burcharth et al 2015

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Extending organizational antecedents of absorptive capacityOrganizational characteristics that encourage experimentation

Ana Luiza Lara de Arauacutejo Burcharth a Christopher Lettl b1 John Parm Ulhoslashi a2

a Aarhus University Business and Social Sciences Bartholins Alleacute 10 8000 Aarhus Denmarkb Institut fuumlr Entrepreneurship und Innovation Vienna University of Economics and Business Nordbergstr 15 1090 Vienna Austria

a r t i c l e i n f o a b s t r a c t

Article history

Received 4 September 2012Received in revised form 3 September 2013Accepted 28 December 2013Available online 26 January 2014

Absorptivecapacity has generally been perceived as a lsquopassiversquo outcome of RampD investmentsRecently however a renewed debate on its lsquoproactiversquo dimensions has emerged We tap intothis development and complement the existing discussion on combinative capabilities witha perspective that focuses on organizational characteristics that encourage experimentationSpecifically we argue that characteristics such as slack resources tolerance for failurewillingness to cannibalize and external openness are important organizational antecedentsfor knowledge absorption activities as they prevent inertia Drawing on multi-informantsurvey data collected from SMEs in Denmark (n = 169) we find empirical support for theimpact of these characteristics (except for tolerance for failure) on various aspects of absorptive capacity (both potential and realized) Before concluding we discuss thetheoretical and managerial implications of our study

copy 2014 Elsevier Inc All rights reserved

Keywords

Absorptive capacityOrganizational antecedentsExperimentationInnovationSMEs

1 Introduction

The competitive landscape in which many firms operatetoday especially in technology-intensive industries is charac-terized by increased customer demands and a rapidly growingknowledge base which is becoming increasingly more complexconvergent and widely distributed across the globe In suchcontexts firms need to intensify their innovative efforts while atthe same time they find virtually impossible to both unite all thenecessary competencies in-house and capture all the socialbenefits of their research and development (RampD) endeavors [1]

Therefore firms have become more and more reliant on eachother to create and sustain innovation [2ndash5] As a result theefficiency and efficacy of innovation systems depend on theextent to which its actors are able to simultaneously generateexternalities and benefit from knowledge spillovers [6]

Greater reliance on external parties implies that the abilityto recognize and utilize outside knowledge has become acritical component of a firms innovative capabilities andconsequently an important subject of technology and econom-ic policy [7ndash9] In theoretical terms this ability is linked to theconcept of lsquoabsorptive capacityrsquo [10] While there is a rich bodyof conceptual and empirical work on this concept whichemphasizes its positive outcomes with respect to competitiveadvantage exploitationexploration orientation and economicgrowth [81112] the crucial issue from both a practical and atheoretical perspective is its organizational antecedents In

other words how can firms increase their absorptive capacityThe literature provides two sets of complementary answers

The first which relates back to Cohen and Levinthal [1013]suggests that firms should invest in prior related knowledge (iespecifically through RampD) in order to keep abreast of the latestresearch findings and developments in the industry The secondsolution draws on the work of van den Bosch et al [14] and Jansenet al [15] on combinative capabilities It recommends thatfirms secure a well-functioning internal exchange of knowledgeamong employees so that new pieces of knowledge drawn fromoutside can be properly integrated with in-house expertise andthus lead to the generation of new products and services

Technological Forecasting amp Social Change 90 (2015) 269ndash284

Corresponding author Tel +45 8716 5124E-mail addresses allaasbdk (ALLA Burcharth)

christopherlettlwuacat (C Lettl) jpuasbdk (JP Ulhoslashi)1 Tel +43 1 31336 45852 Tel +45 8716 5027

0040-1625$ ndash see front matter copy 2014 Elsevier Inc All rights reservedhttpdxdoiorg101016jtechfore201312024

Contents lists available at ScienceDirect

Technological Forecasting amp Social Change



Although the importance of prior related knowledge andcombinative capabilities must be acknowledged as importantdrivers of absorptive capacity our paper emphasizes that theymay not suffice We argue that this perspective needs to becomplemented with one that focuses on the characteristics of an organization that encourage experimentation and preventinertia This is because in order to create the capability toleverage external knowledge organizations need to ensurethat enough resources are shifted from routinized tasks tonovel activities in duetime Absorbing knowledgefrom outsideis costly difficult and risky [16ndash20] as well as contentious as itmay be subject to employee resistance in the form of thelsquonot-invented-herersquo syndrome [21] It often falls outside thescope of exploitative activities to which managerial attentionand effort is normally directed and hence it tends to becrowded out by more routinized activities [2223] Innovativeactivities fundamentally rely on extra-organizational knowl-edge and the creative recombination of existing knowledgeand production factors [24] which seldom is entirely possiblewithin the constraints of a firms internal knowledge base[25ndash29] As empirical evidence from technology-intensiveindustries has revealed new technological and market trendsalong with shifts in consumer preferences emerge mainly inthe realms of research institutions RampD alliances and usercommunities or among lead users [42830ndash38] Besidesavailable extra-organizational technological knowledge israrely entirely ready to be commercialized [39] Due to itsambiguity and complexity it typically requires an adapta-tion or developmental process before it can be assimilatedand utilized effectively mdash a potentially time-consuming andcostly process that may involve adding new skills andorfilling existing gaps in competence

In fact recent evidence suggests that some companiesneed to embark on novel learning trajectories in order toexploit knowledge from outside [2040] Beta Electronics3

for example a medium-sized producer of electromechanicalproducts such as volume controls and speakers decided inthe 1990s to exploit MEMS technology (Micro ElectroMe-chanical Systems) in order to develop the worlds smallestsilicon microphone That innovation was possible despite thefact that the companys competencies were very different fromthe ones needed to exploit MEMS technology (eg clean roomfacilities) Neither knowledge investments nor the improve-ment of communication channels among employees (that isprior to related knowledge and combinative capabilities) wereself-reliant options for the company in this case In order to

complete the development of the microphone the companyhad to purchase new equipment hire external consultantsestablish a partnership deal (with a university and three othercompanies) as well as retrain its staff In other words thecompany had to acquire new skills and resources and it had toexperiment with new technological fields in order to supportthe absorption activities related to MEMS technology

Against this background we address the following researchquestion Which organizationalantecedents affect the development

of absorptive capacity Our focus is directed toward proactiveorganizational antecedents that influence experimentationwith regard to the acquisition assimilation transformation and

exploitation of external knowledge thereby complementing theknowledge-related antecedents (ie RampD investments) and theorganizational antecedents related to combinative capabilities[15] The concrete organizational characteristics investigatedare1) existence of slack resources 2) willingness to cannibalize3) tolerance for failure and 4) external openness Whilethese characteristics have been previously studied in relationto other constructs such as second-order competences [41]and radical innovation [42] they have not been associated toabsorptive capacity They constitute the core contribution of our study in that they are qualitatively distinct from previouslystudied antecedents They underline the fact that the absorp-tion of external knowledge is an effortful risky and challengingactivity that demands more from organizations than internalcommunication

The remainder of the paper is organized as follows In thenext section we provide a discussion of theoretical consider-ations and develop our conceptual framework Based on thisframework we develop our hypotheses We then describe ourresearch methodology in detail after which we present thefindings of our empirical study Finally we conclude andaddress key implications for research and practice

2 Theoretical considerations and framework

Cohen and Levinthal [13] defined lsquoabsorptive capacityrsquo inthemanagement field as ldquothe firms ability to identify assimilateand exploit knowledge fromthe environmentrdquo (p 569) in orderto emphasize the dual role of RampD activities By dual role theymeant that RampD served both for the creation and utilization of new knowledge (innovation) and for the ability of firms toabsorb and deploy external knowledge (learning) The willing-ness to invest in RampD was a central theme in their paper and

was modeled as a function of two exogenous factors 1) thescope of technological opportunities and 2) the propensitytoward knowledge spillovers in the industry In this wayCohen and Levinthals initial work placed great emphasis onthe role of the external environment in determining the ab-sorptive capacity of a firm In their 1990 paper they developed amore robust theoretical basis for the concept including itsdeterminants [11] As a result the sources of a firms absorptivecapacity were extended to include its internal communicationstructure The existence of gatekeepers shared language sys-tems cross-functional interfaces and diversity across individualswere discussed as key aspects of a communication systemcapable of enhancing absorptive capacity

Yet in most subsequent studies throughout the 1990s pastRampD expenditures were employed as the key measure andordriver of absorptive capacity [11] It was not until Zahra andGeorges [43] work that the view of absorptive capacity asembedded in organizational processes and structures wasrevitalized They emphasized the proactive dimension of theconstruct suggesting that absorptive capacity should beseen as a manifestation of a dynamic capability pertaining toknowledge creation and utilization They further argued thatthe concept could be split into two constituent dimensionspotential and realized absorptive capacity While lsquoPotentialAbsorptive Capacity4rsquo was saidto comprise the initialprocesses

3 We use a 1047297ctious name here due to con1047297dentiality agreements

4

It should be noted that potential absorptive capacity constitutes anintegral part of the construct and is not a hypothetical one

270 ALLA Burcharth et al Technological Forecasting amp Social Change 90 (2015) 269ndash 284



involving the acquisition and assimilation of new externalknowledge lsquoRealized Absorptive Capacityrsquo referred to theabilities to transform and exploit it Even though othernomenclatures and taxonomies (ie [114445]) have surfaced inthe literature since Zahra and George [43] the multidimensionalcharacter of absorptive capacity does not seem to have beenseriously contested We employ Zahra and Georges (2002)taxonomy because it is widely recognized and thus allowscomparisons with other studies in the field (ie [1546])

Building on those previous studies [101443] Jansen et al[15] developed a model in which lsquoorganizational formsrsquo andlsquocombinative capabilitiesrsquo were the key organizational driversof absorptive capacity Whereas organizational forms re-ferred to the overall structure of an organization combinativecapabilities were regarded as mechanisms which enhanceinteraction among employees thereby allowing an internalexchange of knowledge whether explicit or tacit [47] Threetypes of combinative capabilities were identified coordinationsystems and socializationcapabilities Coordination capabilitiescomprise lateral methods of coordination between members of an organization involving cross-functional interfaces participa-tion in decision-making and job rotation Systems capabilitiesrefer to the directions procedures andmanuals used to integrateexplicit knowledge and encompass two dimensions formaliza-tion androutinization Finallysocializationcapabilities relate to afirms ability to develop a shared ideology that offers memberscollective interpretations of reality including the degree of connectedness among employees and the integration of newrecruits [15] Subsequent work on the antecedents of absorptivecapacity [4648ndash50] basically adopted the same frameworkThus existing research has been dominated by the notion thatthe relevant organizational drivers of absorptive capacity consistof the practices that contribute to the internal dissemination of knowledge in the firm

