In this paper, we argue that the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities. We label this capability a firm's absorptive capacity and suggest that it is largely a function of the firm's level of prior related knowledge. The discussion focuses first on the cognitive basis for an individual's absorptive capacity including, in particular, prior related knowledge and diversity of background. We then characterize the factors that influence absorptive capacity at the organizational level, how an organization's absorptive capacity differs from that of its individual members, and the role of diversity of expertise within an organization. We argue that the development of absorptive capacity, and, in turn, innovative performance are history- or path-dependent and argue how lack of investment in an area of expertise early on may foreclose the future development of a technical capability in that area. We formulate a model of firm investment in research and development (R&D), in which R&D contributes to a firm's absorptive capacity, and test predictions relating a firm's investment in R&D to the knowledge underlying technical change within an industry. Discussion focuses on the implications of absorptive capacity for the analysis of other related innovative activities, including basic research, the adoption and diffusion of innovations, and decisions to participate in cooperative R&D ventures. **

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Absorptive capacity: a new perspective on learning and innovation

This paper focuses on dynamic capabilities and, more generally, the resource-based view of the firm. We argue that dynamic capabilities are a set of specific and identifiable processes such as product development, strategic decision making, and alliancing. They are neither vague nor tautological. Although dynamic capabilities are idiosyncratic in their details and path dependent in their emergence, they have significant commonalities across firms (popularly termed ‘best practice’). This suggests that they are more homogeneous, fungible, equifinal, and substitutable than is usually assumed. In moderately dynamic markets, dynamic capabilities resemble the traditional conception of routines. They are detailed, analytic, stable processes with predictable outcomes. In contrast, in high-velocity markets, they are simple, highly experiential and fragile processes with unpredictable outcomes. Finally, well-known learning mechanisms guide the evolution of dynamic capabilities. In moderately dynamic markets, the evolutionary emphasis is on variation. In high-velocity markets, it is on selection. At the level of RBV, we conclude that traditional RBV misidentifies the locus of long-term competitive advantage in dynamic markets, overemphasizes the strategic logic of leverage, and reaches a boundary condition in high-velocity markets. Copyright © 2000 John Wiley & Sons, Ltd.

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Dynamic capabilities, what are they?

The authors assume that firms invest in R&D not only to generate innovations, but also to learn from competitors and extraindustry knowledge sources (e.g., university and government labs). This argument suggests that the ease of learning within an industry will both affect R&D spending, and condition the influence of appropriability and technological opportunity conditions on R&D. For example, they show that, contrary to the traditional result, intraindustry spillovers may encourage equilibrium industry R&D investment. Regression results confirm that the impact of appropriability and technological opportunity conditions on R&D is influenced by the ease and character of learning. Copyright 1989 by Royal Economic Society.

Innovation and Learning: The Two Faces of R & D

I have developed "tennis elbow" from lugging this book around the past four weeks, but it is worth the pain, the effort, and the aspirin. It is also worth the (relatively speaking) bargain price. Including appendixes, this book contains 894 pages of text. The entire panorama of the neural sciences is surveyed and examined, and it is comprehensive in its scope, from genomes to social behaviors. The editors explicitly state that the book is designed as "an introductory text for students of biology, behavior, and medicine," but it is hard to imagine any audience, interested in any fragment of neuroscience at any level of sophistication, that would not enjoy this book. The editors have done a masterful job of weaving together the biologic, the behavioral, and the clinical sciences into a single tapestry in which everyone from the molecular biologist to the practicing psychiatrist can find and appreciate his or

