The emergence of absorptive capacity through micro-macro level interactions

Abstract

A firm's absorptive capacity involves two dimensions: horizontal and vertical. The horizontal dimension refers to a dynamic interplay between internal and external environments of the firm, which is extensively covered in the absorptive capacity research. However, the literature ignores vertical dimension involving individual-organization interactions. Scant knowledge is available about the mechanisms through which absorptive capacity emerges as an organizational learning capability. This study reviews the seminal works of Cohen and Levinthal and finds that the stickiness of knowledge, the multiple antecedents of absorptive capacity and their interactions are explicitly addressed therein, but are insufficiently problematized in subsequent research. Drawing on the knowledge-based view of the firm and the micro-foundations lens of organizational capabilities, the present study re-conceptualizes absorptive capacity as a set of three sequentially linked learning processes where individual and organizational antecedents interact, and explains how value recognition, assimilation and application capabilities emerge as organizational (macro) level phenomena.