The capacity to innovate: a meta-analysis of absorptive capacity

Abstract

For nearly 30 years, ACAP has been the bedrock of theories of innovation. A meta-analysis is timely to glean insights from the rich empirical evidence to date and guide future work on the topic. Our meta-analysis of 241 studies reveals that ACAP is a strong predictor of innovation and knowledge transfer, and that its effects on financial performance are fully mediated by these two outcomes. As different from most theoretical discourse, we also find that the firm size-ACAP relationship is positive for small firms but negative for larger firms and that the firm age-ACAP relationship is negative for mature firms and not significant for young firms. Our findings present a clearer picture of the performance implications of ACAP and also suggest the need to revisit traditional theoretical arguments on innovation, especially regarding the causal arguments underlying age and size. These results provoke scholars to revisit traditional assumptions of organizations and their patterns of innovation. Finally, we also take this opportunity to investigate factors that have been commonly considered to be relevant for the ACAP-innovation relationship, as we detail in our additional analysis.