Ben Youssef and Zaccour (2009) considered a duopoly competing in quantities and where firms can invest in R&D to control their emissions. They distinguished between effort carried out to acquire first'hand knowledge (original R&D) and effort to develop an absorptive capacity to be able to capture part of the knowledge developed by rival. There are also free R&D spillovers between firms. They showed that a regulator can reach the social optimal outcome by implementing a taxation and subsidy policy. The regulator subsidizes at a higher rate original R&D effort than its absorptive capacity counterpart when the free spillovers are high, and the contrary may occur when the free spillovers are low. When the cost of original research is lower than the one of absorptive research, or when the learning parameter of the latter is low, then the socially optimal level of original research is higher than the one of absorptive capacity. The opposite result holds when the cost of absorptive capacity is lower than the one of original research and when the learning parameter is high.
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The stronger competition from foreign firms may encourage innovation in domestic firms. Moreover, contact with foreign suppliers may provide access to specialized and superior intermediate and capital goods. Thus, the results of this study may be due to mechanisms linked to strategic behaviour and/or to those linked to learning. At the macro level Borenszstein et al. (1998) find a positive relationship between inward FDI and technology diffusion. However, foreign investment is found to be “more productive than domestic investment only when the host country has a minimum threshold of human capital” (p. 117). 6 Nonetheless, negative effects of inward FDI on innovation are also possible via the cumulative mechanisms described above for imports. Lichtenberg and van Pottelsberghe de la Potterie (1996) following an analysis of 13 countries reject the hypothesis that inward FDI supports technology transfer. A negative impact is reported by Schneider (2005), Chang et al. (2013) and Connolly (2003). On the whole, the results are far from clear cut and this is one of the reasons why we shall test the modifying role of absorptive capacity.
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Abstract: This study aimed to determine the effect of Absorptive Capacity and Knowledge Sharing on the performance of women- owned SMEs group. The sample of this research was female business actor who joined in Alisah Khadijah group of ICMI Palembang as many as 138 business actors. Analysis of this research used Structural Equation Modeling (SEM) program with Lisrel Program. The result showed that Absorptive Capacity and Knowledge Sharing variable had positive and significant influence on Performance of SME group incorporated in Alisah Khadijah ICMI Palembang. Absorptive Capacity variable had more dominant influence on Performance than Knowledge Sharing variable.
Potential absorptive capacity is the ability to acquire, and assimilate prior knowledge and experiences. Acquiring information is the process of finding and identifying relevant information. For a student, this would entail remembering pertinent information from prior lessons, and having confidence that the information presented by the instructor is relevant and accurate. At the firm level, assimilating knowledge is how a firm uses its routines and processes which “allow it to analyze, process, interpret, and understand the information obtained from external sources” (Zahra & George, 2002, p. 18). Instructors within a classroom can facilitate the assimilation of knowledge by developing their own classroom routines and processes for presenting new information. The distinction between potential and realized ACAP has been illustrated at the firm level as the difference between a firm having a patent (potential ACAP), and commercializing the patent (realized ACAP) (Joshi, Lei, Datta, & Shu, 2010). At an individual level, the difference has been demonstrated in an academic research setting as the difference between creativity and the ability to generate research ideas (potential ACAP), and the writing and publication of these ideas (realized ACAP) (Da Silva & Davis, 2011). Similarly, in an educational setting, we conceive potential ACAP as the ability of a student to engage in the lesson and understand the lesson presented. These abilities may lie in individual differences such as self-efficacy (Axtell et al., 2000), persistence (Taggar, 2002), and individual motivation (Minbaeva, Makela, & Rabbiosi, 2007). Despite individual differences, we contend that the activities presented have the potential to increase all students’ ACAP, although we realize the foundational level of ACAP and the amount of increase may vary by a student’s individual differences.
