Absorptive Capacity

Annotations:

• March and Simon (1958: 188) suggested most innovations result from borrowing rather than invention

1. firm's absorptive capacity

   Annotations:

   • - Recognize the value of the new, external information, assimilate it and apply it to commercial ends. - It is a source of innovation
   1. innovative capabilities

      Annotations:

      • Critical component: Exploit externla knowledge (evaluate and utilize)
   2. firm level

      Annotations:

      • - An organization's absorptive capacity will depend on the absorptive capacities of its individual members. - Absorptive capacity refers not only to the acquisition or assimilation of information by an organization but also to the organization's ability to exploit it
      1. Ways of generating
         1. conduct their own R&D

            Annotations:

            • This kind of company is better able to use externally available information
         2. developing as a byproduct of a firm's manufacturing operations

            Annotations:

            • direct involvement in manufacturing, a firm is better able to recognize and exploit new information relevant to a particular product market
         3. send personnel to advanced technical training
      2. Sources
         1. comunication
            1. between the external environment and the organization

               Annotations:

               • remeber the ideia of OPEN INNOVATION
               1. outward-looking
            2. among the subunits of the organization
               1. inward-looking

                  Annotations:

                  • any particular body of expertise could become sufficiently overlapping and specialized that it impedes the incorporation of outside knowledge and results in the pathology of the not-invented-here (NIH) syndrome
            3. on the character and distribution of expertise within the organization
   3. cognitive structures

      Annotations:

      • Research on memory development suggests that accumulated prior knowledge increases both the ability  to put new knowledge into memory, what we would refer to as the acquisition of knowledge, and the ability to recall and use it
   4. R&D

      Annotations:

      • creates a capacity to assimilate and exploit new knowledge
      1. two factors that will affect a firm's incentives to learn

         Annotations:

         • and, therefore, its incentives to invest in absorptive capacity via its R&D expenditures
         1. quantity of knowledge to be assimilated

            Annotations:

            • there is the quantity of knowledge to be assimilated and exploited: the more there is, the greater the incentive
         2. difficulty of learning

            Annotations:

            • Second, there is the difficulty (or, conversely, the ease) of learning. Some types of information are more difficult to assimilate and use than others
2. Structure
   1. Objective
   2. Methodology

      Annotations:

      • pages 16, 17, 18 and 19
   3. Main contributions
      1. model of firm investment in research and development (R&D)

         Annotations:

         • We formulate a model of firm investment in research and development (R&D), in which R&D contributes to a firm's absorptive capacity, and test predictions relating a firm's investment in R&D to the knowledge underlying technical change within an industry.
   4. Research Problem
      1. Absorptive capacity must to be internally or externally?

         Annotations:

         • . A question remains as to whether absorptive capacity needs to be internally developed or to what extent a firm may simply buy it via, for example, hiring new personnel, contracting for consulting services, or even through corporate acquisitions. 
3. can be used for
   1. knowledge

      Annotations:

      • - May include knowledge of the most recent scientific of technological developments in a given field. - knowledge must be diverse, because it facilitates the innovative process by enabling the individual to make novel associations and linkages.
      1. prior learning

         Annotations:

         • gives rise to creativity
         1. Have effect on subsequent learning tasks

            Annotations:

            • EXAMPLE 1: "students who have thoroughly mastered the principles of algebra find it easier to grasp  advanced work in mathematics such as calculus." EXAMPLE 2: who compared students learning LlSP as a first programming language with students learning LlSP after having learned Pascal. The Pascal students learned LlSP much more effectively, in part because they better appreciated the  semantics of various programming concepts.
      2. prior knowledge

         Annotations:

         • prior knowledge permits the assimilation and exploitation of new knowledge
   2. learning capabilities

      Annotations:

      • involve the development of the capacity to assimilate existing knowledge
      1. have the same necessary preconditions
   3. problem solving

      Annotations:

      • problem-solving skills represent a capacity to create new knowledge. considerable time and effort should be spent on early problems before moving on to more complex problems
4. two features of absorptive capacity that will affect innovative performance in an evolving, uncertain environment
   1. Accumulating absorptive

      Annotations:

      • Accumulating absorptive capacity in one period will permit its more efficient accumulation in the next
   2. expectation formation

      Annotations:

      • in an uncertain environment, absorptive capacity affects expectation formation, permitting the firm to predict more accurately the nature and commercial potential of technological advances.