The existing literature however does not yet seem tohave fully grasped the fact that not all firms which engagein knowledge-sourcing activities may possess the neces-sary competencies to support them Rather it seems as if scholars have often implicitly assumed that an organiza-tion already possesses all the knowledge and related assetsnecessary to access and implement new external knowl-edge However this is rarely the case As illustrated in theexample of Beta Electronics limitations in a firms knowl-edge base may indeed require changes in their learningtrajectories so as to accommodate the development of newtechnological and market competencies needed for ab-

sorption activities Moreover knowledge insourcing is farfrom a straightforward pursuit given the inherent prob-lems regarding its inter-organizational exchange such ashigh transaction costs misalignment of interests asym-metric information protective attitudes and knowledgeboundaries among others [216192151] It is in fact a costlyrisky difficult and contentious endeavor which involves a highlevel of novelty from the organizations point of view [20] Dueto these characteristics knowledge developed externallycannot be absorbed by a firm freely or effortlessly even if it isavailable in the public domain [52]

Following this reasoning we emphasize that the debate onthe proactive dimensions of absorptivecapacity needs to include

organizational antecedents that stimulate experimentationBased on insights from prior research in the fields of organization

studies technology management and strategic managementsuch key organizational antecedents are (1) slackresources(2) a climate of tolerance for failure (3) willingness tocannibalize and (4) external openness Such antecedents areconsidered the key constituents in our conceptual frame-work because they have been recognized previously as thecharacteristics that affect an organizations predisposition toalter learning paths and that are able to offset the tendencyto allocate efforts to the most secure activities [41]

More precisely slack resources refer to the human andfinancial resources (including time) which are not con-sumed by the daily operations of a firm and can therefore bereadily deployed for novel or other activities [53] The termdenotes actual as well as potential resources to be employedin adjustments to changing external pressures or strategies[54] Tolerance for failure is understood as the extent towhich errors and failures are accepted and perceived bymanagement as opportunities to learn [55] If managers andother organizational members consider failure an unwantedincident that should be avoided at all costs employees arelikely to associate failure with negative sanctions [56] Theopposite situation where ldquofailure-tolerant leadersrdquo [55] acceptmistakes as an inevitable part of the learning process willencourage employees to engage in new and more riskyprojects [41] Willingness to cannibalize ldquorefers to the extentto which a firm is prepared to reduce the actual or potentialvalue of its investmentsrdquo[57 475] It denotes the dispositionof an organization to write off previous investments and currentcompetencies[58] According to Chandy and Telis [57] can-nibalization is conceptualized as an attitudinal characteristicthat resides within the organizations culture Finally externalopenness refers to howimportant a firmhas considered externalsources of knowledge for its innovative activities in previousyears The concept thus relates to a broader lsquonetwork compe-tencersquo [59] reflected in the overall willingness of an organizationto collaborate and thus take in ideas from its partners

Fig 1 sketches out the conceptual framework used in ourresearch Since the managerial challenges associated withthe different dimensions of potential and realized absorptivecapacity [43] areexpected to vary significantly foreach constructwe develop separate hypotheses for them in the next section

3 Hypotheses development

According to the behavioral theory of the firm [53]slack resources are critical for firms aspiring to enter new

domains of activity The existence of slack allows the firmto allocate resources to projects which would otherwisenot be supported on a tight budget as well as leading to anoverall relaxation of controls which may also be importantfor absorptive activities For this reason slack plays animportant ldquoadaptive rolerdquo[53 44] Conversely when slackis limited controls are intensified and managerial attentionshifts away from novel non-routinized and risky activities(such as the acquisition and assimilation of external knowl-edge) toward efforts directed at improving productive effi-ciency with known technologies and processes

In other words slack resources promote the search for newopportunities ndash or lsquoslack searchrsquo in the words of Levinthal and

March[60 309] ndash in the sense that they enable environmentalscanning activities which do not offer an immediate expected




return for the organization Environmental scanning encom-passes high levels of uncertainty as such activities are explor-atory searches through the technical trade and businessliterature often based on diffuse information and weak signals[60ndash63] Such scanning activities are tolerated because of theorganizations past success in achieving its targets [60] and ingenerating a cushion of assets that can bear the concomitantcosts and the risk of failure [41] Slack thus stimulates creativityand experimentation [64] both of which are considered keyelements underpinning the search and identification of valuableknowledge outside the firms boundaries

Furthermore slack allows some individuals to perform atechnological gatekeeping function as this is an informal roleundertaken outsideof formaljobdescriptions [65] Technologicalgatekeepers facilitate external and internal communicationprocesses which are crucial for the initial stages of absorptionefforts First by scanning the environment for ideas andtechnologies of potential relevance to the firm in their extra-organizational professional engagements eg conferences trade

and professional literature gatekeepers significantly contributeto the acquisition of new external knowledge Second bytranslating and disseminating acquired knowledge inside theorganization via their internal network of contacts gatekeeperssignificantly support theassimilation of newexternal knowledge[65] The reasoning above leads to the following hypothesis

Hypothesis 1a Slack resources are positively related to theacquisition and assimilation of external knowledge (iepotential absorptive capacity)

Similarly slack resources arelikely to havea positive impacton the transformation and exploitation of outside knowledge

by increasing the flexibility of new product developmentprocesses The study conducted by [64] for example has

shown that managers perceptions of the availability of slackresources increase their intentions and motivation to adoptnew technologies for the purpose of immediate transforma-tion into new products and services In this way they divertmanagerial attention away from short-term performanceissues to more uncertain new product development projects[66] Besides slack was also found to be useful in acquiringresources that aid in implementation thereby ensuring that thenecessary services skills equipment and related assets are inplace [64] In cases where the new external knowledge is notclosely related to the firms knowledge base it may be necessaryto acquire complementary assets and technical competencesthat support the exploitation of external knowledge

Moreover slack supports the actual incorporation of external knowledge into new products and processes Itenables organizations not only to purchase innovations butalso to absorb failure and explore new ideas in advance of aconcrete need [67] In fact prior empirical evidence hasrevealed that slack resources enhance learning aboutexternal sources of knowledge both in the pre-launch andpost-launch phases of new product development Joshi andSharma [68] for instance found that a resource cushion isrequired in order for the customer knowledge developmentprocess (ie learning about customer preferences) to unfoldeffectively in each stage and across stages The authorsindicate that the integration of customer knowledge likeany other source of outside knowledge is an ongoing andevolving activity which develops according to the partnersengagement with new ideas concepts and prototypes As aresult it is difficult to forecast resource requirements accurate-ly for the activities required throughout new product develop-ment The reasoning above leads to the following hypothesis

Hypothesis 1b Slack resources are positively related to thetransformation and exploitation of external knowledge (ierealized absorptive capacity)

Since absorbing extra-organizational knowledge is acostly and uncertain endeavour [17ndash19] a high probabilityof failure exists Recognizing and assimilating valuable ideasfrom external sources are far from a straightforward activitydue to their inherent ambiguity and complexity Even thoughaccess to information has improved with the development of information and communication technologies tracking downinformation that is both relevant and useful involves skillfulefforts One can make mistakes either in overlooking informa-

tion that is significant or in misjudging the feasibility of a givenpiece of knowledge The frequent lack of immediate fit orapplicability of external knowledge makes it harder to assessits wider potential and practical limitations realistically Asthe study conducted by Menon and Pfeffer[69 498] revealsldquomanagers cannot scrutinize the ideas of outsiders as closelyso that the flaws of external ideas are less visible until suchideas are brought inside and actually implementedrdquo

Consequently for the early phases of identification andevaluation of external knowledge the acceptance of mistakes islikely to be critical especially as these are lsquoinvestigationalrsquoactivities which hinge on the ability of employees to dare toincorporate novel ideas By limiting the opportunity costs of

exploratory tasks and creating an atmosphere of safety wherethe pressure to succeed is lessened a tolerant climate may

Slack resources AbsorptiveCapacity

recognition

assimliation

transformation

exploitation

Tolerance for failure

Willingness to

cannibalize

External openness

Combinative

capabilities

New organizational antecedents

Fig 1 Organizational antecedents of absorptive capacity




increase the propensity of employees to devote efforts andresources to uncertain search activities [56] In addition arisk-friendly environment may reduce the not-invented-heresyndrome [55] As Farson and Keyes[56 70] suggest ldquofailure-tolerant leaders emphasize that a good idea is a good ideawhether it comes from Peter Drucker Readers Digest oran obnoxious coworkerrdquo The reasoning above leads to thefollowing hypothesis

Hypothesis 2a Tolerance for failure is positively related tothe acquisition and assimilation of external knowledge(ie potential absorptive capacity)

The transformative and exploitative dimension of absorption activities involves new product developmentprocesses (NPD) in general and processes of matching newapplications to a given technological platform in particularThese processes inevitably require trial-and-error approachesin which mistakes can never be completely avoided NPDprojects that involve the deployment of extra-organizationalknowledge are more prone to fail because they rely on thecombination of bodies of knowledge which were developedseparately and were therefore not initially ldquomeantrdquo to be puttogether [14] This can lead to unexpected misalignments deadends causal ambiguities and other knowledgebarriers thatcanultimately hinder the completion of such projects [5170] Inother words the inherent difficulties of external knowledgeevaluation that affect its acquisition may manifest themselvesas concrete problems in the application phase

A non-punitive climate where failures are for instance metwith humor and where individuals are not stigmatized forunsuccessful efforts is thus expected to be more conducive touncertain endeavors such as the exploitation of externalknowledge [55] In such contexts intelligent failure systemsreward employees in NPD projects on the basis of the extent towhich they undertake creative and learning activities not theextent to which they achieve immediate success [68] As aresult the fact that employees are encouraged to undertakeactivities with uncertain outcomes ldquomay help organizationslearn and build new capabilitiesrdquo[41 524] which are oftennecessary to support the adaptation of outside ideas to a specificbusinesss need Furthermore a failure-friendly organizationalclimate has been found to increase the predisposition of employees to collaborate and share knowledge with theirpeers [56] as well as to processinformation [71] These activitiesare key steps in the transformative stage of absorptive capacity

