Innovation Capability Performance through Potential and Realized Absorptive Capacity: an Empirical Study in the West Java Mini Market

Authors

DOI:

https://doi.org/10.33633/jpeb.v6i1.4043

Abstract

This study explores how potential and realized absorptive capacity affects innovation capability. This study aims to empirically examine the path relationship between potential absorptive capacity, realized absorptive capacity, and innovation capability in mini market in West Java, thus enhance our understanding of the mechanism between absorptive capacity and innovation capability. The authors have conducted a survey among employees with a valid response from 597 respondents. Multiple regression was used to assess the research model. The results provide evidence to show that potential and realized absorptive capacity are positively related to innovation capability, but in different proportions, and potential absorptive capacity affects positively to realize absorptive capacity. This study will contribute in an acceptable way to highlight the effects and role of both the potential absorptive capacity and the realized absorptive capacity in their role as independent variables and the results of this in innovation capability in turn as a dependent variable.Keywords: potential absorptive capacity realized absorptive capacity innovation capability

References

Abbing, E. R. (2010). Brand-driven Innovation. Lausanne, SA: AVA Publishing.

Adler, P.S., & Shenbar, A. (1990). Adapting your technological base: The organizational challenge. Sloan Management Review, 25, 25–37.

Albort-Morant, G.; Henseler, J.; Cepeda-Carrión, G. & Leal-Rodríguez, A.L. (2018). Potential and realized absorptive capacity as complementary drivers of green product and process innovation performance. Sustainability, 10, 381.

Ali, M. & Park, K. (2016). The mediating role of an innovative culture in the relationship between absorptive capacity and technical and non-technical innovation. Journal of Business Research, 69(5), 1669-1675.

Al-kalouti, J., & Kumar, V., Kumar, N., Garza-Reyes, J.A., Upadhyay, A., & Zwiegelaar, J.B. (2020). Investigating innovation capability and organizational performance in service firms. Strategic Change, 29, 103–113. DOI: 10.1002/jsc.2314.

Allen, T.J., & Katz, R. (1982). Investigating the not-invented-here (NIH) syndrome: a look at the performance, tenure, and communications patterns of 50 R&D project groups. R&D Management, 12(1), 7–19.

Amabile, T., Conti, R., Coon, H., Lazen B. J., & Herron, M. (1996). Assessing the work environment for creativity. Academy of Management Journal, 39 (5), 1154-1184.

Andrews, K.R. (1971). The Concept of Corporate Strategy. Homewood, IL: Irwin.

Aragón, M.I.B., Jiménez, D.J., & Valle, R.S. (2014). Training and performance: the mediating role of organizational learning. BRQ Business Research Quarterly, 17(3), 161-173.

Aribi, A., & Dupouët, O. (2016). Absorptive capacity: a non-linear process. Knowledge Management Research & Practice, 14(1), 15-26. doi:10.1057/kmrp.2014.17.

Baregheh, A., Rowley, J. & Sambrook, S. (2009). Towards a multidisciplinary definition of innovation. Management Decision, 47(8), 1323-1339.

Bella, A. (2019). Jumlah minimarket Indonesia terbanyak di Asia Tenggara. Diunduh 02-05-2020, https://marketeers.com/jumlah-minimarket-indonesia-terbanyak-di-Asia-Tenggara/

Ben-Oz, C. & Greve, H.R. (2015). Short- and long-term performance feedback and absorptive capacity. Journal of Management, 41(7), 1827-1853.

Burgelman, R.A., Christensen, C.M., & Wheelwright, S.C. (2004). Strategic Management of Technology and Innovation. Irwin: McGraw-Hill.

Burns, T., & Stalker, M.G. (1961). The Management of Innovation. London: Tavistock.

Calantone, R. J., Cavusgil, S. T., & Zhao, Y. (2002). Learning orientation, firm innovation capability, and firm performance. Industrial Marketing Management, 31(6), 515-524. doi: 10.1016/S0019- 8501(01)00203-6.

Caloghirou, Y., Kastelli, I., & Tsakanikas, A. (2004). Internal capabilities and external knowledge sources: complements or substitute for innovative performance? Technovation, 24, 29–39.

Canh, N.T., Liem,N.T., Thu, P.A., & Khuong, N.V. (2019). The impact of innovation on the firm performance and corporate social responsibility of Vietnamese manufacturing firms. Sustainability, 11, 3666; doi:10.3390/su11133666.

