Connecting Absorptive Capacity and Open Innovation

Abstract:     
Open innovation provides a general view how firms can benefit from external sources of knowledge. Absorptive capacity is crucial in explaining why some companies are much better than others in creating and capturing value from in-sourcing externally developed technology and from collaboration with innovation partners. Absorptive capacity and the outside - in dimension of open innovation are inevitably linked to each other. The purpose of this paper is to analyze how absorptive capacity and the outside-in dimension of open innovation can be linked to each other. We claim that recent insights from open innovation practices in companies entail several clues to enrich the concept of absorptive capacity and to improve our understanding how management decisions can strengthen a firm's ability to learn from its external environment.

Number of Pages in PDF File: 22

Keywords: absorptive capacity, open innovation, external technology sourcing

JEL Classification: M13, O32, L22, L14

working papers series