A Literature Review on Absorptive Capacity
This paper reviews the developed body of literature on absorptive capacity over the last two decades. It identifies and discusses the main research streams and argues the tensions in the literature originate from the use of expense in R&D as a means of developing AC. Following from that, and building on the recent developments in literature, I argue that research in this area are needed and that the focus of research has to be aligned again to the Cohen and Levinthal’s 1989 and 1990 papers that discuss the general commercial application of acquired knowledge. This study, therefore, contributes to the understanding of absorptive ...view middle of the document...
Furthermore, my opinion on developing and emerging countries (especially Brazil for living here) on the aspect of technology and innovation was a totally wrong view of a country with firms which the main activity was assembling imported parts of products and/or produce very simply and low technological and innovative products or services.
In few months I opened my mind and I built a very new perspective on technology and innovation management within the context of developing and emerging countries with practical examples of success. I don’t hide the willing to continue to explore this fascinating area and go more in depth in the intricate role of technological capabilities building in the corporate competitive strategy of firms from developing and emerging economies.
Another reason for choose absorptive capacity as topic is that it is not a new concept for me: indeed, in my master’s dissertation one of the topics of the theoretical framework has been the process-based definition of absorptive capacity where, analysing the case study of a company acting in the e-learning market, I identified technological and market knowledge as two critical components of prior knowledge in the organizational learning processes of AC.
For all these reasons I decided to start a literature review on AC and continue to feed it even after the submission of this first draft, with the intent to enrich the issue with new further literature and improve the quality of what already done. Thus, I hope to receive guidelines and suggestions from you.
The paper is structured as follows. I begin by exploring the origins of the concept of AC and the way it was developed originally. Then I provides a review of the AC literature dividing the research in two main streams, the cognitive approach, and the evolutionary/dynamic capability approach.. In the third section I make a reflection on the validity of R&D expense as proxy for AC. The article concludes with summarizing the main features of the stream of research on AC and offering recommendations for policy makers and firms’ management.
Origins and definition of absorptive capacity
Absorptive capacity (AC) is one of the most important constructs of the last decades introduced by Wesley Cohen and Daniel Levinthal in a 1989 paper in the Economic Journal. They offered the most widely cited definition of AC, viewing it as the firm’s ability to value, assimilate and apply new knowledge from the environment. These three dimensions encompass not only the ability to imitate other firms’ product or processes but also the ability to exploit less commercially focused knowledge, such as scientific research (Cohen and Levinthal, 1989, 1990).
Since its introduction, the AC construct has been used more than 900 peer-reviewed academic papers due to its unique perspective crossing over several areas of organizational research such as organizational learning, strategic alliances, knowledge management and the resource-based view of the...