Absorptive Capacity: A New Perspective on Learning and Innovation

Published on Mar 1, 1990in Administrative Science Quarterly8.02
· DOI :10.2307/2393553
Wesley M. Cohen33
Estimated H-index: 33
(Duke University),
Daniel A. Levinthal47
Estimated H-index: 47
(UPenn: University of Pennsylvania)
Discusses the notion that the ability to exploit external knowledge is crucial to a firm's innovative capabilities. In addition, it is argued that the ability to evaluate and use outside knowledge is largely a function of the level of prior related knowledge--i.e., absorptive capacity. Prior research has shown that firms that conduct their own research and development (R&D) are better able to use information from external sources. Therefore, it is possible that the absorptive capacity of a firm is created as a byproduct of the firm's R&D investment. A simple model of firm R&D intensity is constructed in a broader context of what applied economists call the three classes of industry-level determinants of R&D intensity: demand, appropriability, and technological opportunity conditions. Several predictions are made, including the notions that absorptive capacity does have a direct effect on R&D spending and spillovers will provide a positive incentive to conduct R&D. All hypotheses are tested using cross-sectional survey data on technological opportunity and appropriability conditions--collected over the period 1975 to 1977 for 1,719 business units--in the American manufacturing sector from Levin et al. (1983, 1987) and the Federal Trade Commission's Line of Business Program data on business unit sales, transfers, and R&D expenditures. Results confirm that firms are sensitive to the characteristics of the learning environment in which they operate and that absorptive capacity does appear to be a part of a firm's decisions regarding resource allocation for innovative activity. Results also suggest that, although the analysis showing a positive effect of spillovers in two industry groups do not represent a direct test of the model, positive absorption incentive associated with spillovers may be sufficiently strong in some cases to more than offset the negative appropribility incentive. (SFL)
  • References (48)
  • Citations (21290)
#1Wesley M. Cohen (CMU: Carnegie Mellon University)H-Index: 33
#2Daniel A. Levinthal (UPenn: University of Pennsylvania)H-Index: 47
#1David C. Mowery (University of California, Berkeley)H-Index: 48
#2Nathan Rosenberg (Stanford University)H-Index: 48
#1Richard C. Levin (Yale University)H-Index: 15
#2Alvin K. Klevorick (Cowles Foundation)H-Index: 17
Last.Sidney G. WinterH-Index: 56
view all 4 authors...
Cited By21290
#1Marte Cecilie Wilhelmsen Solheim (University of Stavanger)H-Index: 3
#2Ron Boschma (University of Stavanger)H-Index: 51
Last.Sverre J. Herstad (University of Oslo)H-Index: 14
view all 3 authors...
#1Pedro Manuel García Villaverde (UCLM: University of Castilla–La Mancha)H-Index: 11
#2Dioni Elche Hortelano (UCLM: University of Castilla–La Mancha)H-Index: 6
Last.Ángela Martínez Pérez (UCLM: University of Castilla–La Mancha)H-Index: 3
view all 3 authors...
#1P. Malone (UWA: University of Western Australia)
#2Tim Mazzarol (UWA: University of Western Australia)H-Index: 27
Last.Sophie ReboudH-Index: 5
view all 3 authors...
#1Tatyana O. Tolstykh (National University of Science and Technology)H-Index: 2
Last.Natalia S. Andryashina (UP: Pedagogical University)H-Index: 1
view all 0 authors...
View next paperThe Knowledge-Creating Company