ArticlePDF Available

Absorptive Capacity: A New Perspective on Learning and Innovation

Authors:
Wesley M. Cohen
Wesley M. Cohen
Wesley M. Cohen
  • This person is not on ResearchGate, or hasn't claimed this research yet.
Daniel A. Levinthal at University of Pennsylvania
Daniel A. Levinthal
Download full-text PDFDownload full-text PDF
Read full-text
Download citation

Abstract

In this paper, we argue that 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. We label this capability a firm's absorptive capacity and suggest that it is largely a function of the firm's level of prior related knowledge. The discussion focuses first on the cognitive basis for an individual's absorptive capacity including, in particular, prior related knowledge and diversity of background. We then characterize the factors that influence absorptive capacity at the organizational level, how an organization's absorptive capacity differs from that of its individual members, and the role of diversity of expertise within an organization. We argue that the development of absorptive capacity, and, in turn, innovative performance are history- or path-dependent and argue how lack of investment in an area of expertise early on may foreclose the future development of a technical capability in that area. We formulate a model of firm investment in research and development (R&D), in which R&D contributes to a firm's absorptive capacity, and test predictions relating a firm's investment in R&D to the knowledge underlying technical change within an industry. Discussion focuses on the implications of absorptive capacity for the analysis of other related innovative activities, including basic research, the adoption and diffusion of innovations, and decisions to participate in cooperative R&D ventures.
Absorptive Capacity A
SQ.pdf
Content uploaded by Daniel A. Levinthal
Author content
All content in this area was uploaded by Daniel A. Levinthal on Mar 16, 2017
Content may be subject to copyright.
0fcfd5142b6a98e5550000
00.pdf
Content uploaded by Daniel A. Levinthal
Author content
All content in this area was uploaded by Daniel A. Levinthal
Content may be subject to copyright.
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
Copyright © 2001 All Rights Reserved
... Y tercero, la aplicación de este conocimiento asimilado para la innovación (Zahra and George, 2002). Desde este punto de vista, los nuevos productos o procesos requieren nuevas competencias que se suelen ver como el resultado de la capacidad de absorción (Cohen and Levinthal, 1990). La capacidad de absorción no solo se considera como el resultado de las habilidades individuales, el conocimiento previo y las capacidades internas de una empresa, sino también el acceso a fuentes externas de información (Schmidt, 2010). ...
... En general, la variedad en el suministro de información tiende a afectar positivamente el desempeño innovador. Así pues, las empresas necesitan cada vez más colaborar con otros jugadores para mejorar su capacidad de innovación y disponer de una combinación equilibrada de fuentes de información internas y externas que permitan no solo evitar inversiones excesivas o insuficientes sino aprovechar oportunidades de negocio de forma eficiente (Cohen and Levinthal, 1990). Los argumentos señalados nos permiten plantear la siguiente hipótesis: H3: las fuentes de información se asocian positivamente con el desempeño innovador de las ESIC. ...
Análisis del desempeño innovador de las empresas de servicios intensivos del conocimiento
Article
Full-text available
  • Jun 2024
Objetivo. Evaluar la relación entre las fuentes de información y la capacidad de absorción y cómo esta capacidad mejora el desempeño innovador de una empresa. Metodología. El estudio presenta evidencias basadas en una muestra de 212 P-ESIC y 355 T-ESIC peruanas. En la investigación se aplicó un enfoque de modelo de ecuaciones estructurales por medio del software AMOS; mientras que para el análisis de mediación se utilizó el software PROCESS. Resultados. Se encontró que cuando las ESIC son expuestas a fuentes de información internas, del mercado, institucionales, así como a otras fuentes, están en mejores condiciones para desarrollar innovaciones. Sin embargo esta condición no es suficiente, pues es necesario desarrollar la capacidad dinámica (denominada capacidad de absorción). Conclusiones. Este estudio contribuye a comprender mejor el comportamiento innovador de las ESIC en una economía emergente como la peruana, ya que tiene en cuenta que las economías emergentes presentan características diferentes a las de las economías más desarrolladas. También se verificó que la capacidad de absorción no media en la relación entre las fuentes de información y el desempeño innovador en los dos grupos de empresas ESIC analizadas.
View
... On the one hand, firm size has been widely seen as being positively related to innovation performance (Scherer, 1965). One of the reasons is larger firms' higher absorptive capacity, that is, the ability to recognise and assimilate knowledge (Cohen and Levinthal, 1990). The external knowledge provided by the park ecosystem (both tenants and off-park organisations) would be more easily accessed and used by large companies that, in this way, would benefit more than companies with smaller absorptive capacity (Claver-Cortés et al., 2018). ...