The reasoning above leads to the following hypothesis

Hypothesis 2b Tolerance for failure is positively related tothe transformation and exploitation of external knowledge(ie realized absorptive capacity)

The absorption of new external knowledge may involveshifting the focus from existing resources andor practices ndashwhich may become obsolete ndash to new ones which in turnmay require sacrifices in current sources of profit Thepredisposition of organizations to commit themselves toalternative learning trajectories at the expense of currentones also referred to as their willingness to cannibalize [57]

is thus likely to be a fundamental enabler of the capacity toassimilate and utilize knowledge from outside

During the initial stages of absorption activities obsoles-cence may manifest itself in the established knowledge stockandor relationships with certain partners Therefore thefirm may have to cannibalize some of the routines andvested social capital related to its established scanning andassimilation activities even at a point in time when theserelationships are highly valuable [5772] To put it different-ly the firm may need to close certain search channels inorder to develop links to new stakeholders (eg collabora-tion with research groups specialized in another technicaldiscipline) and to establish new procedures to track relevantadvances in a new field [73]

According to Chandy and Tellis (1998) the willingness tocannibalize requires decision-makers to keep their horizonsbroad and stay alert to new technologies competitors andcustomers that will constitute the firms future market This isbecause ldquoa new innovation often is not introduced by the man-ager but by some other party sometimes even an outsiderrdquo[57477] The reasoning above leads to the following hypothesis

Hypothesis 3a Willingness to cannibalize is positively relatedto the acquisition and assimilation of external knowledge(ie potential absorptive capacity)

Throughout the processes in which external knowledgeis applied to the development or refinement of products andprocesses a firm may also need to engage in an internalldquocreative destruction processrdquo [24] Compared to internalknowledge exploitative activities encompassing externalknowledge challenge the existing assets and routines of anorganization to a greater extent This is because externalknowledge originates in a different context Knowledge issituated that is it is an embodiment of the social andphysical context in which it was created [74] Thereforeexternal knowledge is most likely not aligned with theresource base of the organization trying to apply it meaningthat there might be problems with its internal fit

As a result the transformative and exploitative phases of absorption activities may involve replacing important assets of the firm such as product lines process equipment technolog-ical know-how or manufacturing skills [41] This processrequires a willingness to cannibalize as firms are required tosubstitute current cash cows dominating ideas and mentalmodels in their business to disconfirm past programs todiscard assets or routines and thus to prepare to try out newknowledge [57] For instance the architecture of NPD projects

which comprise external knowledge may need to be moredecomposable so as to create more interfaces with partners mdashwhich may represent itself a disruption of traditional projectdevelopment routines In this way the willingness to canni-balize may enable a firm to develop new products that do notnecessarily spring from its current knowledge base Thereasoning above leads to the following hypothesis

Hypothesis 3b Willingness to cannibalizeis positively relatedto the transformation and exploitation of new externalknowledge (ie realized absorptive capacity)

As a substantial part of absorptive activity is derived from

relationships and engagement with external partners the im-portance that an organization attributes to them is fundamental




During the recognition and assimilation phases openness iscrucial because it is a way of gaining lsquowindowsrsquo on emergingtechnologies and markets thus complementing the firmsinternal knowledge base [75] In this way external openness isan attitudinal characteristic that encourages employees to lookmore for solutions outside the firm [39] It is also expected toreduce resistance to ideas of outside origin specifically thelsquonot-invented-herersquo syndrome [217677]

The degree to which employees have been able to cultivateand shape useful relationships in the past is highly importantprecisely because a great deal of knowledge transfer andexchange takes place through inter-organizational ties [4] Pastlinks to external actors provide firms with procedural knowl-edge about how to organize the search process for externalknowledge and its subsequent assimilation in an efficient andeffective way Furthermore according to the literature on searchstrategies [2978] broad search processes across a variety of external channels may lead to new andor additional ideasand resources that help firms overcome local search biases Asthese external sources or lsquochannelsrsquo enhance the firms abilityto recognize new and unfamiliar knowledge from non-localdomains and provide firms with distinct informational advan-tages [7980] they are likely to foster experimental behavior andto break path-dependent patterns of knowledge accumulation

Although some previous studies have utilized absorptivecapacity as a moderator of the relationship between externalnetworks and innovation or performance (ie [52]) we arguethat prior networks actually play a role in the development of absorptive capacity because they secure the endowment of key lsquonetwork resourcesrsquo [79] We thus follow Gulatis [79]reasoning in that we expect a firm to be able to develop themanagerial capabilities associated with forming new alli-ances by collaborating with external partners The reasoningabove leads to the following hypothesis

Hypothesis 4a External openness is positively related to theacquisition and assimilation of external knowledge (ie poten-tial absorptive capacity)

Openness to outside network partners is also expected to bea critical condition for the transformation and exploitation of external knowledge Regarding the transformation of externalknowledge openness is important because it allows firms toutilize inter-organizational relationships to retain knowledgeover time [81] Regarding the exploitation of external knowl-edge openness is important because it enables firms to sys-

tematically integrate external actors in NPD processes This isbecause firms may need to collaborate with different externalstakeholders in various phases of a NPD project including thelatterstages of theinnovationcycle [375] There isa richbody of literature indicating thatcustomerscan playvarious roles duringthe different stages of NPD ndash as idea generators conceptdevelopers prototype (co-)developers testers and diffusionagents (eg [6882]) Universitiesarealsoconsideredkeysourcesof information in the NPD process of firms through both formaland social links such as research papers patents prototypestraining and consultancy services [75] As Perkman and Walsh[75 266] note ldquoin many cases public research provides waysof solving problems rather than suggesting new project ideasrdquo

Furthermore procedural knowledge learned from priorinter-organizational relationships is also likely to be important

for realized absorptive capacity In particular procedural knowl-edge about how to behave in collaborative innovation settingsie in the negotiation of contracts and intellectual property rightissues may positively affect realized absorptive capacity[83] Thereasoning above leads to the following hypothesis

Hypothesis 4b External openness is positively related tothe transformation and exploitation of external knowledge(ie realized absorptive capacity)

4 Methods

41 Sample and data collection

The empirical setting of our study is small and medium-sized firms (SMEs) in Denmark from medium high-tech tohigh-tech manufacturing sectors such as machinery scien-tific instruments pharmaceuticals and chemicals Our selec-tion of this empirical setting was motivated by severalconsiderations First SMEs are a particularly suitable setting totest our framework because they rely on absorptive capacity asa key source of competitive advantage [84] Second themedium-high and high-tech sectors were selected becausethey are known for complementing heavy investments in RampDwith external knowledge acquisition [5] Thirdly as companiesin these sectors increasingly rely on a combination of multipletechnological domains such as nanotechnology robotics andcomputer-related technologies they are more likely toexperience the need to start new learning trajectories andas a consequence exhibit a high need for knowledge ab-sorption activities A multi-industry approach was employedbecause we are confident that the sectors selected arecomparable with regard to our variables of interest Prior tosampling we conducted preliminary semi-structured inter-views in companies belonging to both medium high-techand high-tech industries (n = 10) and this confirmed ourexpectation that the use of external knowledge was a keysource of competitiveness for them These interviews wereused to check whether the professionals in different industrieshad a common understanding of the activities underlyingknowledge absorption as well as to identify the practicalitiesunderpinning these activities The interviews revealed that theprofessionals in the selected industries do perceive knowledgeabsorption activities and the associated managerial challengesin a very similar way In addition the pre-tests of our survey

instrument and the descriptive analysis of the sample (seeTable 2) revealed no further differences between the twoclusters of sectors

Applying Eurostats [85] classification of sectors wethen identified enterprises on the basis of the NACE tradecodes listed under the categories of medium high-tech andhigh-tech We collected this information from a nation-wide electronic database (NED) which is regarded as themost complete and up-to-date catalog of companies in thecountry In addition to industry affiliation business sizeand age criteria were also included in the search Only thosecompanies which fell into the category of SMEs (with ten to249 employees) and which were more than three years old

(established before 2006) were selected The final populationcomprised 1206 companies




In order to limit common method bias we collected datafrom two groups of informants We thus administered twocompletely distinct questionnaires with a view to increasingthe validity of our study General managers or CEOs wereidentified as the first group of informants for the indepen-dent variables (ie organizational antecedents) as they dohave a very good overview of their respective companies Asgeneral managers interact with employees from all func-tions they were regarded as the best persons to report thecharacteristics prevailing in their organizational context Inaddition we identified chief technology officers (CTOs) oremployees with equivalent position as the second group of informants for the dependent variable (ie absorptivecapacity) We chose CTOs because they are assumed topossess the most knowledge about the technological aspectsof the company and are responsible for organizing searchactivities as well as new product development projects Inthecase of small businesses without this job title or functionwe identified the person accountable for the technicalactivities as the survey informant via the initial telephoneconversations This was possible for all companies in thesample since they belong to technology-intensive sectors Asthe two informants represent different occupational cultureswithin the organization (ie the executive and engineeringcultures) [86] respondent biases should not be a majorconcern in our study Furthermore our multi-informant designis consistent with prior research in the field (eg [15])

A pilot study was conducted with four companies in July2009 in order to test the effectiveness of the questionnaireNo major comprehension problems were reported and onlyminor modifications were suggested Data collection wascarried out between September and November 2009During this phase we first contacted the companies bytelephone to present the study identify the right infor-mants obtain their consent and encourage their participa-tion Those who consented were sent an e-mail with aninvitation letter and a link to the web-based survey Thequestionnaires were administered online using the soft-ware Inquisite (Version 90) in English given that the scalesadopted from the literature were developed exclusively inthat language Although most respondents were not nativespeakers nearly all of them use English as a workinglanguage In addition the pilot tests revealed no indicationsthat the language of the survey might cause problems Inorder to boost response rates further two reminder e-mailswere sent out Of the 1206 companies contacted 645 (53)

agreed to participate and therefore received the link to thesurvey A total of 527 questionnaires were returnedyielding a response rate of 409 Of those responses 282pertained to the first survey and 245 to the second survey As aresult we had 169 matched pairs with data from bothrespondents which makes for a final response rate of 262The respondents had a mean company tenure of 38 years and amean industry tenure of 8 years which suggests sufficientcompetence to reply to the questionnaires

