absorptive capacity

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).