... These results suggest that larger firms enhance the economic value of their patents by accessing knowledge in the park ecosystem which they are capable of assimilating, probably because of a higher absorptive capacity (Cohen and Levinthal, 1990). ...
Science and technology parks and their heterogeneous effect on firm innovation
Article
Full-text available
  • Jun 2024
  • J ENG TECHNOL MANAGE
Science and Technology Parks (STPs) have proliferated in many countries as a policy initiative to foster innovation. Previous studies have mostly analysed average effects on the innovation performance of tenant firms, leading to mixed results. This paper aims to explore whether there are heterogeneous STP effects. Creating a novel database of Spanish patents generated on- and off-park, merged with firm and STP characteristics, we find that younger and larger firms benefit more from being on-park and younger and older STPs have a stronger effect on tenants’ patent quality, while STPs promoted by universities do not exhibit a differential effect.
View
... Integrating resources not only improves the efficiency of resource utilization and avoids the phenomenon of sunken resource value, but also enables INVs to identify new innovation opportunities and thus achieve better innovation performance. The organizational capabilities, particularly absorptive capacity, influence the recognition of the value of new external resources during the integration process (Cohen and Levinthal 1990). Absorptive capacity not only makes the exchange and learning of existing knowledge possible (Ritala and HurmelinnaÅ]Laukkanen 2013), but also connects new external knowledge to its prior experience (Cohen and Levinthal 1990), and facilitates the generation of new ideas. ...
... The organizational capabilities, particularly absorptive capacity, influence the recognition of the value of new external resources during the integration process (Cohen and Levinthal 1990). Absorptive capacity not only makes the exchange and learning of existing knowledge possible (Ritala and HurmelinnaÅ]Laukkanen 2013), but also connects new external knowledge to its prior experience (Cohen and Levinthal 1990), and facilitates the generation of new ideas. ...
Tracking the Long-Term Trajectory of International New Ventures' Innovation: The Moderating Role of Regional Multi- Cluster Diversity
Article
Full-text available
  • Nov 2023
The purpose of this article is to study how the innovation performance of international new ventures (INVs) evolves over time, and how multi-cluster diversity as an external environment moderates INVs' innovation performance. We employed the latent growth curve modeling (LGCM) approach to analyze 5,744 INVs from 21 cities in the Guangdong Province (China). We found that INVs' innovation follows a positive linear trend over time, and that multi-cluster diversity plays a positive moderating role. Our findings enrich international entrepreneurship by showing the long-term effect of early internationalization on INVs' innovation under a multi-cluster environment.
View
... As we have seen with the parent company, the IPM Group in our Ino-Bat case, a Slovak-based global investment firm with foreign owners, we need to look more carefully at the form of TNC activity in host economies-whether it is a wholly-owned subsidiary, a joint venture, an acquired company or an alliance-and the type of technological cooperation it brings into the host economy, e.g. a licensing agreement, joint R&I, or strategic partnership (Young et al. 1994). Research on technological spillovers in semi-peripheral contexts has shown that host economies need to have the absorptive capacity in the form of domestic private sector capabilities in respective sectors to benefit from the local presence of TNCs (see Cohen and Levinthal 1990;Criscuolo and Narula 2008;Bell and Figueiredo 2012). The structuralist literature has so far failed to identify and analyse domestic companies that do have the absorptive capacity to benefit or even lead upgrading initiatives. ...
Beyond Dependent Development? The Unlikely Emergence of an Upgrading Alliance in the Case of InoBat in Slovakia
Article
Full-text available
  • Jun 2024
  • STUD COMP INT DEV
Semi-peripheral economies are reliant on foreign capital for innovation and upgrading into higher-value-added economic activities. This characteristic of dependent development is coupled with unreliable government support for domestic businesses, resulting in fragmented state-business ties. How then did a local electrical vehicle (EV) battery startup InoBat manage to build an upgrading alliance in Slovakia and capitalise on the accelerating automotive shift to electromobility despite these barriers being present in the semi-peripheral economy of Slovakia? By developing a network-based analytical approach and using the unlikely case study of InoBat, this paper argues that developmental entrepreneurship, the mobilisation of private sector resources by venture capital or a large domestic firm, and support by private-public institutions were key determinants for the emergence of the InoBat upgrading alliance. The findings underline that local firms can also be the drivers of upgrading efforts even in the absence of consistent government support and the heavy presence of large transnational corporations.
