The role of knowledge processing systems in firms’ absorptive capacity

Abstract

We rely on a qualitative study of three industrial firms to investigate the role of knowledge recombination capabilities in the absorptive process. We compare two firms aiming at “new-to-the-world” innovation with a firm aiming at producing “new-to-the-firm” innovation. We find that the formers resort to formal, codified, controlled knowledge processing systems, while the latter rather makes use of informal, loosely defined processing systems. We interpret this rather counter intuitive result by the necessity for firms engaged in radical innovation to take risk into account. We advocate taking risk into account when dealing with absorptive capacity and invite to rethink the link between knowledge management and types of innovation.JEL Codes: O32, O32, O31, D81, O32