Principles of Neural Science

The ability to transfer best practices internally is critical to a firtn's ability to build competitive advantage through the appropriation of rents from scarce internal knowledge. Just as a firm's distinctive competencies tnight be dificult for other firms to imitate, its best prczctices could be dfficult to imitate internnlly. Yet, little systematic attention has been pcrid to such internal stickiness. The author analyzes itlterrzal stickiness of knowledge transfer crnd tests the resulting model using canonical correlation analysis of a data set consisting of 271 observations of 122 best-practice transfers in eight companies. Contrary to corzverztiorzrzl wisdom that blames primarily motivational factors, the study findings show the major barriers to internal knowledge transfer to be knowledge-related factors such as the recipient's lack oj absorptive capacity, causal anzbiguity, and an arciuous relationship between the source and the recipient. The identification and transfer of best practices cally are hindered less by confidentiality and legal is emerging as one of the most important and obstacles than external transfers, they could be widespread practical management issues of the faster and initially less complicated, all other latter half of the 1990s. Armed with meaningful, things being equal. For those reasons, in an era detailed performance data, firms that use fact- when continuous organizational learning and based management methods such as TQM, bench- relentless performance improvement are needed to marking, and process reengineering can regularly remain competitive, companies must increasingly compare the performance of their units along resort to the internal transfer of capabilitie~.~ operational dimensions. Sparse but unequivocal Yet, experience shows that transferring capaevidence suggests that such comparisons often bilities within a firm is far from easy. General reveal surprising performance differences between Motors had great difficulty in transferring manuunits, indicating a need to improve knowledge facturing practices between divisions (Kerwin and utilization within the firm (e.g., Chew, Bresnahan, Woodruff, 1992: 74) and IBM had limited suc

https://onlinelibrary.wiley.com/doi/pdf/10.1002/smj.4250171105

Exploring internal stickiness: Impediments to the transfer of best practice within the firm

Managing the flow of technology

The Not-Invented-Here (NIH) syn- drome is defined as the tendency of a project group of stable composition to believe it pos- sess~~ a monopoly of knowledge of its field, which leads it to reject new ideas from outsiders to the likely detriment of its performance. The authors have carried out an empirical test of the extent to which the rate of communica- tion between a project group and the outside world decreases with mean project tenure and how far performance decreases with project tenure. The study, carried out in a large laboratory, shows that performance increases up to 1.5 years tenure, stays steady for a time but by five years has declined noticeably. This tendency is best accounted for by the marked decline in communication rate among group members and between them and critical external sources of information. The authors analyse the significance of this finding and suggest means of maintaining the vitality of long-standing project teams.

Investigating the Not Invented Here (NIH) syndrome: A look at the performance, tenure, and communication patterns of 50 R & D Project Groups

The original edition of this book summarized more than a decade of work on communications flow in science and engineering organizations, showing how human and organizational systems could be restructured to bring about improved productivity and better person-to-person contact. While many studies have been done since then, few of them invalidate the general conclusions and recommendations Allen offers. In a new preface he points out - new developments, noting areas that need some modification, elaboration, or extension, and directing readers to the appropriate journal articles where the findings, are reported.The first three chapters provide an overview of the communication system in technology, present the author's research methods, and describe differences in the career paths and goals of engineers and scientists that cause special problems for organizations. The book then discusses how technological information is acquired by the R & D organization, shows how critical technical communication within the laboratory is for R & D performance, and originates the idea of the "gatekeeper," the person who links his or her organization to the world at large. Concluding chapters take up the influence of formal and informal organization and of architecture and office layouts on communication. Many of these ideas have been successfully incorporated by architects and managers in the design of new R & D facilities and complexes.Thomas J. Allen is Professor of Organizational Psychology and Management at MIT's Sloan School of Management.

Managing the flow of technology: technology transfer and the dissemination of technological information within the R & D organization

http://personal.rhul.ac.uk/urte/247/papers/rppaper.pdf

Entrepreneurial orientation, technology transfer and spinoff performance of U.S. universities

Technical communication patterns in two research and development laboratories were examined using modified sociometric techniques. The structure of technical communication networks in the two laboratories results from the interaction of both social relations and work structure. The sociometric "stars" in the technical communication network who provide other members of the organization with information either make greater use of individuals outside the organization or read the literature more than other members of the laboratory.

Thomas J. Allen

Papers

Managing the flow of technology

Investigating the Not Invented Here (NIH) syndrome: A look at the performance, tenure, and communication patterns of 50 R & D Project Groups

Managing the flow of technology: technology transfer and the dissemination of technological information within the R & D organization

Entrepreneurial orientation, technology transfer and spinoff performance of U.S. universities

Information Flow in Research and Development Laboratories.