In order to test for non-response bias we examineddifferences between respondents and non-respondentsbased on firm size firm age and industry affiliation A t -testshowed no significant differences (p b 05) with respect to

age and to distribution across industries while the test forfirm size revealed a tendency for respondent firms to be

larger than non-respondents but only at a 10 significancelevel Nevertheless there seems to be broad overall corre-spondence between the population and our sample in termsof these objective measures

42 Measurement and validation of constructs

All of the measures in this study are Likert-type multi-itemscales borrowed from previous research in order to ensurecomparability in our study (see Tables I and II) The constructswere computed by calculating the arithmetic averages of theiritems so thatthey could be treated as observed indicators Theywere also standardized in order to reduce multicollinearityproblems

421 Dependent variables

Instead of using the proxies traditionally employed in theliterature to estimate absorptive capacity (eg RampD intensityand number of corporate researchers) we chose to employ a25-item scale designed to produce direct measures of afirms ability to absorb external knowledge this scale wasbased on the prior study of Jansen et al [15] We did sobecause the items refer to a number of activities related toknowledge sourcing which are less ambiguous than thetraditional measures (ie RampD investments andor corporateresearchers may be dedicated to innovative activities whichdo not necessarily involve interaction with the externalenvironment)

In order to check for dimensionality construct indepen-dence and convergent validity in the dependent variable weused the AMOS 18 software package to conduct exploratory aswell as confirmatory factor analyses of the 25 items comprisingthe scale As shown in Table 1 the exploratory factor analysis(usingprincipal components Varimax rotation) resulted in fourseparate factors each with Eigenvalues greater than oneaccounting for 66 of total variance factor 1 (items 1ndash5lsquorecognizersquo) factor2 (items 6ndash9 lsquoassimilatersquo) factor 3 (items10ndash14 lsquotransformrsquo) and factor 4 (items 15ndash25 lsquoexploitrsquo) Allitem loadings were positive and significant The confirma-tory factor analysis estimated three other plausible measure-ment models The results indicated that a four-factor model fitthe data moderately well (λ2df = 223 goodness-of-fitindex [GFI] = 0774 comparative fit index [CFI] = 0867root-mean-square error of approximation [RMSEA] = 0084)

For comparison purposes the statistics for the rival modelswere as follows model using one one-dimensional factorλ2df = 387 GFI = 0573 CFI = 0683 RMSEA = 0131

two-factor model λ2df = 312 GFI = 0666 CFI = 0768RMSEA = 0112 three-factor model λ2df = 233 GFI =0762 CFI = 0855 RMSEA = 0089 All of the fit indices forthe rival models were lower than that of our four-factormodel For this reason we deemed it most appropriate towork with the four-factor model in line with previoustheoretical and empirical work [154387] The factors areas follows recognize (α = 086) assimilate (α = 087)transform (α = 082) and exploit (α = 092) Our resultsthus clearly confirm the currently popular understanding of

absorptive capacity as a multidimensional construct in thecontext of SMEs [12]




422 Independent variables

The scales for slack resources (α = 066) tolerance forfailure (α = 084) and willingness to cannibalize (α =056) were adopted from the work of Danneels [41] and provedreliable We do not regard the relatively low Cronbachs alphastatistic for slack resources and willingness to cannibalize as asourceof major concern When scales such as these arerestrictedto a few items a Cronbachs alpha of 050 is consideredsatisfactory by most researchers [88] External openness wasmeasured as the number of external actors the companies usedas information sources in their innovation activities (out of a listof 13 sources) this measure was likewise found to be reliable Asproposed by Laursen and Salter [29] for their measure of lsquosearchbreadthrsquo and as applied by other studies in the field (eg [89])the 13 sources were coded as binary variables that is 0 if thecompany had not used that source and 1 if it had used it to anyextent (low medium or high) The 13 sources were then addedup to yield the external openness variable We assumed that the

higher the number of sources used the more open the companywas to its external environment Confirmatory factor analysesregarding the four independent variables corroborated thevalidity of these constructs

423 Control variables

Two groups of control variables were included controlsrelated to combinative capabilities and controls related tofirm characteristics In order to assess the relative strengthof the new antecedents we controlled for the ones alreadyestablished in the literature We specifically explored therole of four organizational mechanisms related to combinativecapabilities (i) centralization of decision-making (ii) connect-

edness (iii) socialization capabilities and (iv) formalization[15] In order to measure centralization we applied the scale

proposed by Burton et al (2002) (α = 075) Connectednesswas assessed using the scale developed by Jaworski and Kohli[90] (α = 080) Socialization tactics were assessed accordingto theconstruct put forthby Jones [91] However we did adjustthis scale to account for the fact that the respondents aregeneral managers (α = 067) Formalization was also evalu-atedusing a scalederived from the work ofBurton et al [1792]but in a reduced form (ie reduced from eight to five itemsα = 069) Confirmatory factor analyses supported the validityof these constructs

In addition we included six sets of control variablespertaining to firm characteristics firm size firm age RampDintensity technological specialization participation in aholding group and industry effects While RampD intensity andtechnological specialization were collected in the secondsurvey the remaining variables were available in the NEDdatabase As larger firms typically have more resources andlarger knowledge bases we included the natural logarithm of

the number of full-time employees to account for firm size Wealso controlled for firm age which was measured as thenaturallogarithm of the number of years since its establishment Olderfirms may lack the flexibility to acquire and assimilate newexternal knowledge [93] We included RampD intensity that isRampD expenditure as a percentage of turnover because it hasbeen used as a proxy for absorptive capacity in most previousstudies In order to account for thecharacteristics of each firmsknowledge base we used an adapted version of Anderson andWeitzs [94] scale of specialized investments to measure thedegree of technological specialization We expected it to have anegative influence on the extent to which firms can draw onexternal knowledgeA dummy variable regarding participation

in holding groups was added as well (0 = lsquono participationrsquoand1 = lsquoparticipationrsquo) since this variable is related to a firms

Table 1

Results of exploratory factor analysis of the absorptive capacity variableSource Authors elaboration

Items F1 F2 F3 F4

1) We frequently scan the environment for new technologies 053 048 006 0252) We thoroughly observe technological trends 055 046 minus005 0403) We observe in detail external sources of new technologies 060 045 002 0344) We thoroughly collect industry information 083 014 016 009

5) We have information on the state of the art in external technologies 065 047 013 0136) We frequently acquire technologies from external sources 036 067 017 0167) We periodically organize special meetings with external partners to acquire new technologies 031 071 018 0208) Employees regularly approach external institutions to acquire technological knowledge 013 081 005 0199) We often transfer technological knowledge (from outside the organization) 016 078 017 01910) We thoroughly maintain relevant knowledge over time 032 014 065 01511) Employees store technological knowledge for future reference 004 032 075 01412) We communicate relevant knowledge across the units of our firm minus004 005 078 01613) Knowledge management functions well in our company 008 015 072 03714) When recognizing a business opportunity we can quickly rely on existing knowledge 020 minus022 052 05115) We are proficient in reactivating existing knowledge for new uses 024 minus017 041 057

16) We quickly analyze and interpret changing market demands for our technologies 013 011 026 073

17) New opportunities to serve our customers with existing tech are quickly and easily understood 005 000 043 069

18) We are proficient in transforming tech knowledge from external sources into new products 025 021 015 070

19) We regularly match new technologies from outside with ideas for new products 028 037 017 066

20) We quickly recognize the usefulness of new tech knowledge from outside for existing knowledge 016 036 018 074

21) Our employees are capable of sharing their expertise to develop new products minus001 017 035 039

22) We regularly apply technologies developed externally in new products 014 049 009 060

23) We constantly consider how to better exploit technologies from outside 030 038 026 057

24) We easily implement external technologies in new products 006 035 018 074

25) It is well known who can best exploit new technologies inside our firm 008 018 006 066

Note Principal component analysis with Varimax rotation and Kaiser normalization Figures in bold indicate the four factors derived




boundaries and may affect their disposition to engage inextra-organizational exchanges of knowledge Moreover wealso controlled for industry effects with a dummy variable(0 = lsquomedium high-techrsquo and 1 = lsquohigh-techrsquo)

5 Results

Table 2 presents the descriptive statistics and correla-tions for the variables in the study The companies in oursample exhibited a relatively high level of absorptivecapacity (overall average 483 on a 7-point scale) More-over the significant and positive correlations among thefour aspects of absorptive capacity are consistent with priorconceptual and empirical work on their complementarity[11] The descriptive statistics also point to a comparativelyhigh level of external openness as compared to othersettings investigated [29] On average firms use ten out of the 13 possible sources of external knowledge consideredRampD intensity is significantly and positively related to mostdimensions of absorptive capacity (except for lsquotransformationrsquo)

Beyondthese stylized facts we relyon hierarchical regressionto test our hypotheses

51 Results of hierarchical regression analyses

Table 3 shows the results of hierarchical regressionanalysis for organizational antecedents to the four aspectsof absorptive capacity The results include standardizedcoefficients as well as their significance The highest value of variance inflation factors (VIFs) within the models was 165indicating that multicollinearity is not a serious issue in ouranalyses

Models 1 to 4 in Table 2 include only the controlvariables Surprisingly we found only limited support forthe role of drivers related to combinative capabilitiesCentralization was found to be important for the initialprocess of external knowledge recognition while variablesrelated to the internal social environment (ie socializationand connectedness) were important in the latter twostages that is knowledge transformation and exploitationThe formalization of work processes was not significant inany of the models RampD intensity proved to be positive andsignificant in all models especially in Models 1 and 2 withregard to potential absorptive capacity This finding isconsistent with Cohen and Levinthals (1990) basic as-

sumption that prior related knowledge is necessary for theabsorption of new outside knowledge It also suggests thatprior related knowledge is more important for the initialprocesses of search and recognition The degree of techno-logical specialization on the other hand appears to have anegative effect on the latter two processes of realizedabsorptive capacity

Models 5 to 8 include the variables cited in our hypothesesComparisons with the corresponding base models reveal thatadding the variables related to experimentation significantlyimproved the models explanatory power for all aspects of absorptive capacity as all R 2 changes were significant (p b 001for Model 5 and p b 0001 for Models 6 to 8) Our results thus

provide strong empirical support for including this new subsetof organizational antecedents in the construct

