How absorptive capacity influences project performance

Abstract

PurposeThe absorptive capacity (AC) leads to firm performance and influences the development and evolution of capabilities and routines, but the influence of AC in projects remains unclear. Therefore, this study aims to investigate the effect of AC on project performance (PP) in the construction industry of Sao Paulo State, Brazil.Design/methodology/approachThe authors conducted a survey questionnaire with project managers and collected 157 responses in the construction sector. They also used confirmatory factor analysis (CFA) and multiple linear regression techniques to assess the data.FindingsThe study provides empirical evidence that realized absorptive capacity (RAC) has a direct and indirect positive effect on PP. Conversely, the potential absorptive capacity (PAC) only indirectly impacts PP through project management practices (PMPs). PAC and RAC positively influence PMPs that in turn positively influence PP. The findings reinforce the relevance of AC to the development of internal knowledge for processes and routines, thereby enhancing PP.Practical implicationsThe findings provide practical implications: the AC influences PP by refining and adapting routines. Moreover, the consistent application of accepted practices is not enough for PP, but the ability to adapt, adjust and transform the relevant knowledge into routines.Originality/valueThis paper provides empirical evidence that the knowledge application of PMPs improves organizational performance through PP. However, despite what the literature has discussed, this paper proved that AC has no effect as a moderating factor between PMPs and performance; however, AC's role significantly impacts PP through PMPs.

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“…According to PBV, the purpose of RBT is to explain sustained abnormal returns, while that of PBV is to explain variations in firm performance (Bromiley & Rau, 2014;. Even though Brito and Sauan (2016) recognized that a superior level of management practices as organizational capabilities is connected to better performance (Dultra-de-Lima & Brito, 2023), they understand that RBT supports this effect; therefore, no new theory would be required, such as PBV. Yoshikuni et al (2023) also highlight that strategic enterprise management practices enable decision-making performance and gain strategic flexibility in innovation.…”