View
... Numerous studies on innovation in the wine industry have relied heavily on the resource-based view (RBV) theory introduced by Barney in 1991 [22]. This theory argues that competitive advantage can be achieved by strategically managing human resources, technological capabilities, financial resources, and R&D activities [23,24]. The dynamic capabilities and knowledge-based vision extensions respectively proposed by Easterby-Smith and Prieto in 2008 and Grant in 2015 [25,26] have also been relevant to this approach. ...
Performance and efficiency of national innovation systems: lessons from the wine industry
Article
Full-text available
  • Jun 2024
The multiplicity of factors involved in the innovation process makes its measurement and evaluation a complex endeavor. In this study we propose a new approach to measure and decompose the efficiency of national innovation systems in the wine industry considering the relationship between the innovation environ- ment and economic performance. The analysis applies the data envelopment analy- sis approach to quantify the relative efficiency of each national system using a set of four indicators to describe the innovative environment in the wine industry as model inputs, and an index of international market performance as output. The results dem- onstrate a clear perspective of the innovation process within the wine industry, iden- tifying the systems that efficiently use the available resources and those that encoun- ter difficulties in translating innovation into economic performance. The proposed approach also captures the dynamics of the international innovation landscape in the wine industry, providing potential country-level strategies and opportunities to increase innovation systems’ efficiency.
View
... The study of autonomous research on enterprise innovation and the factors that significantly impact it has been classified. Respected scholars assert that organizational learning fosters innovation (Cohen & Levinthal, 1990). Companies with advanced maintenance capabilities can benefit from external information to foster innovation (Lin et al., 2020). ...
Harnessing Big Data for Strategic Innovation: Insights into Corporate Entrepreneurship and Technological Advancements
Article
Full-text available
  • Jun 2024
Organizations are embracing innovation and strategic development driven by three powerful forces, technology, big data, and corporate entrepreneurship (CE), to achieve revenue growth, sustainability, and global leadership. The three levels of an organization—individual, group, and organizational—are interconnected and mutually impact one another, ultimately determining the organization’s outcomes in terms of efficiency, performance, and sustainability. A study employing multiple research methods was carried out to understand this complex situation. A total of 450 professionals from various industries participated in an online survey, sharing their experiences and viewpoints. The analysis, conducted using both SPSS and Microsoft Excel, revealed a number of significant findings: Approximately 30% of individuals come from the telecommunications industry. 42.5% consider CE the initial step for strategic initiatives, while technology is regarded as the dominant force (70.45%). Surprisingly, although only 42% utilize all three levels, 40% believe their combined effort leads to the best possible outcomes. This study illustrates a complex ecosystem where big data, technology, and CE must collaborate to achieve organizational sustainability and ensure the success of executive initiatives. By utilizing the combined strength of this triumvirate, organizations can ascend to the highest position on the competitive hierarchy.
View
A Cost-Benefit Analysis of IT Security Investments and Their Economic Impact on Businesses in Developing Economies
Article
Full-text available
  • Jun 2024
Cybersecurity threats pose significant risks to businesses in developing economies, potentially undermining economic growth and stability. This study analyzes the economic impact of cybersecurity threats on businesses in these regions and evaluates the cost-benefit of IT security investments to mitigate these risks. Cybersecurity Threats and Economic Impact: The research begins by identifying common cybersecurity threats faced by businesses in developing economies, including malware, ransomware, phishing attacks, and data breaches. It quantifies the economic impact of these threats, such as financial losses, operational disruptions, reputational damage, and loss of customer trust. The study presents data and case studies illustrating the severe consequences of inadequate cybersecurity measures. Cost of Cybersecurity Threats: The study details the direct and indirect costs associated with cybersecurity incidents. Direct costs include financial losses from fraud, ransom payments, and regulatory fines, while indirect costs encompass lost productivity, recovery expenses, and long-term reputational damage. An economic model is developed to estimate these costs, providing a comprehensive view of the financial burden on affected businesses. IT Security Investments: The research examines various IT security investments that businesses can make to protect against cybersecurity threats. These investments include advanced threat detection systems, encryption technologies, employee training programs, and the implementation of security best practices. The study assesses the costs of these investments and compares them to the potential savings from avoiding cybersecurity incidents. Cost-Benefit Analysis: A detailed cost-benefit analysis is conducted to evaluate the ROI of IT security investments. The analysis considers both tangible benefits, such as reduced financial losses and lower recovery costs, and intangible benefits, such as enhanced customer trust and improved business resilience. The findings demonstrate that strategic IT security investments can significantly mitigate the economic impact of cybersecurity threats, providing a strong economic rationale for businesses to invest in robust cybersecurity measures. Challenges