The Differential Relationship between Absorptive Capacity and Product Innovativeness: A Theoretically Derived Framework

Abstract

The concept of absorptive capacity is one of the main drivers of new product development. However, absorptive capacity has been treated as a concrete, uni-dimensional proxy targeting R&D context. Explicitly, absorptive capacity variables namely; acquisition, assimilation, transformation, and utilization of external information/knowledge have rarely been theoretically analyzed in relation to firm product innovativeness in the new product development (NPD) literature. Addressing this particular gap in the literature, we develop a conceptual model encapsulating the simultaneous but differential interrelationships between absorptive capacity variables and product innovation in particular. This study contributes to the literature in three ways. First, the theoretical framework proposed highlights the effects of absorptive capacity variables on product innovation. Hence the focus is, on distinguishing product innovation from other innovation types, and building a theoretical background for the relationship of absorptive capacity variables and product innovativeness. Second, based on the extended reconceptualization of absorptive capacity of Zahra and George (2002) this study aims to assess the differential roles of absorptive capacity variables in NPD efforts. Thus we propose the multidimensional operationalization of the construct through; acquisition, assimilation, transformation and utilization capabilities embedded within firm’s absorptive capacity. Third, this research integrates absorptive capacity literature to the knowledge management literature through offering a theoretical framework where absorptive capacity is a process consisting of organizational routines which not only acquires but also assimilates, transforms and exploits the knowledge leaning on the basic determinants of knowledge management.

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