Barriers to Absorptive Capacity in Emerging Market Firms

Journal of World Business, 52 (6): 727-742

28 Pages Posted: 27 Dec 2018 Last revised: 20 May 2019

See all articles by Alvaro Cuervo-Cazurra

Alvaro Cuervo-Cazurra

Northeastern University - Department of International Business and Strategy

Huaichuan Rui

University of London - Royal Holloway College

Date Written: June 8, 2017

Abstract

We identify how barriers to absorptive capacity limit success in integrating external technology by firms in emerging markets. By comparing a failure and a success case, we refine previous barriers to absorptive capacity and classify them into internal (managerial biases and weak social integration mechanisms) and external (muted activation triggers, conflicting source relationships, and feeble appropriability regimes). We also identify how particular home country conditions in emerging markets (higher restraints on incentives, higher information asymmetries, and weaker contract protection) heighten the barriers. These ideas refine our understanding of the concept of absorptive capacity and the barriers by using agency theory as the theoretical grounding of the explanatory mechanisms. They also provide a better understanding of the influence of the home country on the technology strategy of firms.

Keywords: absorptive capacity, barriers, emerging countries, agency theory

JEL Classification: F23, M16, M21

Suggested Citation

Cuervo-Cazurra, Alvaro and Rui, Huaichuan, Barriers to Absorptive Capacity in Emerging Market Firms (June 8, 2017). Journal of World Business, 52 (6): 727-742. Available at SSRN: https://ssrn.com/abstract=3298403

Alvaro Cuervo-Cazurra (Contact Author)

Northeastern University - Department of International Business and Strategy ( email )

D'Amore-McKim School of Business
313 Hayden Hall, 360 Huntington Avenue
Boston, MA 02115
United States
16173736568 (Phone)
16173738628 (Fax)

HOME PAGE: http://cuervo-cazurra.com

Huaichuan Rui

University of London - Royal Holloway College ( email )

Egham
Surrey
TW20 0EX
United Kingdom

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