Exploring the impact of the level of absorptive capacity in technology development firms

Abstract

Absorptive capacity (ACAP) is widely recognized as an effective means of obtaining and sustaining a competitive advantage. Although ACAP was globally introduced decades ago, researchers from Central and Eastern Europe have since underestimated its importance. The research objective of this paper is to answer the following questions: how does the level of ACAP influence the performances of technology-driven firms, and how does it catalyse their innovation outputs? Furthermore, we argue that exporting technology-driven firms possess even higher levels of ACAP than those who are weak or not-at-all exporters. ACAP measured value is examined alongside the innovation outputs of firms and their business performance, with an extended focus on exporters. A selected population of more than 600 Croatian firms were asked to fill in the questionnaire. Out of the 103 firms that completed the survey, 45 were recognized as intensive technology development performers, and 34 were identified as large exporters. Both populations were tested against formulated hypotheses, ultimately proving that higher levels of ACAP can be seen to positively drive innovation performance which, notably, can be seen most clearly with exporters. 1. INTRODUCTION Technology acquisition has been studied widely, evidencing its impact on organizations. For example, Gupta et al (2018) and El Kassar and Singh (2018) studied the impact of various technologies on the performance of organizations, showing that several internal and external factors can influence impact. One of these factors is ACAP. Originally proposed bv Rostow (1956 and 1963), ACAP was later revived by Cohen and Levinthal (1989), who formulated the idiom 'absorption capacity'. They put forward a definition which stated that absorptive capacity (ACAP) is the potential of a firm to "identify the value of new, external information, assimilate it, and apply it to commercial ends" (Cohen and Levinthal 1990:128). ACAP often accompanies the search for innovation in firms which frequently focus on technological development. Initial models of ACAP have been tested and, as a result, multiple new models have emerged. These new models show an evolution in response to accurate ACAP, and demonstrate the need to enhance or alter previous models in the light of new knowledge. Taking this into consideration, the approach of this paper implements the definition of ACAP in firms through a modified model, which is based on existing ones (Zahra and George, 2002). Over the past two decades, numerous scholars across the world have been looking to determine favourable

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