Models 5 and 6 relate to potential absorptive capacity Theresults for Hypothesis 1a which proposes a positive relation-ship with slack resources are somewhat mixed as this variablewas significant for recognition but not for assimilation NeitherHypothesis 2a nor 3a was verified as theeffectsof tolerance forfailure and willingness to cannibalize were found to beinsignificant Hypothesis 4a is fully confirmed since externalopenness showed a positive and significant impact on bothaspects The coefficients related to control variables remainedlargely stable in comparison to the base models Hence ourfindings imply that potential absorptive capacity is driven bythe level of prior knowledge centralization in decision-makingprocesses the availability of slack resources and openness tothe external environment

Models 7 and 8 generate analyses in relation to realizedabsorptive capacity Hypothesis 1b was verified for slack ispositively and significantly related to both stages of realizedabsorptive capacity However Hypothesis 2b is rejected asthe coefficients related to tolerance for failure were notsignificant As far as Hypothesis 3b is concerned the resultsare not entirely clear While the coefficient of willingness tocannibalize was not significant for the transformation stageit was positive and significant (p b 005) for the exploitationstage Hypothesis 4b was also verified as external opennessexhibits a positive and highly significant (p b 0001) rela-tionship to transformation and exploitation However theintroduction of the new explanatory variables suggested thatconnectedness no longeraffected exploitation In consequencetheimportant antecedents of realized absorptive capacity seemto be slack resources willingness to cannibalize externalopenness prior knowledge and socialization tactics

A summary of theresults of our hypothesis tests is providedin Table 4 below

6 Discussion and conclusion

The aim of our paper is to provide a conceptual andempirical assessment of the effects of four new drivers on thevarious dimensions of absorptive capacity both potential andrealized

Ourfindings provide strongsupport for extending the rangeof antecedents to absorptive capacity with a new set of characteristics that emphasize the need of experimentationthat firms may encounter while engaged in the search for andapplication of useful external knowledge The inherent com-plexityof absorptive activitiesmakes thema difficult uncertain

and costly endeavor [18ndash20] from which managerial attentionis typically diverted To offset these tendencies we argue thatfirms need to foster a conducive organizational environmentmarked by slack resources failure-tolerant attitudes a predis-position to cannibalize current assets or routines and externalopenness

Our empirical study reveals that specific organizationalantecedents were found to be significant Slack resources andexternal openness proved to be highly important for bothpotential and realized absorptive capacity This confirms ourtheoretical reasoningin that it emphasizes that a bufferofmeansand a broad range of external contacts are crucial throughout thevarious steps of knowledge sourcing They are key drivers that

thus need to be at thecore of practitioners attention Willingnessto cannibalize had a positive and significant effect on the




Table 2Descriptive statistics and correlations of study variables

Variables Mean Sd 1 2 3 4 5 6 7 8 9 10 11 12 13

1 Recognition 499 103 1002 Ass imilation 437 134 071 1003 Transformation 503 091 036 036 1004 Exploitation 482 096 060 056 064 1005 Slack resources 389 112 009 003 025 018 1006 Tolerance for

failure525 107 017 011 015 015 016 100

7 Willingness tocannibalize

440 085 019 019 014 024 009 030 100

8 Externalopenness

983 293 022 038 0161 024 minus015 008 008 100

9 Centralization 395 061 0196 014 017 017 minus003 017 001 006 10010 Connectedness 414 055 010 017 018 021

minus010 036 029 012 024 10011 Socialization 505 089 015 008 024 016

minus002 039 014 minus003 026 038 10012 Formalization 292 062 minus004 minus009 006 minus002 003 006 minus013 minus004 014 minus018 019 10013 RampD intensity 193 096 031 026 014 023 minus018 002 011 016 001 018 minus004 028 114 Firm age 333 077 minus008 005 minus002 minus001 014 minus010 003 minus009 004 minus010 minus016 minus004 minus015 Firm size 367 088 minus003 000 minus017 minus008 minus016 001 014 008 minus003 004 minus013 minus013 minus016 Technological

specialization330 097 minus015 minus008 minus020 minus018 minus008 minus010 minus005 008 minus011 minus003 minus009 023 minus0

17 Medium-highhigh-tech sector

020 040 008 minus006 004 minus002 minus009 010 002 minus006 minus002 022 007 minus001 0

18 Participationin a holdinggroup

080 040 008 012 minus001 002 minus011 minus003 010 005 003 008 004 minus001 0

N = 169

Significant at the 001 level (2-tailed) Significant at the 005 level (2-tailed)



exploitation aspect (ie realized absorptive capacity) Interest-ingly it was not shown to be significant for the initial stages of knowledge absorption The reason for this may be that firmswillingness to cannibalize may be less manifested in thereplacement of search routines and social capital and moremanifested in funnel decisions related to NPD processeswhen cannibalization via the replacement of concreteproduct lines become more prevalent Tolerance for failure incontrast was not significant in any of the knowledgeabsorption processes This is a surprising finding thatcontradicts our theoretical expectations Obviously toler-ance for failure is a more a generic characteristic relatedto the building of second-order competence in RampD and

marketing [41] rather than directly linked to the develop-ment of absorption capabilities Overall ourfindings imply thatcultivating absorptive capacity requires a firm (in particularSMEs) to develop characteristics that support experimentationwith costly and uncertain endeavors

As our sample consists of SMEs another interesting findingis that the effects of organizational antecedents with respect tocombinativecapabilities differ from those found in larger firmsAlthough we did not include large companies in our samplethe application of the same constructs allows us to compare(with due caution) our findings with those of Jansen et al(2005) While previous studies have found the delegation of decision-making power to be important for potential absorp-tive capacity in large companies (ie [1550]) ourresults revealthe opposite ie that centralization enhances the recognitionand assimilation of external knowledge The lack of sophisti-cated intelligence systems as well as resource constraints thatlimit the number of technological bets which can be pursuedsimultaneously may explain why smaller firms need central-ized control at this stage Moreover while the formalization of work processes has been found to enhance the exploitationphase in large companies [15] it is striking that it had no effecton the companies in our sample This suggests that absorptionprocesses can be kept informal in SMEs since they do not seemto benefit from codification efforts and established rules of behavior At the same time connectedness and socializationtactics seem to increase realized absorptive capacity for allcompany sizes [15]

With respect to theory our findings bear importantimplications for our understanding of absorptive capacityThe framework that we propose complements the effects of

Table 3

Results of hierarchical regression analyses effects of organizational antecedents on the dimensions of absorptive capacity recognition assimilationtransformation and exploitation

Potential absorptive capacity Realized absorptive capacity

Variables Recognize Assimilate Transform Exploit

Model 1 Model 5 Model 2 Model 6 Model 3 Model 7 Model 4 Model 8

ControlsFirm age 0027 0024 0119 0141dagger 0107 0086 0094 0080Firm size 0050 0044 0003 minus0028 minus0137dagger minus0101 minus0028 minus0019RampD intensity 0339 0324 0300 0253 0143dagger 0156 dagger 0 261 0249Technological specialization minus0098 minus0092 minus0046 minus0067 minus0197 minus0190 minus0167 minus0165 Medium-highhigh-tech sector 0 029 0064 minus0113 minus0057 minus0002 0 037 minus0098 minus0052Participation in a holding group 0057 0064 0090 0086 minus0007 minus0001 minus0016 minus0015

Combinative capabilitiesCentralization 0157 0159 0087 0078 0055 0062 0072 0081Connectedness minus0062 minus0122 0111 0050 0116 0102 0161 dagger 0116Socialization 0139 0134 0042 0064 0150 dagger 0182 0080 0102Formalization 0027 0025 0009 0008 0122 0130 0096 0105

New organizational antecedentsSlack resources 0164 0109 0287 0240Tolerance for failure 0044 minus0013 minus0073 minus0061Willingness to cannibalize 0108 0099 0062 0150 External Openness 0203 0352 0211 0243

Model statisticsF 3203 3646 2571 4074 2895 3876 2807 4090Adjusted R 2 0116 0181 0085 0204 0101 0193 0097 0205R 2 change 0080 0130 0106 0120

Notes Standardized coefficients reported (N = 169)Significance daggerp b 01 p b 005 p b 001 p b 0001 (two-tailed t-tests)

Table 4

Overview of hypotheses tests

Hypothesis Expected effect Result

H1a Slack resources PAC Partially confirmedH1b Slack resources RAC ConfirmedH2a Tolerance for failure PAC Not confirmedH2b Tolerance for failure RAC Not confirmedH3a Willingness to

cannibalizePAC Not confirmed

H3b Willingness tocannibalize

RAC Partially confirmed

H4a External openness PAC ConfirmedH4b External openness RAC Confirmed

Notes PAC Potential absorptive capacityRAC Realized absorptive capacity




combinative capabilities (which are assumed to nurtureknowledge exchange routines inside firms) with four addi-tional antecedents representing characteristics assumed tostimulate experimentation The introduction of these anteced-ents provides a social context and economic incentives forflexibility which if utilized proactively may help firms tohandle the challenges associated with knowledge absorptionBesides by identifying and detailing the effect of firm-specificcharacteristics the study enhances our understanding of theconstituent organizational-level components of a firms ab-sorptive capacity thus echoing recent conceptual work [12]which has called for further investigation on the topic In thisway ourstudy links different research streams to the debateonthe drivers of absorptive capacity such as the literature onsecond-order competences [41] decision-making [53] andorganizational adaptability [57]

Our work also has some important practical implicationsIt calls the attention of managers to the need of not onlyfacilitating processes of knowledge sharing inside firms butalso managing additional drivers related to the experimentalside of knowledge absorption More concretely the studycalls attention to the importance of (1) relaxing control overresources (slack) (2) having the willingness to replacehuman and physical assets or organizational routines whichare no longer useful and (3) establishing an open attitudetoward the external environment Our results thus urgepractitioners to play an active role in developing a support-ive environment whose values andincentives leave room foruncertain activities such as knowledge absorption Increas-ing the level of firms absorptive capacity is crucial for both

managers and policy makers since it is regarded as apre-condition for economic progress [8]

