Development of absorptive capacity over time and across boundaries: The case of R&D consortia

Absorptive capacity (AC) has been identified as the ability of firms to acquire, assimilate, and apply external knowledge, and thus as a pre-condition for learning from knowledge environment. However, extant literature has focused on AC as (1) a static and (2) a firm-centred concept. In particular, there is little conceptual framing and empirical evidence of how AC develops over time and across boundaries. Taking R&D consortia as the unit of analysis and based on insights from three in-depth case studies of collaborative R&D, our contribution is a framework for AC development over time and across inter-organizational, intra-organizational, and practice boundaries at different stages of collaboration in R&D consortia. Using this framework, we identify a set of mechanisms which enable the development of AC and we discuss the preconditions for these mechanisms. For R&D managers, our research implies that in order to enhance effectiveness of knowledge transfer and learning in R&D consortia they need to develop a strategy that (1) supports learning and AC development throughout the whole cycle of the collaboration, not only by focusing on intra-firm capabilities, but in particular by providing flexible interfaces for overcoming a variety of interaction and learning boundaries between heterogeneous R&D partners, and (2) enables the integration of created and acquired knowledge within the organization once the collaboration is over.     

Exploring the antecedents of potential absorptive capacity and its impact on innovation performance

This paper builds upon the theoretical framework developed by Zahra and George [Absorptive capacity: a review, reconceptualization, and extension. Academy of Management Review 2002;27:185–203] to empirically explore the antecedents of potential absorptive capacity (PAC), i.e. the ability to identify and assimilate external knowledge flows. Based on a sample of 2464 innovative Spanish firms, we find evidence that R&D cooperation, external knowledge acquisition and experience with knowledge search are key antecedents of a firm's PAC. Also, during periods of important internal reshaping, when there are significant changes in strategy, design of the organization and marketing, firms exert more effort to accumulate PAC. Finally, we find that PAC is a source of competitive advantage in innovation, especially in the presence of efficient internal knowledge flows that help reduce the distance between potential and realized capacity.     

External knowledge search,absorptive capacity and radical innovation in high-technology firms

Open innovation and absorptive capacity are two concepts based on the idea that companies can leverage the knowledge generated externally to improve their innovation performance. The aim of this paper is to analyse the joint effect of open innovation and absorptive capacity on a firm's radical innovation. Open innovation is expressed in terms of external search breadth and depth strategies and absorptive capacity is described by distinguishing between potential and realized absorptive capacity. In order to test our hypotheses, we carried out empirical research in firms operating in high-technology industries. The results indicate that internal routines and processes for absorbing external knowledge help explain radical innovation as they show a significant effect of potential and realized absorptive capacity. Also, there is a moderating effect of absorptive capacity on open innovation. Specifically, potential absorptive capacity exerts a positive effect on the relationship between external search breadth and depth and radical innovation. Realized absorptive capacity moderates the influence of external search breadth. These findings confirm the complementary nature of absorptive capacity and open innovation search strategies on radical innovation.     

Counter-knowledge and realised absorptive capacity

In the following paper we investigate the concept of counter-knowledge and how its effects may be mitigated in an organisational context. Counter-knowledge may be acquired unwittingly from unreliable or inaccurate sources such as gossip, lies, exaggeration and partial truths. We consider that if counter-knowledge is present then specific actions are required to stimulate realised absorptive capacity and, hence, provide for the creation and assimilation of new knowledge and new knowledge structures. Thus, in this paper, we focus on intentional unlearning as a method to counteract the problem of counter-knowledge. We have analysed the relationships between an unlearning context and counter-knowledge using an empirical study of 164 Spanish hospitality companies in order to identify whether the impact of unlearning on RACAP can be strength. A model is tested in which counter-knowledge is simultaneously a hindrance and a challenge stressor. Our results confirm that counter-knowledge is a variable that, when controlled, has the effect of strengthening the relationship between unlearning and RACAP. However, when left uncontrolled, the relationship between unlearning and RACAP is weaker than it otherwise would be.     

