Understanding Absorptive Capacity from a Network Perspective

The term absorptive capacity refers to the notion that firms may have differing capabilities to innovate and to recognise the value of new knowledge, assimilate it, and apply it to creating business value. Developing such capabilities often requires firms to become part of a value network. We therefore apply the notion of absorptive capacity to the level of both the firm, and the wider value network in that it is embedded. The purpose of this research is to understand how absorptive capacity process may be moderated by contingent factors so that a more complete picture of absorptive capacity development emerges from our research. We identify from the literature on learning, innovation, and networks several theoretical perspectives that may help researchers to understand how contingent factors may facilitate and/or inhibit the development of absorptive capacity capabilities. We offer a set of propositions that may guide research into learning and innovation in business networks, and we discuss the managerial implications of these propositions.