This study is not without limitations First our empiricalwork focuses on the Danish context While we see no reasonto suspect that our results are country-specific supplemen-tary research in other contexts would be required in order tofurther confirm our findings Besides even though weexpect the new antecedents to be as relevant for largeestablished companies as for SMEs we are not able to makesuch inferences on the basis of our sample We thereforeencourage further research on the topic for the validation of our conceptual framework Second we relied on a cross-sectional dataset which constrains the inference of causalityamong our variables as we were not able to demonstratetime precedence Our causal relationships are built exclu-sively on theoretical rationale and for this reason theywould need to be validatedin a longitudinal research designThird the measures of our constructs are not withoutlimitations As capabilities and attitudes cannot be directlyobserved consistent with previous studies in the field [15]we relied on measures that capture actual behavior to makeinferences about them Yet we might not have been able tocapture the full picture there may be firms that have thecapacity to absorb external knowledge but that did notexercise it at the time of the data collection Fourth as thisstudy focuses on organizational-level antecedents addition-al studies should examine individual-level determinantsThese determinants might for example include the positionof key individuals in professional networks (ie gatekeep-ing) and attributes of top management

Table I

Measures of organizational antecedents Informant 1 Chief Executive Officer

Construct Items

Combinative capabilities Centralization from Burton et al(2002)

1 Management is involved in the collection of information used as a base fordecisions2 Management is involved in interpretation of information used as a base fordecisions3 Management controls that decisions are realized(5-point scale where 1 = never and 5 = always)

Connectedness from Jaworski and

Kohli (1993)

1 Employees find it easy to talk with virtually anyone they need to regardless

of rank or position2 There is ample opportunity for informal ldquohall talkrdquo among individuals fromdifferent departments3 Employees from different departments feel comfortable calling each otherwhen a need arises4 Employees here are discouraged from discussing work-related matters withthose who are not their immediate superiors or subordinates5 People around here are quite accessible to those in other departments6 Junior managers can easily schedule meetings with junior managers in otherdepartments(5-point scale where 1 = strongly disagree and 5 = strongly agree)

Socialization Tactics from Jones(1986)

1 Experienced organizational members see advising or training newcomers asone of their main job responsibilities in this organization2 Employees typically gain a clear understanding of their role in thisorganization from observing senior colleagues3 Employees typically receive little guidance from experienced organizational

members as to how they should perform my job (R)

Appendix A




(continued)

Construct Items

4 Employees have little or no access to people who have previously performedtheir role here(R)5 Employees are generally left alone to discover what their role should be inthis organization (R)(7-point scale where 1 = strongly disagree and 7 = strongly agree)

Formalization from Burton et al

(2002)

1 There are clear-cut rules for how employees must perform their jobs

2 We carefully control weather our employees follow the rules of thecompany3 Employees are allowed to deviate from rules4 Employeesrsquo work is to a high degree governed by standards5 Employees are allowed to deviate from standards(5-point scale where 1 = strongly disagree and 5 = strongly agree)

New organizational antecedents Slack resources from Danneels(2008)

1 All available resources are locked up in current projects (R)2My firm has a reasonable amount of resources in reserve3We have ample discretionary financial resources4We can always find the lsquomanpowerrsquo to work on special projects(7-point scale where 1 = strongly disagree and 7 = strongly agree)

Tolerance for failure fromDanneels (2008)

1 It is understood that failure is a necessary part of success2 Management doesnt understand that when you try something new yousometimes fail (R)3 Failure is accepted as an inevitable byproduct of taking a lot of initiatives4A mistake is seen as an opportunity to learn

(7-point scale where 1 = strongly disagree and 7 = strongly agree)Willingness to cannibalize fromDanneels (2008)

1 We support projects even if they could potentially take away sales fromexisting products2We easily replace one set of abilities with a different set of abilities to adopt anew technology3 We tend to oppose new technologies that cause our manufacturing facilitiesto become obsolete(R)4 We are very willingto sacrifice sales of existing products in order to improvesales of our new products5 We will not aggressively pursue a new technology that causes existinginvestments to lose value(R)(7-point scale where 1 = strongly disagree and 7 = strongly agree)

External openness from Laursenand Salter (2006)

How important to your companies innovation activities during the three-yearperiod 2006ndash2008 were each of the following information sourcesMarket Sourcesa) Suppliers of equipment materials components or software

b) Clients or customersc) Competitorsd) Consultantse) Commercial laboratoriesRampD enterprises

Institutional Sourcesf) Universities or other higher education institutionsg) Government research organizationsh) Other public sector eg business links government officesi) Private research institutions

Other Sources j) Professional conferences meetingsl) Trade associationsm) Technicaltrade press computer databasesn) Fairs exhibitions(4-point scale where 0 = not used to 3 = used to a high extent)

Note (R) means reverse coding

Table II

Measures of absorptive capacity and technological specialization Informant 2 Chief Technology Officer

Construct Items

Absorptive capacity (a) Recognize1 We frequently scan the environment for new technologies2 We thoroughly observe technological trends3 We observe in detail external sources of new technologies4 We thoroughly collect industry information

5 We have information on the state of the art in external technologies

Table I (continued)

(continued on next page)




References

[1] RR Nelson The simple economics of basic scientific research J PolitEcon 67 (1959) 297ndash306

[2] EVonHippelThe Sourcesof Innovation OxfordUniv PressNew York 1988

[3] B-Aring Lundvall National Systems of Innovation Towards a Theory of Innovation and Interactive Learning Pinter London 1992[4] WW Powell KW Doput L Smith-Doerr Interorganisational collabora-

tion and the locus of innovation networks of learning in biotechnologyAdmin Sci Q 41 (1996) 116ndash145

[5] B Cassiman R Veugelers In search of complementarity in innovationstrategy internal RampD and external knowledge acquisition Manag Sci52 (2006) 68ndash82

[6] B-Aring Lundvall B Johnson ES Andersen B Dalum National systems of production innovation and competence buildingResPolicy 31 (2002) 213

[7] SMS Krammer Assessing the relative importance of multiple channels forembodied and disembodied technological spillovers Technol Forecast SocChang 81 (2014) 272ndash286

[8] MF Millikan WW Rostow A Proposal Key to an Effective ForeignPolicy Harper New York 1957

[9] WW Rostow The take-off into self-sustained growth Econ J 66 (1956)25ndash48

[10] WM Cohen DA Levinthal Absorptive capacity a new perspective onlearning and innovation Admin Sci Q 35 (1990) 128ndash152

[11] PJ Lane BR Koka S Pathak The reification of absorptive capacity acritical review and rejuvenation of the construct Acad Manag Rev 31(2006) 833ndash863

[12] HW Volberda NJ Foss MA Lyles Absorbing the concept of absorptivecapacity how to realize its potential in the organization field OrganSci 21

(2010) 934ndash954[13] WM Cohen DA Levinthal Innovation and learning the two faces of R amp D Econ J 99 (1989) 569ndash596

[14] FAJ van den Bosch HW Volberda M de Boer Coevolution of firm absorptive capacity and knowledge environment organiza-tional forms and combinative capabilities Organ Sci 10 (1999)551ndash568

[15] JJP Jansen FAJ Van Den Bosch HW Volberda Managing potentialand realized absorptive capacity how do organizational antecedentsmatter Acad Manag J 48 (2005) 999ndash1015

[16] KJ Arrow Uncertainty and the welfare economics of medical care AmEcon Rev 53 (1963) 941ndash974

[17] RM Grant Toward a knowledge-based theory of the firm StrategManag J 17 (1996) 109ndash122

[18] JA Nickerson TR Zenger A knowledge-based theory of the firm theproblem-solving perspective Organ Sci 15 (2004) 617ndash632

[19] JTMacher Technological development and the boundaries of the firma

knowledge-based examination in semiconductor manufacturing ManagSci 52 (2006) 826ndash843

(continued)

Construct Items

(b) Assimilate6 We frequently acquire technologies from external sources7 We periodically organize special meetings with external partners to acquire new tech8 Employees regularly approach external institutions to acquire technologicalknowledge9 We often transfer technological knowledge

(c) Transform10 We thoroughly maintain relevant knowledge over time11 Employees store technological knowledge for future reference12 We communicate relevant knowledge across the units of our firm13 Knowledge management functions well in our company14 When recognizing a business opportunity we can quickly rely on existing knowledge(d) Exploit15 We are proficient in reactivating existing knowledge for new uses16 We quickly analyze and interpret changing market demands for our technologies17 New opportunities to serve our customers with existing technologies are quicklyunderstood18 We are proficient in transforming tech knowledge from external sources into newproducts19 We regularly match new technologies from outside with ideas for new products20 We quickly recognize the usefulness of new technological knowledge from outside forexisting knowledge

21 Our employees are capable of sharing their expertise to develop new products22 We regularly apply technologies developed externally in new products23 We constantly consider how to better exploit technologies from outside24 We easily implement external technologies in new products25 It is well known who can best exploit new technologies inside our firm(7-point scale where 1 = strongly disagree and 7 = strongly agree)

Technolog specialization from Anderson and Weitz (1992) 1 Much of our technical expertise is insufficient for the application and implementationof new technologies2 We have to significantly reinvent many of our operating procedures and protocols tosuccessfully apply technologies developed externally into our business3 To be successful in new outside technologies we often need to change substantially themanner in which we carry many of our tasks4 Our equipment and instruments are often not useful for our new developmentalprojects5 Many of our manufacturing skills cannot be applied to new technologies6 We have usually to retrainlay off current employees or hire new ones in order to

successfully develop new technologies(7-point scale where 1 = strongly disagree and 7 = strongly agree)

Table II (continued)




[20] PE Bierly III F Damanpour MD Santoro The application of externalknowledge organizational conditions for exploration and exploitation J Manag Stud 46 (2009) 481ndash509

[21] R Katz TJ Allen Investigating the Not Invented Here (NIH) syndromea look at the performance tenure and communication patterns of 50RampD project groups R D Manag 12 (1982) 7ndash20

[22] JGMarchExploration andexploitation in organizational learning OrganSci 2 (1991) 71ndash87

[23] D Lavie J Kang L Rosenkopf Balance within and across domains theperformance implications of exploration and exploitation in alliances

Organ Sci 22 (2011) 1517ndash1538[24] JA Schumpeter The Theory of Economic Development An Inquiry

into Profits Capital Credit Interest and the Business Cycle HarvardUniversity Press Cambridge 1934