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time and effort to get there. Garcia-Morales et al. (2007) support the importance of investments by stating that technology absorptive capacity needs constant investments, otherwise the ability of a technological company to acquire knowledge and learn from it will decrease. In contrast to Lin et al. (2002), Lichtenthaler (2009) not only focused on the technological side but also on market knowledge and emphasises it. He claims that past research has focused too much only on the technological knowledge and R&D of firms, and thereby neglected other, for absorptive capacity, relevant information. Lichtenthaler (2009) further found in his study that the intensity of R&D has no direct influence on absorptive capacity because non-technological information such as market information is simply overlooked, which then will lead to a lack of properly exploiting the acquired and assimilated knowledge.
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Almost all the constructs presented in the model, i.e., resources, routines, operational and dynamic capa- bilities, as well as absorptive capacity, if not questioned and re-examined periodically, have a tendency to become rigid due to the force of inertia. The explanation for this statement lies in the velocity of the con- temporary environment in which majority of firms operate (Stefanovic et al, 2012). It is well known that in the ever-changing environment sustainable competitive advantage is a thing of the past. Thus, contemporary environment has shifted the focus towards the temporary competitive advantage (D’Aveni et al, 2010), be- cause the true sustainable competitive advantage is rare and declining in duration (Ruefli & Wiggins, 2002). Long-term survival ought to be embedded in new variations, internal selection that correctly reflects exter- nal selection pressures and top management’s capacity for recognizing and retaining viable strategic ini- tiatives (Burgelman, 1994).
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Potential absorptive capacity comprises acquisition, which refers to a firm’s capability “to identify and acquire externally generated knowledge that is critical to its operations” (Zahra and George 2002, p.189) and assimilation, being the firm’s “routines and processes that allow it to analyse, process, interpret and understand information obtained from external sources” (ibid, p. 189). Zahra and George (2002) argue that while potential absorptive capacity enables the firm to be receptive to acquiring and assimilating external knowledge it does not guarantee that a firm will leverage and exploit this knowledge, rather, this requires realised absorptive capacity. Realised absorptive capacity comprises transformation, which represents the firm’s capability to “develop and refine the routines that facilitate combining existing knowledge and the newly acquired and assimilated knowledge” (ibid, p. 190) along with exploitation, which is the firm’s ability to “refine, extend and leverage existing competencies or to create new competencies by incorporating transformed knowledge into its operations” (ibid, p. 190). Absorptive capacity has been used to investigate innovation and firm performance (e.g. Cohen and Levinthal 1990; Gluch et al. 2009), and importantly, IT assimilation (Saref et al. 2012; Roberts et al. 2012).
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We do the study from the perspective of expatriates, and focus on recipient absorptive capacity (RAC) . Cohen and Levinthal identified RAC as that companies use existing knowledge to recognize the value of new knowledge, absorb and make full use of the new knowl- edge. EL-Sayed compared the process of knowledge transfer in MNCs and influence factors, and came up with an idea that it is the same important for MNCs that the motivation of MNCs to achieve knowledge, the ab- sorptive capacity and the characteristics of knowledge, and even the motivation is more important. Foss and Pedersen put forward that the absorptive capacity of sub- sidiaries is stronger, the greater the likelihood of success of knowledge transfer happens. However, with the tech- nology skill of subsidiaries becomes stronger, it can’t avoid that subsidiaries have more power to judge inde- pendently and bargain with parent companies. Compre- hensive previous conclusion, we measure the absorptive capacity of subsidiaries from six aspects: 1) whether sub- sidiaries have sufficient capacity to acquire the knowl- edge and skills from parent companies, 2) whether sub- sidiaries clearly understand what knowledge and skills to be learned, 3) whether subsidiary have sufficient accu- mulated technology and foundation to absorb the knowl- edge and skills from the parent company, 4) whether subsidiaries have sufficient capacity to implement knowledge and skills learning from parent companies, 5) whether subsidiaries can transform knowledge and skills learning from parent companies into their own knowl- edge, 6) whether subsidiaries have abilities to apply the latest research achievement of parent company to their own products. At the same time, based on the previous studies of knowledge transfer, the absorptive capacity of
The third stage of the research involved multiple case studies to validate the model and factors influencing absorptive capacity. The multiple case studies include five construction SMEs operating in rural areas in four different states in Malaysia (Perlis, Kedah, Kelantan and two in Sarawak). The multiple case studies conducted utilized a combination of both qualitative and quantitative data. It involved interviews with the companies’ top management on their company policies and approach towards knowledge absorption. A questionnaire survey was undertaken with the site workforces to understand their attitude towards knowledge absorption, the factors influencing their ability to use the technology, and their awareness and observations of the work routine. At the end of each case study, a small seminar was conducted with the top management and on site workforce to validate the findings. After all the five case studies were validated with each company, the second stage validation was conducted with CIDB representatives. In this validation all the findings/results from the five case studies were gathered together and the final model was discussed with CIDB officers.
