Organizational Absorptive Capacity And Firm Performance Relationship Studies

In today's knowledge economy knowledge as a kind of resource has become the key element for modern organization's survival and development. In order to catch and keep competitive advantages organization has to adjust, update and create new knowledge all the time. A firm's ability to recognize valuable new external knowledge, assimilate it, and finally commercially apply it is named "absorptive capacity". It represents an important part of a firm's ability to create new knowledge. Since 1989, the concept has been firstly introduced by Cohen and Levinthal, due to its unique angle of view and its intersection with some hot research topics such as organization learning, strategic alliance, and knowledge management, absorptive capacity has got serious and wide concern in academy world. When define absorptive capacity Cohen and Levinthal have described the internal mechanism of how its three dimensions--identify, assimilate, and exploit-influence the innovative capacity of a firm. They believe there is sequential relation among the three dimensions: organization has to identify valuable new external knowledge first, then assimilate some of this knowledge, and exploit some of the absorbed knowledge for commercial end at last. However in the about 30 years after absorptive capacity has been introduced, two-third relative researches overlook these three dimensions. In this article the relation of these three dimensions of absorptive capacity when they influence corporate performance has been first explored and proved by statistics. We also find out that absorptive capacity's different dimension has different influence on different aspect of corporation performance, explore the mechanism of how absorptive capacity influence different aspect of corporation performance, and discuss the English-to-Chinese translation issue of absorptive capacity's three dimensions.