Definition of Absorptive Capacity

Definition: Absortive capacity is a limit to the rate or quantity of scientific or technological information that a firm can absorb. If such limits exist they provide one explanation for firms to develop internal R&D capacities. R&D departments can not only conduct development along lines they are already familiar with, but they have formal training and external professional connections that make it possible for them to evaluate and incorporate externally generated technical knowledge into the firm better than others in the firm can. In other words a partial explanation for R&D investments by firms is to work around the absorptive capacity constraint.(Econterms)

Terms related to Absorptive Capacity:

• Technology Shocks

About.Com Resources on Absorptive Capacity:

• Does Wired's Page Count Predict NASDAQ Movements?

Writing a Term Paper? Here are a few starting points for research on Absorptive Capacity:

Books on Absorptive Capacity:

• Absorptive Capacity: On the Creation and Acquisition of Technology in Development

Journal Articles on Absorptive Capacity:

• Absorptive Capacity: A New Perspective on Learning and Innovation
• Absorptive capacity: A review, reconceptualization, and extension
• Relative absorptive capacity and interorganizational learning