[25] W Riggs EV Hippel Incentives to innovate and the sources of innovationthe case of scientific instruments Res Policy 23 (1994) 459ndash469

[26] WM Cohen RR Nelson JP Walsh Links and impacts the influenceof public research on industrial RampD Manag Sci 48 (2002) 1 ndash23

[27] GL Lilien PD Morrison K Searls M Sonnack E Von HippelPerformance assessment of the lead user idea-generation process fornew product development Manag Sci 48 (2002) 1042ndash1059

[28] L Rosenkopf P Almeida Overcoming local search through alliancesand mobility Manag Sci 49 (2003) 751ndash766

[29] K Laursen A Salter Open for innovation the role of openness inexplaining innovation performance among UK manufacturing firmsStrateg Manag J 27 (2006) 131ndash150

[30] A Saxenian Regional networks and the resurgence of silicon valley

Calif Manag Rev 33 (1990) 89ndash113[31] DC Mowery JE Oxley BS Silverman Strategic alliances and interfirmknowledge transfer Strateg Manag J 17 (1996) 77ndash91

[32] P Almeida B Kogut Localization of knowledge and the mobility of engineers in regional networks Manag Sci 45 (1999) 905ndash917

[33] TE Stuart Interorganizational alliances and the performance of firmsa study of growth and innovation rates in a hi-technology industryStrateg Manag J 21 (2000) 791ndash811

[34] G Ahuja R Katila Technological acquisitions and the innovationperformance of acquiring firms a longitudinal study Strateg Manag J21 (2001) 197ndash220

[35] RM Grant C Baden-Fuller A knowledge accessing theory of strategicalliances J Manag Stud 41 (2004) 61ndash84

[36] R Sampson RampD alliances amp firm performance the impact of technological diversity and alliance organization on innovation AcadManag J 50 (2007) 364ndash386

[37] E Von Hippel Horizontal innovation networks mdash by and for users Ind

Corp Chang 16 (2007) 293ndash315[38] C Lettl C Hienerth HG Gemuenden Exploring how lead usersdevelop radical innovation opportunity recognition and exploitationin the field of medical equipment technology IEEE Trans Eng Manag55 (2008) 219ndash233

[39] L Huston N Sakkab Connect and develop inside Procter amp Gamblesnew model for innovation Harv Bus Rev 84 (2006) 58ndash66

[40] G Cattani Technological pre-adaptation speciation and emergence of new technologies how Corning invented and developed fiber opticsInd Corp Chang 15 (2006) 285ndash318

[41] E Danneels Organizational antecedents of second-order competencesStrateg Manag J 29 (2008) 519-519

[42] CWL Hill FT Rothaermel The performance of incumbent firms inthe face of radical technological innovation Acad Manag Rev 28(2003) 257ndash274

[43] SA Zahra G George Absorptive capacity a review reconceptualiza-tion and extension Acad Manag Rev 27 (2002) 185ndash203

[44] J Liao H Welsch M Stoica Organizational absorptive capacity andresponsiveness an empirical investigation of growth-oriented SMEsEnterp Theory Pract 28 (2003) 63ndash85

[45] AY Lewin S Massini C Peeters Microfoundations of internal andexternal absorptive capacity routines Organ Sci (2014)(forthcoming)

[46] J Vega-Jurado A Gutierrez-Gracia I Fernandez-de-Lucio Analyzing thedeterminants of firms absorptive capacity beyond RampD RampD Manag 38(2008) 392-392

[47] B Kogut U Zander Knowledge of the firm combinative capabilitiesand the replication of technology Organ Sci 3 (1992) 383ndash397

[48] M Lenox A King Prospects for developing absorptive capacitythrough internal information provision Strateg Manag J 25 (2004)331ndash345

[49] A Fosfuri JA Triboacute Exploring the antecedents of potential absorptivecapacity and its impact on innovative performance Omega 36 (2008)173ndash187

[50] NJ Foss K Laursen T Pedersen Linking customer interaction and

innovation the mediating role of new organizational practices OrganSci 22 (2011) 980ndash999

[51] PR Carlile Transferring translating and transforming an integrativeframework for managing knowledge across boundaries Organ Sci 15(2004) 555ndash568

[52] A Escribano A Fosfuri JA Triboacute Managing external knowledgeflows the moderating role of absorptive capacity Res Policy 38(2009) 96ndash105

[53] RM Cyert JG March A Behavioral Theory of the Firm Prentice-HallEnglewood Cliffs NJ 1963

[54] JT Mahoney Economic Foundations of Strategy Sage PublicationsThousand Oaks California 2005

[55] SB Sitkin Learning through failure the strategy of small losses inBM Staw LL Cummings (Eds) Research on Organization BehaviorElsevier New York 1992

[56] N Farson R Keyes The failure-tolerant leader Harv Bus Rev 80 (2009)64ndash71

[57] RK Chandy GJ Tellis Organizing for radical product innovation theoverlooked role of willingness to cannibalize J Mark Res 35 (1998)474ndash487

[58] EJ Nijssen B Hillebrand PAM Vermeulen Unraveling willingness tocannibalize a closer look at the barrier to radical innovation Technovation25 (2005) 1400ndash1409

[59] P Kale H Singh Permutter learning and protection of proprietaryassets in strategic alliances building relational capital Strateg Manag J 21 (2000) 7ndash20

[60] DA Levinthal JG March A model of adaptive organizational search JEcon Behav Organ 2 (1981) 307ndash333

[61] JP Martino A review of selected recent advances in technological

forecasting Technol Forecast Soc Chang 70 (2003) 719ndash733[62] BE Tonn A methodology for organizing and quantifying the results of environmental scanning exercises Technol Forecast Soc Chang 75(2008) 595ndash609

[63] M Yasai-Ardekani PC Nystrom Designs for environmental scanningsystems tests of a contingency theory Manag Sci 42 (1996) 187ndash204

[64] PC Nystrom K Ramamurthy AL Wilson Organizational contextclimate and innovativeness adoption of imaging technology J EngTechnol Manag 19 (2002) 221ndash247

[65] E Whelan R Teigland B Donnellan W Golden Howinternettechnologiesimpact information flows in RampD reconsidering the technological gate-keeper R D Manag 40 (2010) 400ndash413

[66] N Nohria R Gulati Is slack good or bad for innovation Acad Manag J39 (1996) 1245ndash1264

[67] F Damanpour Organizational innovation a meta-analysis of effects of determinants and moderators Acad Manag J 34 (1991)555ndash590

[68] AW Joshi S Sharma Customer knowledge development antecedentsand impact on new product performance J Mark 68 (2004) 47ndash59[69] T Menon J Pfeffer Valuing internal vs external knowledge explaining

the preference for outsiders Manag Sci 49 (2003) 497ndash513[70] AC Inkpen Learning through alliances general motors and NUMMI

Calif Manag Rev 47 (2005) 114ndash136[71] A Carmeli A Tisher CEO relational leadership and strategic decision

quality in top management teams the role of team trust and learningfrom failure Strateg Organ 10 (2011) 31ndash54

[72] CM Christensen ME Ranor The Innovators Solution Creating andSustaining Successful GrowthHarvardBusinessSchool Press BostonMA2003

[73] MR Millson SP Raj D Wilemon Strategic partnering for developingnew products Res Technol Manag 39 (1996) 41ndash49

[74] MJ Tyre E Von Hippel The situated nature of adaptive learning inorganizations Organ Sci 8 (1997) 71ndash83

[75] M Perkman K Walsh Universityndashindustry relationships and open innova-

tion towards a research agenda Int J Manag Rev 9 (2007) 259ndash280[76] U Lichtenthaler H Ernst Attitudes to externally organizing knowledgemanagement tasks a review reconsideration and extension of the NIHsyndrome R D Manag 36 (2006) 367-367

[77] P Herzog J Leker Open and closed innovation mdash differentinnovation cultures for different strategies Int J Technol Manag52 (2010) 322ndash343

[78] L Rosenkopf A Nerkar Beyond local search boundary-spanningexploration and impact in the optical disk industry Strateg Manag J22 (2001) 287ndash306

[79] R Gulati Network location and learning the influence of networkresources and firm capabilities on alliance formation Strateg Manag J20 (1999) 397ndash420

[80] J Hagedoorn W Letterie F Palm The information value of RampDalliances the preference for local or distant ties Strateg Organ 9(2011) 283ndash309

[81] U Lichtenthaler E Lichtenthaler A capability-based framework for

open innovation complementing absorptive capacity J Manag Stud46 (2009) 1315ndash1338




[82] E Von Hippel Democratizing Innovation The MIT Press Cambridge2005

[83] R Gulati D Lavie H Singh The nature of partnering experience andthe gains from alliances Strateg Manag J 30 (2009)

[84] T Flatten G Greve M Brettel Absorptive capacity and firm performancein SMEs themediating influence of strategicalliancesEur Manag Rev 8(2011) 137ndash152

[85] European Business Facts and Figures Eurostat Luxembourg2009

[86] EH Schein Three cultures of management the key to organizational

learning Sloan Manag Rev (1996) 9ndash20[87] D Tzabbar BS Aharonson TL Amburgey A Al-Laham When is the

whole bigger than the sum of its parts Bundling knowledge stocks forinnovative success Strateg Organ 6 (2008) 375ndash406

[88] AR Kristal Evaluation of nutrition interventions in A Coulston CJBoushey (Eds) Nutrition in the Prevention and Treatment of DiseaseElsevier London 2008

[89] A Leiponen CE Helfat Innovation objectives knowledge sources andbenefits of breadth Strateg Manag J 31 (2010) 224ndash236

[90] BJ Jaworski AK Kohli Market orientation antecedents and conse-quences J Mark 57 (1993) 53ndash71

[91] GR Jones Socialization tactics self-efficacy and newcomers adjust-ments to organizations Acad Manag J 29 (1986) 262ndash280

[92] RM Burton J Lauridsen B Obel Return on assets loss from situationaland contingency misfits Manag Sci 48 (2002) 1461ndash1485

[93] PE Bierly III PS Daly Sources of external organisational learningin small manufacturing firms Int J Technol Manag 38 (2007)

45ndash68[94] E Anderson B Weitz The use of pledges to build and sustain commitmentin distribution channels J Mark Res 29 (1992) 18ndash34