Cassol, A., Reis, C., & Lima, R. (2016). Redefining the Relationship between Intellectual Capital and Innovation: The Mediating Role of Absorptive Capacity. Brazilian Administration Review, 13(4), 1-25.

Cavusgil, S.T., Calantone, R.J., & Zhao, Y. (2003). Tacit knowledge transfer and firm innovation capability. Journal of Business & Industrial Marketing, 18(1), 6–21. doi:10.1108/08858620310458615.

Cepeda-Carrión, G., Cegarra-Navarro, J.G., & Leal-Millan, A.G. (2012). Finding the hospital-in-the-home units’ innovativeness. Management Decision, 50(9), 1596-1617. DOI 10.1108/00251741211266705.

Chandler, A. (1962). Strategy and Structure. Cambridge, Mass: MIT Press.

Chen, C.-J. (2009). Technology commercialization, incubator and venture capital, and new venture performance. Journal of Business Research, 62(1), 93–103.

Chen, S. (2017). The relationship between innovation and firm performance: a literature review. Advances in Computer Science Research, 82, 648-652.

Cho, H. J., & Pucik, V. (2005). Relationship between innovativeness, quality, growth, profitability, and market value. Strategic Management Journal, 26, 555–575.

Choudhury, J. (2010). Performance impact of intellectual capital: A study of indian it sector. International Journal of Business and Management, 5(9), 72-80.

Cohen, W.M. & Levinthal, D.A. (1989). Innovation and learning: the two faces of R&D. The Economic Journal, 99, 569–596.

Cohen, W.M. & Levinthal, D.A. (1990). Absorptive capacity: a new perspective on learning and innovation. Administrative Science Quarterly, 35(1), 128–152.

Daghfous, A. (2004a). Knowledge management as an organisational innovation: an absorptive capacity perspective and a case study. International Journal of Innovation and Learning, 1(4), 409-422.

Daghfous, A. (2004b). Absorptive capacity and the implementation of knowledge-intensive best practices. SAM Advanced Management Journal, 69(2), 21–27.

Das, A., Paul, H., & Swierczek, F.W. (2008). Developing and validating total quality management (TQM) constructs in the context of Thailand’s manufacturing industry. Benchmarking: an International Journal, 15(1), 52-72.

Daspit, J.J. & D’Souza, D.E. (2013). Understanding the multi-dimensional nature of absorptive capacity. Journal of Managerial Issues, 25(3), 299-316.

De Jong, J., Bruins, A., Dolfsma, W., & Meijaard, J. (2003). Innovation in services firms explored: What, how and why? EIM Report, Zoetermeer.

Deng, X., Doll, W.J., & Cao, M. (2008). Exploring the absorptive capacity to innovation/productivity link for individual engineers engaged in IT enabled work. Information and Management, 45(2), 75–87.

Drejer, I. (2004). Identifying innovation in surveys of services: a Schumpeterian perspective. Research Policy, 33(3), 551–562.

Duchek, S. (2013). Capturing absorptive capacity: a critical review and future prospects. Schmalenbach Business Review, 65(3), 312-329.

Eisenhardt, K.M., & Brown, S.L. (1999). Patching: restitching business portfolios in dynamic markets. Harvard Business Review, 77(3), 72-82.

Flor, M.L. & Oltra, M.J. (2013). An exploratory analysis of the relationship between absorptive capacity and business strategy. Technology Analysis & Strategic Management, 25(9), 1103-1117.

Fosfuri, A. & Tribó, J.A. 2008. Exploring the antecedents of potential absorptive capacity and its impact on innovation performance. Omega, 36(2), 173-187.

Gallegos, J.F.D.C., & Torner, F.M. (2018). Absorptive capacity and innovation in low-tech companies in emerging economies. Journal of Technology Management & Innovation, 13(2), 1-10.

Gans, J. & Stern, S., 2003. The product market and the market for “ideas”: commercialization strategies for technology entrepreneurs. Research Policy 32(2), 333– 350.

Gao, G.Y., Zhou, K.Z. & Yim, C.K. (2007). On what should firms focus in transitional economies? A study of the contingent value of strategic orientations in China. International Journal of Research in Marketing, 24(1), 3-15.

