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Absorptive capacity in high-technology markets: the competitive advantage of the haves

Narasimhan, Om ORCID: 0000-0001-8027-8800, Rajiv, Surendra and Dutta, Shantanu (2006) Absorptive capacity in high-technology markets: the competitive advantage of the haves. Marketing Science, 25 (5). pp. 510-524. ISSN 0732-2399

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Identification Number: 10.1287/mksc.1060.0219


The rapid rate of knowledge obsolescence in many high-technology markets makes it imperative for firms to renew their technological bases constantly. Given its critical importance, excellence in renewal of technological base would serve as a dynamic capability. Drawing on past literature, we identify this dynamic capability associated with acquiring and utilizing external technological know-how with the notion of absorptive capacity (AC). We ask the following questions: (a) What would cause some firms to have a higher AC than others? and, (b) What is the impact of AC on a firm’s profitability? We build a conceptual framework suggesting that marketing, R&D, and operations capabilities have a significant positive impact on a firm’s AC. We test our framework on a data set of firms in high-technology markets. Using an econometric technique called stochastic frontier estimation, we infer the AC of firms from an observation of the know-how they actually absorb. We find that firm-specific capabilities significantly impact AC. Also, we find that AC has a significant impact on profitability and that this impact is moderated by the pace of technological change: the greater the pace of change, the greater the impact.

Item Type: Article
Official URL:
Additional Information: © 2006 INFORMS
Divisions: Management
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Date Deposited: 29 Oct 2012 14:00
Last Modified: 27 May 2024 02:39

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