The conceptual paper is significant as it will provide important implications to groups of potential users of SME performance evaluation models such as owners or founders of SMEs who want to monitor the performance of their firms. The study attempts to look into the impact of collaboration networks towards the knowledge- processing capabilities on the firm‘s innovation performance. The study will also look into the mediating effect of absorptive capacity between collaboration networks and the innovation performance. The result of these linkages may provide information benefits to SMEs on how to leverage absorptive capacity in order to enhance firm‘s innovation activities.This study is also relevant to policy-makers who design support mechanisms and schemes to promote the creation and growth of small firms. Last but not least, this conceptual paper can add to contribute as a literature for scholars to make reference.
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Over the past two and half decades, there has been a growing interest of scholars in the concept of AC and its importance for organizations (Daghfous, 2004; Lane et al., 2006). Many researchers and practitioners have persistently cited AC as a major factor in determining whether an organization is able to acquire and make use of external knowledge profitably (Lenox and, King 2004; Harrington and Guimaraes, 2005; Bergh and Lim 2008). Absorptive capacity refers to a set of organizational routines and processes, through which firms recognize, acquire, assimilate, transform, and exploit knowledge to produce a dynamic organizational capacity (Zahra & George, 2002). These routines and processes are essential for firms‟ recognition, acquisition, assimilation, transformation, and exploitation of knowledge for innovation. Absorptive capacity is the most important ability required by firms to effectively acquire and exploit new knowledge to increase its innovation performance. It therefore becomes necessary for firms to boost their AC level in order to Abstract: Firms’ innovation performance is mostly influenced by internal capabilities available within a firm. This paper empirically assesses the impact of absorptive capacitive (AC) on innovation performance of manufacturing firms in Nigeria thus enhance our understanding on the mechanism between AC and innovation performance. A total of 305 SMEs were sampled from subsectors such as; textile/leather/apparel and footwear subsector; wood/furniture and woodworks subsector; and domestic/industrial plastic and rubber subsector in Southwestern Nigeria. Data collected was analyzed using Structural Equation Modeling (SEM). Findings revealed that AC had high positive impact on innovation performance of the manufacturing firms. Particularly AC dimensions such as ‘transformation’ and ‘exploitation’ dimensions of AC are the best indicators of innovation performance within the manufacturing SMEs. Also, AC accounts for about 79% of variation in the innovation performance of the manufacturing firms. The study concludes that AC, particularly its transformation and exploitation dimensions are critical elements for the enhancing the innovation performance of the manufacturing firms in Nigeria.
The study revealed significant relationship between social media, absorptive capacity with crisis communication preparedness. The findings contribute to organizational renewal theory as it encourages organization to use external knowledge. Simultaneously with effective use of social media and learning, the organization can prepare themselves for future events. The practitioners are encouraged to use social media and accumulated knowledge to benefit their organization. Social media helps in monitoring the public perception and on the organization and industry as a whole. Meanwhile, the accumulated knowledge is gained through the organizational interaction with external parties, employees, and these knowledge sharing and dissemination help in seizing opportunities. These activities enhance the organizational value.