Gloet, M., & Samson, D. (2016). Knowledge management and systematic innovation capability. International Journal of Knowledge Management (IJKM), 12(2), 54–72.

Grant, R.M. (1991). The resource based theory of competitive advantage: implications for strategy. California Management Review, 22, 114-135.

Grant, R.M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(2), 109-122.

Guan, J. & Ma, N. (2003). Innovative capability and export performance of Chinese firms. Technovation, 23(9), 737-747.

Hair, Jr., Joseph F., Anderson, R.E., Tatham, R.L., & Black, W.C. (1998). Multivariate data analysis with reading. New Jersey: Prentice Hall.

Hair, Jr., Joseph F., Black, William C., Babin, Barry J., & Anderson, Rolph E. (2010). Multivariate Data Analysis: a global perspective. New Jersey: Pearson.

Hamel, G. (1991). Competition for competence and interpartner learning within international strategic alliances. Strategic Management Journal, 12(S1), 83-103.

Hameli, K. (2018). A literature review of retailing sector and business retailing types. ILIRIA International Review, 8, 1-21.

Han, J.K., Kim, N. & Srivastava, R. (1998). Market orientation and organizational performance: is innovation a missing link? Journal of Marketing, 62(4), 30-45.

Harmaakorpi, V. & Melkas, H. (2008). Data, information and knowledge in regional innovation networks: Quality considerations and brokerage functions. European Journal of Innovation Management, 11, 103–124.

Hofer, C. & Schendel, D.E. (1978). Strategy Formulation: Analysis Concepts. Saint Paul Conn., MN: West Publishing Co.

Huber, G. (1991). Organizational learning: the contributing processes and the literature. Organization Science, 2, 88–115.

Hughes, M., Morgan, R.E., Ireland, R.D., & Hughes, P. (2014). Social capital and learning advantages: a problem of absorptive capacity. Strategic Entrepreneurship Journal, 8(3), 214-233.

Hull, C.E. & Rothenberg, S. (2008). Firm performance: the interactions of corporate social performance with innovation and industry differentiation. Strategic Management Journal, 29(7), 781-789.

Iddris, F. (2016). Innovation capability: A systematic review and research agenda. Interdisciplinary Journal of Information, Knowledge, and Management, 11, 235-260.

Ionescu, A., & Dumitru, N.R. (2015). The role of innovation in creating the company’s competitive advantage. Ecoforum, 4(1/6), 99-104.

Jansen, J.J., Van Den Bosch, F.A., & Volberda, H.W. (2005). Managing potential and realized absorptive capacity: how do organizational antecedents matter? Academy Management Journal, 48(6), 999–1015.

Jansen, J.J.P., van den Bosch, F.A.J. & Volberda, H.W. (2006). Exploratory innovation, exploitative innovation, and performance: effects of organizational antecedents and environmental moderators. Management Science, 52(11), 1661-1674.

Jiménez-Castillo, D., & Sánchez-Pérez, M. (2013). Nurturing employeesé market knowledge absorptive capacity through unified internal communication and integrated information technology. Information and Management, 50(2/3), 76–86.

Johne, A., & Storey, C. (1998). New Service Development: A review of the literature and annotated bibliography. European Journal of Marketing, 32 (3-4), 184-251.

Kang, M., & Lee, M. (2017). Absorptive Capacity, Knowledge Sharing, and Innovative Behaviour of R&D Employees. Technology Analysis & Strategic Management, 29(2), 219-232.

Kim, L. (1998). Crisis construction and organizational learning: capability building in catching-up at Hyundai Motor. Organization Science, 9, 506–21.

Kim, L. (1997a). The dynamics of Samsung’s technological learning in semiconductors. California Management Review, 39, 86–100.

Kim, L. (1997b). Imitation to Innovation: the dynamics of Korea’s technological learning. Boston, MA, USA: Harvard Business Press.

Knudsen, H.K., & Roman, P.M. (2004). Modeling the use of innovations in private treatment organizations: the role of absorptive capacity. Journal of Substance Abuse Treatment, 26, 353–61.

Koc, T. (2007). Organizational determinants of innovation capacity in software companies. Computers and Industrial Engineering, 53, 373–385.

Kostopoulos, K., Papalexandris, A., Papachroni, M. & Ioannou, G. (2011). Absorptive capacity, innovation, and financial performance. Journal of Business Research, 64(12), 1335-1343.