Ana Luiza de Arauacutejo Burcharth is Assistant Professor in the InnovationManagement Group at the Department of Business Administration AarhusUniversity Ana Luizas research interests lie primarily in the intersectionbetween organizational theory strategy and technology and innovationmanagement Speci1047297cally she is interested on the organizational and perfor-mance implications of external knowledge sourcing The topics she is currentlyworking onare open innovation technology marketsand spinoffs AnaLuizawasawarded a PhD in Business Administration from Aarhus University in 2011

Professor Christopher Lettl is Director of the Institute for EntrepreneurshipandInnovation at the ViennaUniversity of Economicsand BusinessHis researchareas are open and user innovation new organizational forms for innovationand more generally entrepreneurship innovation management organizationaldesign and strategy Christopher Lettl received his Masters degree in businessadministration from the University of Hamburg his Doctoral degree in businessadministration from the Hamburg University of Technology and his Habilitationdegree in business administration from the Berlin University of Technology

Dr John P Ulhoslashi is professor of Organization and Management TheoryDirector of Centre for Organizational Renewal and Evolution(CORE) ProfessorUlhoslashi is alsoHead of the inter-university Doctoralprogramin OrganizationandManagement Education in which four Danish universities participate Hisresearch appears in Journal of Business Venturing Entrepreneurship Theoryand Practice Journal of Organizational Behavior International Journal of Technology Management Creativity an Innovation Management ManagementDecision Managerial amp Decision Economics Business Strategy and the

Environment Technology Analysisand StrategicManagementHe has receiveda variety of Awards most recently ldquoThe Best Papers Proceedings of the 2010Academy of Management Meeting Award (2010)rdquo




Although the importance of prior related knowledge andcombinative capabilities must be acknowledged as importantdrivers of absorptive capacity our paper emphasizes that theymay not suffice We argue that this perspective needs to becomplemented with one that focuses on the characteristics of an organization that encourage experimentation and preventinertia This is because in order to create the capability toleverage external knowledge organizations need to ensurethat enough resources are shifted from routinized tasks tonovel activities in duetime Absorbing knowledgefrom outsideis costly difficult and risky [16ndash20] as well as contentious as itmay be subject to employee resistance in the form of thelsquonot-invented-herersquo syndrome [21] It often falls outside thescope of exploitative activities to which managerial attentionand effort is normally directed and hence it tends to becrowded out by more routinized activities [2223] Innovativeactivities fundamentally rely on extra-organizational knowl-edge and the creative recombination of existing knowledgeand production factors [24] which seldom is entirely possiblewithin the constraints of a firms internal knowledge base[25ndash29] As empirical evidence from technology-intensiveindustries has revealed new technological and market trendsalong with shifts in consumer preferences emerge mainly inthe realms of research institutions RampD alliances and usercommunities or among lead users [42830ndash38] Besidesavailable extra-organizational technological knowledge israrely entirely ready to be commercialized [39] Due to itsambiguity and complexity it typically requires an adapta-tion or developmental process before it can be assimilatedand utilized effectively mdash a potentially time-consuming andcostly process that may involve adding new skills andorfilling existing gaps in competence

In fact recent evidence suggests that some companiesneed to embark on novel learning trajectories in order toexploit knowledge from outside [2040] Beta Electronics3

for example a medium-sized producer of electromechanicalproducts such as volume controls and speakers decided inthe 1990s to exploit MEMS technology (Micro ElectroMe-chanical Systems) in order to develop the worlds smallestsilicon microphone That innovation was possible despite thefact that the companys competencies were very different fromthe ones needed to exploit MEMS technology (eg clean roomfacilities) Neither knowledge investments nor the improve-ment of communication channels among employees (that isprior to related knowledge and combinative capabilities) wereself-reliant options for the company in this case In order to

complete the development of the microphone the companyhad to purchase new equipment hire external consultantsestablish a partnership deal (with a university and three othercompanies) as well as retrain its staff In other words thecompany had to acquire new skills and resources and it had toexperiment with new technological fields in order to supportthe absorption activities related to MEMS technology

Against this background we address the following researchquestion Which organizationalantecedents affect the development

of absorptive capacity Our focus is directed toward proactiveorganizational antecedents that influence experimentationwith regard to the acquisition assimilation transformation and

exploitation of external knowledge thereby complementing theknowledge-related antecedents (ie RampD investments) and theorganizational antecedents related to combinative capabilities[15] The concrete organizational characteristics investigatedare1) existence of slack resources 2) willingness to cannibalize3) tolerance for failure and 4) external openness Whilethese characteristics have been previously studied in relationto other constructs such as second-order competences [41]and radical innovation [42] they have not been associated toabsorptive capacity They constitute the core contribution of our study in that they are qualitatively distinct from previouslystudied antecedents They underline the fact that the absorp-tion of external knowledge is an effortful risky and challengingactivity that demands more from organizations than internalcommunication

The remainder of the paper is organized as follows In thenext section we provide a discussion of theoretical consider-ations and develop our conceptual framework Based on thisframework we develop our hypotheses We then describe ourresearch methodology in detail after which we present thefindings of our empirical study Finally we conclude andaddress key implications for research and practice

2 Theoretical considerations and framework

Cohen and Levinthal [13] defined lsquoabsorptive capacityrsquo inthemanagement field as ldquothe firms ability to identify assimilateand exploit knowledge fromthe environmentrdquo (p 569) in orderto emphasize the dual role of RampD activities By dual role theymeant that RampD served both for the creation and utilization of new knowledge (innovation) and for the ability of firms toabsorb and deploy external knowledge (learning) The willing-ness to invest in RampD was a central theme in their paper and

was modeled as a function of two exogenous factors 1) thescope of technological opportunities and 2) the propensitytoward knowledge spillovers in the industry In this wayCohen and Levinthals initial work placed great emphasis onthe role of the external environment in determining the ab-sorptive capacity of a firm In their 1990 paper they developed amore robust theoretical basis for the concept including itsdeterminants [11] As a result the sources of a firms absorptivecapacity were extended to include its internal communicationstructure The existence of gatekeepers shared language sys-tems cross-functional interfaces and diversity across individualswere discussed as key aspects of a communication systemcapable of enhancing absorptive capacity

Yet in most subsequent studies throughout the 1990s pastRampD expenditures were employed as the key measure andordriver of absorptive capacity [11] It was not until Zahra andGeorges [43] work that the view of absorptive capacity asembedded in organizational processes and structures wasrevitalized They emphasized the proactive dimension of theconstruct suggesting that absorptive capacity should beseen as a manifestation of a dynamic capability pertaining toknowledge creation and utilization They further argued thatthe concept could be split into two constituent dimensionspotential and realized absorptive capacity While lsquoPotentialAbsorptive Capacity4rsquo was saidto comprise the initialprocesses

3 We use a 1047297ctious name here due to con1047297dentiality agreements

4

It should be noted that potential absorptive capacity constitutes anintegral part of the construct and is not a hypothetical one



































recognition

assimliation

transformation

exploitation


Willingness to

cannibalize

External openness

Combinative

capabilities



































4 Methods




































Table 1


Items F1 F2 F3 F4


















5 Results
























failure525 107 017 011 015 015 016 100


440 085 019 019 014 024 009 030 100

8 Externalopenness

983 293 022 038 0161 024 minus015 008 008 100









N = 169








Table 3










Table 4
















Table I


Construct Items




Kohli (1993)






Appendix A




(continued)

Construct Items



(2002)















Table II


Construct Items



Table I (continued)





References





















(continued)

Construct Items


































































































































recognition

assimliation

transformation

exploitation


Willingness to

cannibalize

External openness

Combinative

capabilities



































4 Methods




































Table 1


Items F1 F2 F3 F4


















5 Results
























failure525 107 017 011 015 015 016 100


440 085 019 019 014 024 009 030 100

8 Externalopenness

983 293 022 038 0161 024 minus015 008 008 100









N = 169








Table 3










Table 4
















Table I


Construct Items




Kohli (1993)






Appendix A




(continued)

Construct Items



(2002)















Table II


Construct Items



Table I (continued)





References





















(continued)

Construct Items
































































































































4 Methods




































Table 1


Items F1 F2 F3 F4


















5 Results
























failure525 107 017 011 015 015 016 100


440 085 019 019 014 024 009 030 100

8 Externalopenness

983 293 022 038 0161 024 minus015 008 008 100









N = 169








Table 3










Table 4
















Table I


Construct Items




Kohli (1993)






Appendix A




(continued)

Construct Items



(2002)















Table II


Construct Items



Table I (continued)





References





















(continued)

Construct Items






























































































































Table 1


Items F1 F2 F3 F4


















5 Results
























failure525 107 017 011 015 015 016 100


440 085 019 019 014 024 009 030 100

8 Externalopenness

983 293 022 038 0161 024 minus015 008 008 100









N = 169








Table 3










Table 4
















Table I


Construct Items




Kohli (1993)






Appendix A




(continued)

Construct Items



(2002)















Table II


Construct Items



Table I (continued)





References





















(continued)

Construct Items




































































































5 Results
























failure525 107 017 011 015 015 016 100


440 085 019 019 014 024 009 030 100

8 Externalopenness

983 293 022 038 0161 024 minus015 008 008 100









N = 169








Table 3










Table 4
















Table I


Construct Items




Kohli (1993)






Appendix A




(continued)

Construct Items



(2002)















Table II


Construct Items



Table I (continued)





References





















(continued)

Construct Items






































































































failure525 107 017 011 015 015 016 100


440 085 019 019 014 024 009 030 100

8 Externalopenness

983 293 022 038 0161 024 minus015 008 008 100









N = 169








Table 3










Table 4
















Table I


Construct Items




Kohli (1993)






Appendix A




(continued)

Construct Items



(2002)















Table II


Construct Items



Table I (continued)





References





















(continued)

Construct Items







































































































Table 3










Table 4
















Table I


Construct Items




Kohli (1993)






Appendix A




(continued)

Construct Items



(2002)















Table II


Construct Items



Table I (continued)





References





















(continued)

Construct Items







































































































Table I


Construct Items




Kohli (1993)






Appendix A




(continued)

Construct Items



(2002)















Table II


Construct Items



Table I (continued)





References





















(continued)

Construct Items



































































































(continued)

Construct Items



(2002)















Table II


Construct Items



Table I (continued)





References





















(continued)

Construct Items



































































































References





















(continued)

Construct Items

































































































burcharth et al 2015

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