The role of prevailing individual absorptive capacity versus absorptive capacity development for different innovation outcomes

ABSTRACT

Utilising absorptive capacity theory, this study examines whether organisations should outsource knowledge acquisition of employees, i.e.,, by hiring employees with prevailing relevant knowledge, or whether to invest in the development of employees’ knowledge within the organisation for different types of innovations. Three hundred and thirty-five Danish firms in the European Manufacturing Survey reveal that individual knowledge must be differently organised to achieve different innovative outcomes. For new product development, organisations benefit from investing in employees with the highest possible domain-specific absorptive capacity, whilst for product-related service innovations, employees with more general knowledge should be hired. For the latter, employees’ individual absorptive capacity should be developed internally for best innovation outcomes. Irrespective of the type of innovation, providing flexible work arrangements is beneficial for performance and this effect is further substantiated by firm’s cross-functional capabilities. Important implications emerge for the organisation in terms of outsourcing versus developing individual absorptive capacity for different innovations.

KEYWORDS:

• Individual absorptive capacity
• product-related service innovations
• new product development
• organisational capabilities
• individual knowledge

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. For the exact definition of NACE codes please see: http://epp.eurostat.ec.europa.eu/cache/ITY_SDDS/Annexes/htec_esms_an3.pdf

2. To see further details on the macro, we refer to the designated homepage: http://www.processmacro.org/

3. For presentation of the remaining three mediation dimensions as discussed in the paper, please consult Zhao et al. (2010, p. 200–202).