Why Absorbitve Capacities count
Absorptive capacity has been defined as "a firm's ability to recognize the value of new information, assimilate it, and apply it to commercial ends"(Bessant et al., 2009; Lockett et al., 2008; Zahra & George, 2002; Fogg, 2010). Absorptive capacity are therefore abilities of scanning, grasping and combining via different interfaces to the environment. The dynamic capabilities are required for absorption in all areas of the company. The company management, the processes involved and the infrastructure must be adapted to the new requirements.
Zahra and George go on to suggest a series of indicators that can be used to evaluate each element of absorptive capacity.
Knowledge acquisition capability (the number of years of experience of the R&D department, the amount of R&D investment)
Assimilation capability (the number of cross-firm patent citations, the number of citations made in a firm’s publications to research developed in other firms)
Transformation capability (the number of new product ideas, the number of new research projects initiated)
Exploitation capability (the number of patent, the number of new product announcements, the length of product development cycle)
George and his colleagues (Zou, Ertug, George, 2018) conduct a meta-analysis of absorptive capacity and they find that: (1)Absorptive capacity is a strong predictor of innovation and knowledge transfer, and its effects on financial performance are fully mediated by innovation and knowledge transfer; (2) The firm size-absorptive capacity relationship is positive for small firms but negative for larger firms. The firm age-absorptive capacity relationship is negative for mature firms and not significant for young firms; (3) Social integration mechanisms, knowledge infrastructure, management support, and relational capability all have a positive and significant impact on the absorptive capacity-innovation relationship (whereas they do not find the breadth of external search or competitive intensity to impact that relationship). Environmental dynamism has a marginally significant negative impact on the absorptive capacity-innovation relationship; and (4) They also find that the absorptive capacity-innovation relationship is stronger when absorptive capacity is measured by surveys rather than when absorptive capacity is measured by archival proxies.