Productive organizational energy mediates the impact of organizational structure on absorptive capacity

The ability of an organization to cope with radical technological change is regarded to be heavily dependent on its ability to absorb and apply knowledge from its environment. This study investigates the role of organizational structure in driving absorptive capacity and uncovers the role of the emergent phenomenon of organizational energy as the enabler of this relationship. A field study was conducted among firms that are challenged by the disruptive nature of Cloud computing. Our results show that organizational design affects the degree of mobilization of an organization's affective, cognitive and behavioral resources, which in turn influence the effectiveness of learning processes related to the absorption and exchange of knowledge within the organization. Furthermore, they reveal the positive relationship between the enactment of absorptive capacity and the successful adoption of Cloud technology for incumbent firms. The findings contribute to our understanding of the micro-foundations of absorptive capacity and how positive organizational phenomena facilitate effective adoption and implementation of emerging technologies.     

The role of absorptive capacity and innovation strategy in the design of industry 4.0 business Models - A comparison between SMEs and large enterprises

Technological innovations often lead to redesigns in the business models of established companies, requiring them to incorporate new external knowledge into internal activities. Against this background, this study integrates the concepts of business model design, absorptive capacity, and innovation strategy into a novel research model, which analyzes the redesign of established business models in response to the emergence of Industry 4.0. Industry 4.0, also known as the Industrial Internet of Things, constitutes a contemporary research context that is highly relevant for corporate practice but scarcely regarded in management literature until now. The article contains an analysis of data from 221 German industrial enterprises, conducted through structural equation modeling, with separate data for small and medium-sized enterprises (SMEs) and large enterprises. First, the results indicate that the acquisition, assimilation, transformation, and exploitation of knowledge from the environment enable companies to engage in both exploratory and exploitative innovation strategies. Furthermore, the paper includes an evaluation of the role of exploratory and exploitative innovation strategies that reflects in efficiency-centered and novelty-centered business model designs. The distinct characteristics differentiating SMEs from large enterprises are also explained. The implications of absorptive capacity on innovation strategies, which influence the redesign of extant business models, are discussed from a research and managerial perspective.     

Supplier Strategies and Routines for Capability Development: Implications for Upgrading

This paper examines the strategies and routines adopted by small and medium-sized suppliers to develop capabilities that enable them to engage in upgrading, despite a precarious relational and institutional context. To this end, we investigate the strategic behaviour of two Bangladeshi garment manufacturers. Both started out as small suppliers for multinational enterprises (MNEs) and have eventually grown into micro-multinationals. The firms are involved in ‘tacit promissory contracting’ with their buyers, a specific form of international outsourcing relationship. The study adopts a multiple case study design that involves interviews with managers/owners of the firms. The analysis yields two key findings. Both firms have devised strategies and taken coherent routines involving actions to develop skills and motivation needed to perform appropriate functional activities (i.e. pre-production, production and post-production) as they embarked on different stages of upgrading. Furthermore, firms have designed routines to internalise the challenges originating from their relationships with their buyers and the institutional environment at the time that had the potential to affect their upgrading goals. The paper contributes to IB studies by highlighting how suppliers, even in a precarious context, can control their own strategies and routines, so as to develop capabilities that allow them to gradually redress the power imbalance between themselves and their buyers.     

The influence of organizational identification on organizational knowledge management (KM)

Information technology (IT) outsourcing vendor organizations contain isolated business units whose creation and sustenance greatly facilitate business operations. But they also introduce important challenges for organizational knowledge management (KM). In this paper, based on 7 months of intensive field-work at India Inc., a leading Indian IT firm, we looked at how members’ identification with two organizations, their own and their client organization, influences their compliance with an organizational KM initiative. The findings show that members have difficulties in complying with the expectations of the organizational KM initiative owing to a stronger identification with their client organizations. At the same time, they comply readily with KM initiatives at the business unit level. The findings show that KM managers at India Inc. use the help of middle level managers in the business units in their efforts to improve members’ compliance with organizational KM. Theoretical and managerial implications of the study are discussed.     

Positive Chair-CEO work relationships: Micro-relational foundations of organizational capabilities

With the increasing separation of the of the roles of the CEO and Chairperson, the interplay between them has been attracting considerable interest in both communities of scholarlship and practice. We examine the ways in which the work relationships between these two supreme executive functions may help in developing organizational processes and outcomes. In so doing, we shift the discussion from a corporate governance lens to examining how micro-level mechanisms, which are rooted in individual actions and interactions involving behavioral, cognitive and emotional mechanisms, may help cultivate higher-level processes and outcomes. Using a qualitative methodology in which pairs of Chairpersons and CEOs were interviewed, we developed a conceptual model which specifies how the nature of Chairperson-CEO work relationships may be conducive to cultivating organizational capabilities of knowledge creation and cultivate collective resilience, through the shaping of a supportive organizational communication climate. In so doing, we extended a micro-foundation framework by advancing a micro-relational lens to the corporate governance research and theory and more broadly to the literature on strategic leadership.     

