Potential absorptive capacity, realized absorptive capacity and innovation performance

Abstract

The aim of this research is to investigate the relationship between potential absorptive capacity, realized absorptive capacity, and innovation performance. Drawing on the knowledge- based theory, the current research conceptualizes absorptive capacity as two distinct and separated knowledge dynamic capabilities: potential absorptive capacity and realized absorptive capacity. The research addresses potential ACAP and realized ACAP separately and analyzed their influence on the firm’s innovation performance. Using structural equation modeling (SEM) in a sample of 12 firms from Jordanian pharmaceutical industry, the research revealed that potential and realized absorptive capacities have significant and direct relations with firm’s innovation performance. The results confirm that potential ACAP along with components (acquisition, assimilation), and realized ACAP (encompassing transformation, exploitation) are antecedents to the firm’s innovation performance. The research advances the concept of absorptive capacity by exploring it as two different dynamic capabilities.