Laforet, S. (2011). A framework of organizational innovation and outcomes in SMEs. International Journal of Entrepreneurial Behavior & Research, 17(4), 380–408.

Lane, P.J., & Lubatkin, M. (1998). Relative absorptive capacity and interorganizational learning. Strategy Management Journal, 19(5), 461–477.

Lane, P.J., Koka, B.R., & Pathak, S. (2006). The reification of absorptive capacity: a critical review and rejuvenation of the construct. Academy Management Review, 31(4), 833–863.

Lane, P.J., Salk, J.E., & Lyles, M.A. (2001). Absorptive capacity, learning, and performance in international joint ventures. Strategy Management Journal, 22(12), 1139–1161.

Lau, A. K. W., Yam, R. C. M., & Tang, E. P. Y. (2010). The impact of technological innovation capabilities on innovation performance: An empirical study in Hong Kong. Journal of Science and Technology Policy in China, 1(2), 163–186. doi:10.1108/17585521011059893.

Lawson, B. & Samson, D. (2001). Developing innovation capability in organizations: a dynamic capabilities approach. International Journal of Innovation Management, 5(3), 377-400.

Leal-Rodriguez, A.L., Roldán, J.L., Ariza-Montes, J.A., & Leal-Millán, A. (2014). From potential absorptive capacity to innovation outcomes in project teams: The conditional mediating role of the realized absorptive capacity in a relational learning context. International Journal of Project Management, 32, 894–907.

Leal-Rodr?guez, A.L., Eldridge, S., Roldán, J.L., Leal-Millán, A.G. & Ortega-Gutierrez, J. (2015). Organizational unlearning, innovation outcomes, and performance: the moderating effect of firm size. Journal of Business Research, 68(4), 803-809.

Lev, S., Fiegenbaum, A. & Shoham, A. (2009). Managing absorptive capacity stocks to improve performance: empirical evidence from the turbulent environment of Israeli hospitals. European Management Journal, 27(1), 13-25.

Lichtenthaler, U. (2009). Absorptive capacity, environmental turbulence, and the complementarity of organizational learning processes. Academy of Management Journal, 52, 822–846.

Lin, H.F. (2007). Knowledge sharing and firm innovation capability: an empirical study. International Journal of Manpower, 28(3), 315-332.

Lowik, S., Kraaijenbrink, J., & Groen, A.J. (2012). The effects of prior knowledge, networks, and cognitive style on individuals' absorptive capacity. Academy of Management Proceeding, http://dx.doi.org/10.5465/AMBPP.2012.197.

March, J. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87.

Matsuo, M. (2006). Customer orientation, conflict, and innovativeness in Japanese sales departments. Journal of Business Research, 59(2), 242-250.

Matusik, S.F., & Heeley, M.B. (2005). Absorptive capacity in the software industry: identifying dimensions that affect knowledge and knowledge creation activities. Journal of Management, 31(4), 549-572. DOI: 10.1177/014920630427229.

Medase, K., & Barasa, L. (2019). Absorptive capacity, marketing capabilities, and innovation commercialisation in Nigeria. European Journal of Innovation Management, 22(5), 790-820. DOI 10.1108/EJIM-09-2018-0194.

Miles, I. (2008). Patterns of innovation in service industries. IBM Systems Journal, 47(1), 115–128.

Minbaeva, D., Pedersen, T., Björkman, I., Fey, C.F., & Park, H.J. (2003). MNC knowledge transfer, subsidiary absorptive capacity, and HRM. Journal of International Business Studies, 34, 586–99.

Ngo, L.V., & O'Cass, A. (2009). Creating value offerings via operant resource-based capabilities. Industrial Marketing Management, 38, 45–59.

Nieto, M. & Quevedo, P. (2005). Absorptive capacity, technological opportunity, knowledge spillovers and innovative effort. Technovation, 25, 1141–57.

Park, J.-H., Suh, H.-J., & Yang, H.-D. (2007). Perceived absorptive capacity of individual users in performance of Enterprise Resource Planning (ERP) usage: the case for Korean firms. Information and Management, 44(3), 300–312.

Rajapathirana, R.P.J., & Hui, Y. (2018). Relationship between innovation capability, innovation type, and firm performance. Journal of Innovation & Knowledge, 3, 44–55. DOI.org/10.1016/j.jik.2017.06.002 2444-569X.

