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In business administration, 'absorptive capacity' is theory or model used to measure a firm's ability to value, assimilate, and apply new knowledge. It is studied on multiple levels (individual, group, firm, and national level). Antecedents are prior-based knowledge (knowledge stocks and knowledge flows) as well as communication. It is studied involving a firm's innovation performance, aspiration level, and organizational learning.
Absorptive capacity is also said to be a reason for companies to invest in R&D instead of simply buying the results (e.g. patents). Internal R&D teams increase the absorptive capacity of a company.
The theory was first introduced in 1990 by Cohen and Levinthal.^[1] It involves organizational learning, industrial economics, the resource-based view of the firm and dynamic capabilities.
Two concepts related to absorptive capacity are:
- Receptivity (Seaton & Cordey-Hayes 1993) : The firm's overall ability to be aware of, identify and take effective advantage of technology.
- innovative Routines (Nelson & Winter 1982): Practised routines that define a set of competencies the firm is capable of doing confidently and the focus of the firm's innovation efforts.

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Notes and references

See also

★ Change management

Notes and references

1. Cohen and Levinthal (1990), "Absorptive capacity: A new perspective on learning and innovation", ''Administrative Science Quarterly'', Volume 35, Issue 1 pg. 128-152.