An investigation into the vehicle routing problem with time windows and link capacity constraints

In this work, we investigate a new, yet practical, variant of the vehicle routing problem called the vehicle routing problem with time windows and link capacity constraints (VRPTWLC). The problem considers new constraints imposed on road links with regard to vehicle passing tonnage, which is motivated by a business project with a Hong Kong transportation company that transports hazardous materials (hazmats) across the city and between Hong Kong and mainland China. In order to solve this computationally challenging problem, we develop a tabu search heuristic with an adaptive penalty mechanism (TSAP) to help manage the company's vehicle fleet. A new data set and its generation scheme are also presented to help validate our solutions. Extensive computational experiments are conducted, showing the effectiveness of the proposed solution approach.     

The leadership of emergence: A complex systems leadership theory of emergence at successive organizational levels

Complexity science reframes leadership by focusing on the dynamic interactions between all individuals, explaining how those interactions can, under certain conditions, produce emergent outcomes. We develop a Leadership of Emergence using this approach, through an analysis of three empirical studies which document emergence in distinct contexts. Each of these studies identifies the same four “conditions” for emergence: the presence of a Dis-equilibrium state, Amplifying actions, Recombination/“Self-organization”, and Stabilizing feedback. From these studies we also show how these conditions can be generated through nine specific behaviors which leaders can enact, including: Disrupt existing patterns through embracing uncertainty and creating controversy, Encourage novelty by allowing experiments and supporting collective action, Provide sensemaking and sensegiving through the artful use of language and symbols, and Stabilize the system by Integrating local constraints. Finally, we suggest ways for advancing a meso-model of leadership, and show how our findings can improve complexity science applications in management.     

Institutional logics and organizational change: the role of place and time

Journal of Management and Governance - This paper investigates the case of a hybrid organization located in Northern Italy with the aim of providing an understanding of the role of the context,...     

The role of materiality: Knowing through objects in work practice

Based on the perspective of knowing in practice, this paper investigates the everyday work of engineers in a semiconductor plant. Qualitative data analysis is used to examine the active role of objects and how engineers rely on them to perform troubleshooting in the manufacturing processes. Three active roles emerged from the analysis: (a) objects activating interpretations, (b) objects stimulating collaborative practices, and (c) objects sparking experimental activities. Based on these three findings, we propose that objects have three triggering roles. First, objects trigger meaning-making. The meaning-making process provides a condition for better understanding the situation, making inferences, and developing possible diagnostic logics. Second, objects trigger spontaneous relationships. This role promotes social interaction, encourages members to cooperate, and to negotiate in the organization. Third, objects trigger real-time exploratory actions. These triggering roles of objects enable prioritization and execution of troubleshooting practice, based on the available information, actionable knowledge, and the situation at hand. Finally, these findings have important theoretical implications and indicate interesting future research directions related to the active role of objects in work practice.     

The role of ostensive and performative routine aspects in dynamic capability deployment at different organizational levels

This study clarifies how dynamic capabilities work in modifying operational capabilities at different organizational levels. While there is good understanding that routines that make up operational capabilities possess ostensive and performative aspects, whether the same applies to dynamic capabilities is unclear. In addition, there is only a limited understanding of how dynamic capabilities link to operational capabilities in terms of these two routine aspects, in general, and at different organizational levels, in particular. Our findings suggest that ostensive and performative routine aspects explain the way in which dynamic capabilities work in modifying operational capabilities. They also reveal that the pattern of the ostensive or performative routine aspects in dynamic capability deployment at a selected organizational level correspond with that associated with operational capabilities at the same level.     

The micro-foundations of industrial diversification through foreign acquisitions: The multifaceted role of CEO experience

This paper examines the micro-foundations of cross-border industrial diversification strategies. We study the impact of observable CEO experience attributes on the propensity to acquire foreign target firms in unrelated (versus related) industries. Our findings, based on a sample of UK-based firms that engaged in cross-border acquisitions between 2010 and 2016, support an inverted U-shaped relationship between life experience of the CEO and the likelihood of engaging in unrelated foreign acquisitions. Further, we find that CEOs' broad-based work experience, across countries or industries, is associated with a higher propensity to engage in unrelated foreign acquisitions. Finally, CEOs’ education experience in MBA-type qualifications is associated with a preference for related foreign acquisitions. We discuss the theoretical implications of these findings and outline directions for future research in the context of micro-foundations in international business, strategic leadership, and upper echelons theory.     