As shown in Table 2, majority of the respondents surveyed were male. This unfair balance in gender is also evident in Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and National Bureau of Statics (NBS) report (2013) where it was reported that 92.1% of male are owners of manufacturing small enterprises as compared to 7.84% of female. Also, in terms of employment within SMEs in Nigeria, about 61% of males are employed as compared to about 39% of females (SMEDAN and NBS, 2013). This gender disparity within manufacturing SMEs has implication for the business climate in Nigeria given the fact that women constitute about 50.5% of Nigeria‟s population (NBS, 2014).However, the textile/leather/apparel & footwear SME subsector had a fair gender distribution of 50.5% males and 49.5% females. In terms of educational qualification, only about 31.1% of the respondents had higher educational degrees. Majority (32.2%) of the respondent had ordinary national diploma (OND) and senior school certificate (SSCE) (34.3%) as their highest educational qualification. This result revealed that majority (69.9%) of the respondent does not possess higher degrees which is a major obstacle to building AC for innovation within the firms (Oyeyinka-Oyelaran and Adebowale, 2012). More so, about 60.6% of the respondents had between 6 to 10 years of work experience and about 22.9% of the respondents had 11 to 15 years of work experience. And, about 10% of the respondents had over 15 years of work experience. Overall, 93.5% of the respondents surveyed had above 5 years work experience. This indicates that majority of the respondents having been the job for these numbers of years, had a considerable degree of on the job prior related knowledge which is an antecedent for developing absorptive capacity within firms (Cohen and Levinthal, 1990). About 90.6% of the respondents surveyed were within the ranks of chief executive officer, director and manager. Majority of the firms sampled were SMEs in Textile/leather/apparel & footwear subsector.
In increasingly dynamic and competitive environments, the capacity to acquire and exploit external knowledge – that is, absorptive capacity (AC; Cohen & Levinthal, 1990) – is crucial for firms to innovate, renew their competitive advantage, and sustain performance (Lewin et al., 2011; Schildt et al., 2012; Vasudeva and Anand 2011; Volberda et al., 2010; Wales et al., 2013). Scholars have observed the benefits of AC and the considerable heterogeneity in this capacity across firms operating under similar external conditions (Cassiman an&d Veugelers, 2006; Jansen et al., 2005; Lane et al., 2001; Yayavaram & Ahuja, 2008). Theoretically understanding the firm-level
The GSE has the highest concentration of Knowledge-Intensive Business Services (KIBS), not only with respect to the rest of the UK but also as compared to the rest of the European Union. This may suggest a new model of innovation driven growth, led by business and financial services. The latter mostly rely on non-R&D innovation investments and have high employment and productivity returns (Cainelli, Evangelista, and Savona, 2006). The case of the GSE in the UK seems therefore to challenge the ‘Baumolian productivity slowdown argument’ (Baumol, 1967) associated with deindustrialisation and the growth of services. Additionally, the GSE also has the highest concentration of universities and public research institutions, which potentially sustain and facilitate the processes of knowledge spillovers across firms, enhancing their absorptive capacity and their innovation performance (Feldman, 1999; Jaffe, 1989; Jaffe, Traijtenberg and Henderson, 1993).
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within the GCC. This entails among others energizing the role of the private sector in the manufacturing sector and in trade and logistics activities. Kuwait must adopt sound measures to attract FDI and bring the multinational cor- porations into the local market (Kuwait currently attracts hardly any incoming FDI). This approach is the most appropriate and efficient way to transfer technology and managerial know-how. The FDI can significantly in- crease the absorptive capacity of Kuwait by easing its bottlenecks in the areas of entrepreneurial and manage- rial capabilities, international marketing, innovative busi- ness development, new export opportunities, availability of financial resources, and lastly state-of-the-art tech- nology. Finally, Kuwait must work hard in achieving its strategic vision of becoming a regional Trade and Finan- cial Center. This should promote the private sector in providing services in the trade and financial activities. This vision will open the economy to new frontiers in trade and finance and sets Kuwait in its along waited proper place in the region.
