Absorptive capacity in a more (or less) absorptive environment: A meta-analysis of contextual effect

Antecedents and outcomes of open innovation over the past 20 years: A framework and meta-analysis

Absorptive capacity in a more (or less) absorptive environment: A meta-analysis of contextual effects on firm innovation

Tatiana R. Stettler, Esther J. Moosauer, Simone A. Schweiger, Artur Baldauf, David Audretsch

kHUB post date: January 2025
Originally published: 04 October 2024 (PDMA JPIM • Vol. 42, Issue 1 • January 2025)
Read time: 60 minutes

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The effects of the knowledge environment on a firm's ability to acquire, assimilate, transform, and utilize new knowledge—its absorptive capacity (AC)—to produce innovation (INN) have been largely overlooked in prior literature. Drawing on the knowledge spillover theory of entrepreneurship, we conduct a meta-analysis summarizing findings from 145 empirical studies on 434,985 firms with 798,650 firm-year observations. We distinguish between knowledge-rich environments with abundant, easily accessible information; knowledge-protected environments with high levels of intellectual property rights protection; and knowledge-intensive environments with high levels of reliance on knowledge. Our study assesses the impact of the environment on the AC–INN relationship. First, we confirm that knowledge-rich environments create more opportunities to reap innovation benefits from AC compared to knowledge-scarce environments. Driven by the development of communication technologies and increased information sharing, the effects of AC on innovation are almost twice larger in the smartphone era as they were during the preinternet or early internet era. Second, our analysis indicates that high levels of knowledge protection, as seen in North America and Europe, while safeguarding intellectual property, also dampen positive effects of absorptive capacity on innovation. In environments with less knowledge protection, the effects of AC on innovation are stronger. Finally, our findings suggest that AC is beneficial across industry sectors, but its effects are stronger in less knowledge-intensive sectors. The mean effect size in low-tech manufacturing and services is two times larger than in high-tech industries. Beyond contextual effects, we assess AC's effects on two major creativity outputs: invention, as a breakthrough scientific discovery, and commercialization, as a socially usable and marketable product. Our findings show that AC overall boosts innovation and is more strongly associated with commercialization than with invention. The implications of this study aim to inform practitioners and policymakers and advance future research on knowledge environments.

Practitioner Points

  • The knowledge environment impacts a firm's ability to transform knowledge into innovation. The magnitude of this effect differs: (i) over time as knowledge richness increases, (ii) across countries with varying intellectual property rights protection, and (iii) across industries with varying intensity of the knowledge environment.
  • Top managers can leverage their knowledge environment to foster innovation. Environments characterized by high richness, low protection, and low intensity are the most conducive to innovation. To reap this advantage, organizational members need to recognize the value of new knowledge and be able to assimilate and transform it to fit their needs.
  • Additionally, top managers should maintain a focus on both stages of the innovation process—invention and commercialization. Quite predictably, it is easier to achieve innovation in commercialization, than in invention. Our results show that the impact of learning is twice as high in the former compared to the latter.
  • Managers should rely on a variety of measures to capture creative output, including perceived and archival; product and process; quantitative and qualitative.

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