absorptive capacity

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Absorptive capacity is used to measure firm's ability to value, assimilate, and apply new knowledge. It is studied on multiple levels (individual, group, firm, and national level). Antecedents are prior-based knowledge (knowledge stocks and knowledge flows) as well as communication. It is studied involving a firm's innovation performance, firm's aspiration level, and organizational learning.

Absorptive capacity is also said to be a reason for companies to invest in R&D instead of simply buying the results (e.g. patents). Internal R&D teams increase the absorptive capacity of a company.

The theory involves organizational learning, industrial economics, the resource-based view of the firm and dynamic capabilities.

Reference -- It was first introduced by Cohen and Levinthal (1990, Absorptive capacity: A new perspective on learning and innovation. In: Administrative Science Quarterly, Volume 35, Issue 1 pg. 128-152).
Source: Wikipedia contributors, ""Absorptive capacity,"" Wikipedia, The Free Encyclopedia, http://en.wikipedia.org/w/index.php?title=Absorptive_capacity&oldid=84551314 (accessed January 29, 2007).