Information quality and absorptive capacity in service and product innovation processes

Abstract

All innovative activity involves generation and use of knowledge. Knowledge is therefore often assumed to be the most valuable resource of a firm. Creation of new knowledge is conceptualized as conversion, recombination, and exchange of existing knowledge. The concept of absorptive capacity becomes intriguing here. It was originally defined as an organization's ability to value, assimilate and apply new knowledge. Absorptive capacity requires learning capability and develops problem-solving skills. Two types of absorptive capacity have been identified: (i) potential absorptive capacity is important in acquiring and assimilating external knowledge; and (ii) realized absorptive capacity refers to functions of transformation and exploitation of the knowledge that has been obtained. Absorptive capacity is crucial when pondering questions about futureknowledge adaptation in firms and other organizations; higher absorptive capacity enables easier crossing of structural holes in the innovation system. This study investigates ways in which information quality is related to absorptive capacity when designing service and product innovations. The study includes theoretical considerations and three case analyses based on empirical data collected in Finland. The research responds to arising societal and academic interest by combining several research fields (information quality, absorptive capacity and innovation studies). Designing service and product innovations is a challenging task that requires a good knowledge basis in today's increasingly complex operational environment.