in three scientific studies. The first empirical study focuses on the outcomes of absorptive capacity by applying meta-analytical methods. To clarify the variability in the empirical results regarding absorptive capacity and its outcomes 148 empirical studies on absorptive capacity are analyzed quantitatively. This study displays how the measurement of absorptive capacity and firm performance explain partly controversial findings. The second study explores knowledge as a driver of absorptive capacity. Based on the conceptual literature, knowledge is one of the focal antecedents of absorptive capacity but its multifaceted nature has been largely ignored in the extant research. Applying meta-analytical methods, this study offers a categorization and analysis of different facets of knowledge relevant for the development of absorptive capacity. The third study refines the key elements of absorptive capacity and their interplay with related activities within the context of product innovation. A qualitative multi-case analysis clarifies the complexity concerning absorptive capacity and takes a step further to unraveling how absorptive capacity drives innovation in firms. This dissertation as a whole provides researchers and practitioners a better understanding of how firms, by developing absorptive capacity, can effectively process existing and new knowledge in order to drive product innovation. Particularly, managers who consider knowledge as a central element in their strategy can benefit from this research.