Proceedings of the 12th European Conference on Knowledge ...

2. Literature review
2.1 AC: Theoretical and empirical issues
Omid Omidvar
Originally defined as <strong>the</strong> organisational ability to identify, assimilate, and apply external knowledge to
commercial ends (Cohen and Levinthal, 1990), AC is considered as <strong>the</strong> source <strong>of</strong> organisational
competitiveness (Zahra and George, 2002). However, this dynamic capability (Zahra and George,
2002) has gone under continuous controversies and revisions since its initiation. Lane et al. (2006)
showed that AC has become reified in its academic applications, and called for a considerable
reinvestigation <strong>of</strong> <strong>the</strong> concept. As <strong>the</strong>y indicate, AC ‘promised to explain <strong>the</strong> process through which
firms learn, develop, and assimilate new knowledge necessary for competitive advantage’ (Lane et
al., 2006). Moreover, it could explain <strong>the</strong> differences in competitive advantage <strong>of</strong> firms in accordance
with <strong>the</strong> resource based view <strong>of</strong> <strong>the</strong> firm (Penrose, 1959). Accordingly, researchers have <strong>of</strong>ten used it
in order to provide a taken for granted concept without discussing it deeply.
AC literature can be divided into two distinct branches; those who have considered it as an
organizational capability (Cohen &Levinthal, 1990), and those defining it from a process-oriented
perspective (Van den Bosch et al. 1999; Lane et al. 2006; Zahra and George 2002, Lewin et al.
2011). These two different approaches have led into different conceptualizations. The first group have
applied AC as a static capability-which leads into certain outputs needed for organisational survival. In
this sense, AC is operationalized as knowledge stock (e.g. patents, and R&D intensity), or o<strong>the</strong>r
proxies like age, size, and knowledge routines (see Lane and Lubatkin, 1998). Accordingly, it is
argued that whe<strong>the</strong>r it is right to use proxies instead <strong>of</strong> operationalizing AC itself (see Lane et al.,
2006, Lewin et al., 2011). This reminds us <strong>of</strong> <strong>the</strong> controversies occurring in <strong>the</strong> social science
research methods; while Prime and Butler (2001) believe that testing an unobserved capability is
impossible, Barney (2001) argues that a capability needs not to be directly measured if <strong>the</strong> <strong>the</strong>ory
explains its origins and outcomes. However, <strong>the</strong> o<strong>the</strong>r group have defined it as a dynamic capability,
which is <strong>the</strong> change drive in organisations (Teece et al., 1997). It means that it is an organisational
dynamic capability enabling it to create and deploy <strong>the</strong> knowledge needed for o<strong>the</strong>r organisational
capabilities (Todorova and Durisin, 2007, Lewin et al., 2011, Zahra and George, 2002, Lane et al.,
2006). In this stream, Zahra and George (2002) reconceptualised AC as a ‘set <strong>of</strong> organisational
routines and processes by which firms acquire, assimilate, transform and exploit knowledge to
produce a dynamic organisational capability’. According to Lane et al. (2006), defining AC in a
process-oriented mode helps to avoid becoming limited to knowledge content <strong>of</strong> a firm, or being
trapped in defining AC as a simple outcome <strong>of</strong> R&D efforts <strong>of</strong> <strong>the</strong> firm.
These <strong>the</strong>oretical and empirical confusions resulted from different viewpoints to AC and its reification
(Lane et al., 2006) have led to inconsistent results. For instance, although many studies corroborate
that AC increases learning and innovation potential <strong>of</strong> <strong>the</strong> firm (e.g. Tsai, 2001), Mowery et al. (1996)
cannot come into conclusive results about <strong>the</strong> significance <strong>of</strong> AC in inter-organisational learning.
In order to settle <strong>the</strong>se challenges, many authors have tried to clarify <strong>the</strong> underlying routines (Zahra
and George, 2002), antecedents (Van den Bosch et al., 1999), processes (Lane et al., 2006), or meta
routines (Lewin et al., 2011) involved in AC. These contributions have tried to both illuminate <strong>the</strong>
operationalization as well as <strong>the</strong> concept development <strong>of</strong> AC.
Zahra and George (2002), by differentiating between potential absorptive capacity (PACAP) and
realized absorptive capacity (RACAP), discuss for an outstanding need <strong>of</strong> making balance between
<strong>the</strong>se dimensions in companies. While PACAP is oriented to acquire and assimilate external
knowledge, RACAP is <strong>the</strong> ability to transform this knowledge into organisational outputs. In o<strong>the</strong>r
words, RACAP underlines <strong>the</strong> organisational capability to transform acquired knowledge into valuable
products or services.
Van den Bosch et al. (1999) discuss social, coordination, and systems capabilities as <strong>the</strong> three main
antecedents <strong>of</strong> AC. In <strong>the</strong>ir discussion, in addition to prior knowledge resources (cognitive base),
organisations must develop combinative capabilities (Kogut and Zander, 1992) in order to absorb
knowledge effectively.
Lewin et al. (2010) suggest internal and external meta-routines as <strong>the</strong> basis for operationalizing AC.
While external AC routines are those routines enabling firms to scan <strong>the</strong> environmental knowledge,
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