Knowledge infrastructure capability,absorptive capacity and inbound open innovation: evidence from SMEs in France

Abstract

Inbound open innovation (IOI) has become a potentially valuable means of gaining competitive advantage and enhancing organizational performance. This article explores how knowledge infrastructure capability (KIC) affects IOI through the moderating role of absorptive capacity. This research conceptualizes and develops three dimensions of KIC (technological, structural and cultural), and tests the relationships between KIC, absorptive capacity and IOI. Data for the study were collected from 125 small and medium enterprises (SMEs) based in France, and the relationships proposed in the framework were tested using structural equation modeling (SEM). The results indicate that higher levels of KIC can lead to enhanced absorptive capacity and improved IOI. That is, KIC can have a direct, positive impact on absorptive capacity and IOI. Moreover, absorptive capacity partially mediates the linkage between KIC and IOI. The article contributes to the conceptualization of the impact of KIC on IOI, by emphasizing a firm’s absorptive capacity. It offers a validated instrument to measure KIC, and provides an empirical evidence of the impact of KIC on absorptive capacity and IOI. This article also extends the extant literature by focusing on KIC and absorptive capacity simultaneously in a model to understand the notion of IOI in the SMEs based in France. This study offers useful guidance for measuring and implementing KIC in a SME context and encourages further research in this area.     

Designing an intervention strategy for public-interest goods: The California electric vehicle market case

We study the intervention problem for public-interest goods. Public-interest goods are known as goods with positive externalities, allowing the consumer as well as others who do not pay for them benefit from the consumption. Health related goods, such as vaccines, or products with less carbon emissions are well known examples. We consider a supply chain for such a product. Generally, wider adoption or usage of such goods is ensured by the intervention of a central authority in their supply chain. We explore the problem for a setting composed of a retailer and a central authority. The main goal of the central authority is to design and fund an intervention scheme so that decisions of the channel are in line with the good of society, specified as a social welfare function. We propose two intervention tools applied simultaneously: (1) investing in demand-increasing strategies, which affects the level of the stochastic demand in the market; and (2) rebates that affect revenue per unit received by the retailer. We introduce a model that determines a utility maximizing intervention scheme and further investigate the model. We also present two decentralized approaches as benchmarks. Finally, we conduct a case study for California׳s electric vehicle market and validate our findings by a detailed analysis of the results, including comparisons with the current practice.     

Strategizing in a digital world: Overcoming cognitive barriers,reconfiguring routines and introducing new organizational forms

As digital technologies such as cloud and edge computing, machine learning, advanced artificial intelligence (AI), and the internet of things (IoT) unfold, traditional industries such as telecoms, media, entertainment, and financial services are being reconfigured and new sectors are emerging. In this new competitive landscape we observe new organizational forms and new business models, including the emergence of platforms and multi-sided markets. This emergence has required a strategic response from incumbent firms, including both well-established firms and some first-generation digital enterprises. With these advances in digital technology, the very nature of strategy is changing. Fundamentally, the use of digital technologies may provide new opportunities for efficiency gains, customer intimacy, and innovation. However, without the right mindset for change, appropriate digital routines, and structural changes, digital transformation efforts will fail. We therefore present a framework for strategizing in this new digital competitive landscape that underscores the importance of the interplay between (1) the cognitive barriers faced by managers when trying to understand this new digital world and envision new digital business models, (2) a need to reconfigure and extend digital routines, and (3) new organizational forms that are better equipped to creating value and gaining competitive advantage. From this framework of essential pillars, we derive four journeys of digital transformation for companies that were formed in the pre-digital economy. We also describe the management roles required by top, middle, and frontline managers, depending on whether the digital migration is evolutionary or transformative and whether the firm is responding to or attempting to shape the ecosystem. Although digital transformation is technically all about technology, the more important issue is how companies make their way through this strange new digital world in which they find themselves. Ultimately digital transformation is as much about strategizing as it is about technology.