3) Human capital has positive impact on innovative capability. The influence of human capital on absorptive capacity is much less pronounced since imitation requires less creative workforce. This is particularly underlined in Acemoglu, Aghion, Zilibotti (2002a), Vandenbussche, Aghion, Meghir (2004), Rogers (2004). The role of human capital for development was studied in many earlier papers ( see Lucas (1988), Mankiw, Romer, Weil (1992), Nonneman, Vanhoudt (1996) and more references in Aghion, Howitt (1998)). However some researchers cast doubt on significance of human capital, measured as share of education cost in GDP or as literacy rate, for economic growth (see Levine, Renelt (1992) and polemics in Sala-I-Martin (1997)).
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We agree with the latter point, but suggest an alternative explanation of the ‘reifi cation’ observation. The examples given in Lane et al. (2006) appear to be quantitative studies, and it is therefore possible that the lack of development of the concept of absorptive capacity results from the dominant use of research methods which are more appropriate for testing, rather than developing, theory. If so, then new ideas and perspectives are far more likely to be added if qualitative methods are used to examine absorptive capacity. Furthermore, although they suggest that future studies should explore absorptive capacity in non-R&D con- texts, they make no mention of different industrial sectors, or the possibility that absorptive capacity would be of interest within the public sector. These features provide opportunities which we attempt to exploit in the current article: by adopting qualitative rather than quantitative methods; and by examining absorptive capacity in diverse organizational contexts.
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Participation in decision making is also expected to enhance the firm's ability to acquire and assimilate new knowledge. Participation refers to joint decisions through which information is shared amongst superiors and subordinates (Lam, Yik and Schaubroeck 2002). Participatory management practices engage managers and subordinates to process information, make decisions, and solve problems (Wagner 1994). This practice exposes employees to a high level of information processing and sharing, which enable firms to acquire and assimilate knowledge successfully. Job rotation via regular transfer between jobs exposes employees to, and provides them with the opportunity to, acquire multiple skills and competencies (Campion, et al. 1994). The shift from one job to another increases individual experience gained from performing different tasks (Gomez et al. 2004). Rotated employees are exposed to a wide range of knowledge and develop the experience to understand what is required to promote organizational learning processes. For instance, job rotation enables employees to recognize the usefulness of knowledge and depict what kind of new knowledge is needed and how it can be obtained (Allwood and Lee 2004). Accordingly, exposure to diversity of knowledge and skills increases the likelihood of absorbing new knowledge (McGrath 2001; Bennett 2003). Overall, the above discussion suggests coordination that exhibits cross functional interfaces, participation in decision making and job rotation, facilitates the acquisition and assimilation of new knowledge (potential absorptive capacity). This discussion leads to the following hypothesis.
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Construction companies must seek out jobs that are advertised in local newspapers, construction journals and linked Websites. These are known as ‘select list’ advertisements. Applying for a job involves either completing a capability-based questionnaire or sending out an information pack containing the information requested. All companies, regardless of status, must follow the same procedure. There is no standard reply, as applications can differ significantly for each contract. A great deal of care and attention must be spent on each application, as they are aimed at communicating to the client that DComp is the most appropriate company with sufficient capability to meet the client’s current and anticipated needs efficiently and economically. The tender document must give the client confidence in the organization’s capability to fulfil his or her needs (Preece et al, 2003). DComp introduced an element of passive marketing by ensuring that it was listed on all public sector approved contractors lists (for example, Constructionline and health trusts) and by emphasizing its newly developed absorptive capacity, interpreted in terms of approved or select list language. Client groups (or gatekeepers; see Zahra and George, 2002), such as government bodies, public services and large corpora- tions, have lists of approved contractors, as well as preferred and priority contractors. DComp used its absorptive capacity KTP programme to address the criteria on these lists.
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