Knowledge absorptive capacity: do all its dimensions matter for export performance of SMEs?

Abstract

Purpose In this paper we aim to study the relationship between knowledge absorptive capacity (KAC) of exporting SMEs in Uganda and their export performance. Design/methodology/approach This study is correlational and cross-sectional, and adopts firm-level data collected via questionnaires from Ugandan exporting SMEs. As we use the sub-domains of KAC to predict export performance and therefore these sub-mains are expected to be correlated, we apply hierarchical regression as an appropriate tool for analysis when variance on a criterion variable is being explained by predictor variables that are correlated with each other (Pedhazur, 1997). Using this tool we analyze the effect of a given sub-domain after controlling for other indicators (sub-domains) of KAC; a “control” achieved by calculating the change in the adjusted R2 and the significance of this change. Findings We find that only external knowledge acquisition (a dimension of potential absorptive capacity) and external knowledge application (a dimension of realised absorptive capacity) are the only significant predictors of export performance in our model. Contrary to previous thinking, we find that external knowledge assimilation and transformation are not significant predictors of export performance. Taken together, our independent variables explain about 35.4 percent of the variance in export performance of SMEs in Uganda. Research limitations/implications The use of hierarchical regression is susceptible to problems associated with sampling error. However, the likelihood of these problems is reduced by our interaction with the data Practical implications – Our results imply that the initial focus of exporting SMEs should be on external knowledge acquisition and application. Originality/value Unlike most of the export performance literature, which have focused on the general effect of knowledge absorptive capacity as a global variable, this study explores the role played by the four dimensions of KAC and methodologically isolates the contribution played by each individual dimension in the context of exporting SMEs in a developing nation. As such we uncover the reality that not all the sub-domains of KAC are significant for export performance of SMEs in a developing country context.

The Role of Knowledge Adoptive Capacity towards Exports Performance

“…Moreover, assimilation updates firm's knowledge reserves and avoids repetition of work. Researchers have proved that positive association exists among knowledge assimilation and performance (Ahimbisibwe et al, 2016;Xie et al, 2018). Therefore, following hypothesis is deduced H2: Knowledge assimilation has a significant and positive relationship with export performance Knowledge Transformation Zahra and George (2002), defined knowledge transformation as the capacity of a firm in developing and refining routines that encourage in merging recently and existing assimilated and acquired knowledge.…”

“…Absorptive capacity has indirect or direct contribution towards organization's innovation and financial performance. Therefore, firm's knowledge absorptive capacity (KAC) is crucial for value creation (Ahimbisibwe, Nkundabanyanga, Nkurunziza, & Nyamuyonjo, 2016).…”

The Effects of Absorptive Capacity, Intellectual Property and Innovation in SMEs

“…AC has also been shown to play the role of a moderating and determinant variable in the design of new products, the improvement of existing products, and the development of new ways to commercialize products or services (Spithoven et al, 2011). This business strategy is focused on regional and international market orientation and on activities aimed at innovating products and processes (Ahimbisibwe, Nkundabanyanga, Nkurunziza, & Nyamuyonjo, 2016;Najafi-Tavani et al, 2016).…”

Board Member Age Diversity and Financial Performance of Manufacturing Firms: A Developing Economy Perspective

“…Unfortunately, the sector still faces challenges of poor financial performance and slow growth something that undermines the countries ambition to industrialize the sector (Ishengoma & Karpel, 2008). However, the basis of Uganda's future prosperity and competitive growth depends on the existing and future entrepreneurial firms; manufacturing industries inclusive (Orobia et al, 2013;Ahimbisibwe et al, 2016). With the establishment of the East African community, it is expected that the Ugandan manufacturing sector will greatly benefit from access to the markets of the member states as well as internationally (NPA, 2010).…”