Extending Absorptive Capacity from the Microfoundations Perspective

Success in a competitive business environment can be a question of innovation skills. One way to explore a firm’s innovative capabilities is to measure its absorptive capacity: the ability to acquire, assimilate, transform and exploit knowledge. The purpose of this study is to discover the practices and routines that support the development of high absorptive capacity. Identifying the microfoundations of the construct provides practical information about ways to improve firm performance. The study provides an overview of the absorptive capacity construct, its antecedents and outcomes. The emphasis is on Zahra and George’s (2002) reconceptualization, which is used as the framework of the study. The empirical part is based on the four-dimensional model of absorptive capacity and it examines the practices of knowledge acquisition, assimilation, transformation and exploitation in the Finnish food manufacturing industry. Examples from five case companies with above average absorptive capacity help to explain what kind of mechanisms firms can use and what kind of efforts they must make in order to improve their absorptive capacity. The study contributes to the research of the microfoundations of absorptive capacity and supports the operationalization of the construct. The results indicate that while there are common factors that enhance absorptive capacity in general, each of the four dimensions have their specificities. Analyzing and comparing the case companies shows certain practices in each dimension that together build up to a high absorptive capacity and thereby to gaining a competitive advantage.