and Solutions: The study acknowledges challenges faced by businesses in developing economies in implementing effective cybersecurity measures. These challenges include limited financial resources, lack of skilled cybersecurity professionals, and inadequate regulatory frameworks. The research proposes solutions to these challenges, such as government incentives for cybersecurity investments, partnerships with international organizations, and initiatives to build local cybersecurity expertise. Policy Recommendations: Based on the findings, the study offers policy recommendations to support businesses in developing economies in enhancing their cybersecurity posture. These recommendations include developing national cybersecurity strategies, promoting public-private partnerships, providing financial support for small and medium-sized enterprises (SMEs) to invest in cybersecurity, and establishing regulatory standards to ensure a baseline level of cybersecurity protection. Future Directions: The study identifies emerging trends and future opportunities for improving cybersecurity in developing economies, such as the adoption of artificial intelligence for threat detection, the use of blockchain for secure transactions, and the development of regional cybersecurity collaboration frameworks. These innovations have the potential to further enhance the effectiveness and cost-efficiency of cybersecurity measures. In conclusion, cybersecurity threats pose a significant economic risk to businesses in developing economies, but strategic IT security investments can mitigate these threats and provide substantial economic benefits. A comprehensive cost-benefit analysis reveals that the ROI of such investments is compelling, justifying the financial outlays involved. Addressing implementation challenges and adopting supportive policies are essential for maximizing the economic impact of cybersecurity investments.
View
Selective revealing for building ecosystems: a conjoint experiment with managers of established firms
Article
  • Jun 2024
Researchers have identified selective revealing, that is, the voluntary, purposeful, and irrevocable disclosure of information to third parties, as a mechanism in ecosystem building. However, there is a lack of understanding of the ecosystem‐level factors that drive managers' decisions to share such information in emerging ecosystems. To shed light on how managers of established firms engage in selective revealing when building ecosystems, we draw on the resource‐based view. We theorise about the information revealing behaviour of established firms' managers, based on the threats of substitution and imitation that cause trade‐offs in emerging ecosystems of established firms and new ventures. We test our hypotheses with a choice‐based conjoint experiment analysing 640 decisions of managers responsible for ecosystem building. We find that managers from established firms are more likely to engage in selective revealing when the ecosystem aims at radical innovation (over incremental innovation), when other established firms have high knowledge diversity (over a low knowledge diversity), and when new ventures demonstrate technological superiority (over being on par with established firms' technologies). Our study therefore illuminates which ecosystem‐level constructs influence managers' decisions to reveal information when co‐building ecosystems, even when no immediate payoff is recognisable.
View
R&D Cooperation and Absorptive Capacity of Russian Organizations
Article
  • Jun 2024
R&D cooperation is one of the main channels for new knowledge diffusion to create innovation. Therefore, it is important to understand exactly how enterprises use this channel. The purpose of this article is to identify the structure of R&D cooperation determined by both the heterogeneity of partners and the size of organizations. This structure is considered in dynamics. The analysis is based on Rosstat data characterizing the participation in joint R&D projects of innovation-active firms from 2019 to 2022. This approach allows us to find out how the structure of cooperation changes under the influence of crisis. However, unlike most Russian studies, this work also defines the relationship between the choice of R&D partners and the absorptive capacity of organizations in Russia. Differences in absorptive capacities (i.e. abilities of organizations to find, assimilate and apply new knowledge from external sources) largely determine the choice of partners in innovation activities and the results of cooperation. The article finds that despite government efforts the links between science and business are weakening in Russia, as not only small entities but even large companies have largely shifted their preferences to less risky projects. The persistence of such cooperation patterns leads to a decrease or even loss of Russian firms’ capacity to assimilate and use new knowledge to create radical innovations. Consequently, measures are needed not only to maintain the scale of R&D collaboration, but also to avoid negative changes in their structure. Such measures should also include incentives for enterprises to increase absorptive capacities. Unfortunately, these incentives have received little attention both in the practice of innovation management and in Russian economic literature.
View
View
View
View
View
View
View
View
View
View
Structural and Process Constraints on Influence in Organizations: A Level- Specific Analysis
Article
  • Dec 1976
This paper presents a level-specific analysis of the dispersion of influence in administrative bureaucracies of 44 Belgian cities. A distinction was drawn between process and structure, and the effect of various structural and process constraints on the influence of middle and lower echelons was examined. It was found that the effects of process and structure on influence in decision making were not consistent across organizational levels.
View
Succesful Industrial Products from Customer Ideas
Article
  • Jan 1978
  • J MARKETING
Manufacturers must recognize and understand the role of customer initiatives.
View