The Role of Absorptive Capacity in Acquisition Knowledge Transfer

Abstract

Abstract:This article examines the role of absorptive capacity in acquisitions. We propose that absorptive capacity is an important determinant of acquisition knowledge transfer. Also, we identify antecedents of absorptive capacity in the specific context of acquisitions. These include contextual (national cultural differences), individual (employee withdrawal), and organizational design level (integration process communication, knowledge processing system) antecedents. We test our hypotheses on a sample of domestic and foreign acquisitions conducted by Finnish companies. This study contributes to the acquisition literature by elaborating on the role of absorptive capacity in acquisitions and to the general absorptive capacity literature by highlighting the importance of previously underexplored antecedents and outcomes of absorptive capacity.

Internationalization of services: The case of intra‐multinational enterprise trade

“…Results of our export regressions shown in Table 3 provide strong support for Dunning's (2008) OLI framework as well as Rugman's (1981Rugman's ( , 2010 Breadth of global connectedness (Gconnect) and education index (EduInd), both location (L) variables representing CSAs, are highly significant with expected positive signs. It is noted here that the education variable, which also reflects the skill level of the workforce, is intended to capture the effect of absorptive capacity (suggested by Mudambi (2008), Junni and Sarala (2013), and others) of affiliates' employees on exports of technologically complex services by the parent.…”

Reverse knowledge transfer from subsidiaries to multinational companies: Focusing on factors affecting market knowledge transfer

“…This result is also in accordance with findings from previous studies that shed light on the importance of AC to apply new information to commercial ends (Gupta & Govindarajan, ). In other words, the AC of firms helps them to adequately understand the value of new information and correctly assimilate it so that they can apply it to commercial ends, despite the knowledge being hardly codifiable (e.g., Juni & Sarala, ). Likewise, Minbaeva () advised that the extent to which knowledge absorbed by subsidiaries contributes to HQ's enhancement of competitive power will be fundamentally dependent upon HQ's AC in that the absence of HQ's learning capacity makes it difficult for the knowledge acquirers to embed new information in their knowledge reservoir, which logically lessens the possibility of their commercial use.…”

The Impact of Distance (External) and Organizational Factors (Internal) on the Knowledge Chain of Multinational Corporations: South Africa as a Host Country

“…Gupta and Govindarajan () posit that knowledge flows are a function of the following: the value of the source unit's knowledge stock, the motivational disposition of the source unit, the existence and richness of transmission channels, the motivational disposition of the target unit, and the absorptive capacity of the target unit (Jasimuddin, Li, & Perdikis, ; Zhang, Zhao, Lyles, & Guo, ). Similarly, research suggests that the development of subsidiary absorptive capacity is a product of the combined influence of specific MNC organizational mechanisms (integration process communication, knowledge processing system, timing), the subsidiary's environmental market conditions including national cultural differences, and individual antecedents (Junni & Sarala, ; Schleimer & Pedersen, ; Szulanski, Ringov, & Jensen, ; S. Wang, Noe, & Wang, ; Y. Wang, Gray, & Meister, ). We proceed to unpack the process of knowledge transfer models in more detail and how various organizational factors impact on this practice.…”