Absorptive capacity components: Performance effects in related and unrelated diversification
Journal
Long Range Planning
Date Issued
April 2024
Author(s)
DOI
10.1016/j.lrp.2024.102416
Abstract
We study how firms can benefit from external knowledge resources contingent on absorptive
capacity. We separate the three components of absorptive capacity – acquiring, assimilating, and
exploiting external knowledge – and posit that the benefits of a firm’s knowledge expansion
through diversification into related and unrelated business domains differ by the firm’s relative
emphasis on the three components. We test our predictions on a panel of 153 large US-traded ICT
firms. Our analysis broadly supports our hypotheses, highlighting the unique contribution of
individual absorptive capacity components to organizational learning through diversification
strategy.
capacity. We separate the three components of absorptive capacity – acquiring, assimilating, and
exploiting external knowledge – and posit that the benefits of a firm’s knowledge expansion
through diversification into related and unrelated business domains differ by the firm’s relative
emphasis on the three components. We test our predictions on a panel of 153 large US-traded ICT
firms. Our analysis broadly supports our hypotheses, highlighting the unique contribution of
individual absorptive capacity components to organizational learning through diversification
strategy.
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