ABSTRACT
This study identified two different dimensions of absorptive capacity and examined the relationship between absorptive capacity and a firm’s financial performance. Further, we measured absorptive capacity using both the inputs and outputs involved in its development simultaneously, and investigated the complementary role of holding-cash in the performance effect of two dimensions of absorptive capacity. Our results showed that a firm’s homogeneous absorptive capacity has a positive effect on its short-term performance, while a firm’s heterogeneous absorptive capacity may hinder its short-term business performance. However, a high level of either homogeneous or heterogeneous absorptive capacity is not always useful to a firm’s long-term financial performance. Finally, cash, as a slack resource, was found to be more useful for the performance effect of heterogeneous absorptive capacity than for that of homogeneous absorptive capacity in the short term.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes on contributors
Jeong-Duk Choi is a senior consultant at LG Economic Research Institute (LGERI). He received his PhD in management engineering from Korea Advanced Institute of Science and Technology (KAIST).
Ji-Hoon Park is a PhD candidate in College of Business, Korea Advanced Institute of Science and Technology (KAIST).
ORCID
Jeong-Duk Choi http://orcid.org/0000-0002-1823-0088
Ji-Hoon Park http://orcid.org/0000-0001-7075-8114