Ramdani, B., Binsaif, A., & Boukrami, E. (2019). Business model innovation: a review and research agenda. New England Journal of Entrepreneurship, 22(2), 89-108. DOI 10.1108/NEJE-06-2019-0030.

Robinson, J.P., Shaver, P.R., & Wrightsman, L.S. (1991). Criteria for scale selection and evaluation. In Robinson, J. P., Shaver, P. R., & Wrightsman, L. S. (eds.) 1991. Measures of personality and social psychological attitudes. San Diego, CA.: Academic Press.

Santoso, S. (2002). Buku Latihan SPSS Statistik Multivariat. Jakarta: Elex Media Komputindo.

Sekaran, U. (2007). Metode Penelitian untuk Bisnis. Jilid 1 & 2. Diterjemahkan oleh Kwan Men Yon. Jakarta: Salemba Empat.

Sen, F.K., & Egelhoff, W.G. (2000). Innovative capabilities of a firm and the use of technical alliances. IEEE Transactions on Engineering Management, 47(2), 174–183.

Slater, S.F., Hult, G.T.M., & Olson, E.M. (2010). Factors influencing the relative importance of marketing strategy creativity and marketing strategy implementation effectiveness. Industrial Marketing Management, 39(4), 551–559.

Soedibjo, B.S. (2013). Pengantar Metode Penelitian. Bandung: Unas Pasim.

Sözbilir, F. (2018). Innovation capacity and innovation performance in terms of educational level of managers. Journal of Business Research-Türk, 10(2), 1-12.

Stalk, G., Evans, P. & Shulman, L. (1992). Competing on capabilities: the new rules of corporate strategy. Harvard Business Review, March-April, 57-69.

Subramaniam, M. & Youndt, M.A. (2005). The influence of intellectual capital on the types of innovative capabilities. Academy of Management Journal, 48(3), 450-463.

Tang, T.-W., Wang, M.C.-H., & Tang, Y.-Y. (2015). Developing service innovation capability in the hotel industry. Service Business, 9(1), 97–113.

Teece, D. (1998). Capturing value from knowledge assets: the new economy, markets for know-how, and intangible assets. California Management Review, 40(3), 55–79.

Teece, D.J. (2007). Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance. Strategic Management Journal, 28 (13), 1319-1350.

Teece, D.J., Pisano, G., & Shuen, A.M.Y. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533.

Ter Wal, A.L.J., Criscuolo, P., & Salter, A. (2017). Making a marriage of materials: the role of gatekeepers and shepherds in the absorption of external knowledge and innovation performance. Research Policy, 46(5), 1039–1054.

Todorova, G., & Durisin, B. (2007). Absorptive capacity: valuing a reconceptualization. Academy of Management Review, 32(3), 774–786.

Tortoriello, M. (2014). The social underpinnings of absorptive capacity: the moderating effects of structural holes on innovation generation based on external knowledge. Strategic Management Journal, 36(4), 586–597.

Tsai, W. (2001). Knowledge transfer in intraorganizational networks: effects of network position and absorptive capacity on business unit innovation and performance. Academy Management Journal, 44(5), 996–1004.

Tuominen, M., & Hyvönen, S. (2004). Organizational innovation capability: a driver for competitive superiority in marketing channel. The International Review of Retail, Distribution and Consumer Research, 14(3), 277–293.

Van Den Bosch, F.A., Van Wijk, R., & Volberda, H.W. (2003). Absorptive capacity: Antecedents, models and outcomes. In Handbook of Organizational Learning and Knowledge Management. Hoboken, NJ, USA: Blackwell.

Volberda, H.W., Foss, N.J., & Lyles, M.A. (2010). Absorbing the concept of absorptive capacity: how to realize its potential in the organization field. Organization Science, 21(4), 931–951.

Wang, C.H., Lu, I.Y. & Chen, C.B. (2008). Evaluating firm technological innovation capability under uncertainty. Technovation, 28(6), 349-363.

Wang, C.L. & Ahmed, P.K. (2004). The development and validation of the organizational innovativeness construct using confirmatory factor analysis. European Journal of Innovation Management, 7(4), 303-313.

Weerawardena, J., & McColl-Kennedy, J.R. (2002). New service development and competitive advantage: A conceptual model. Australasian Marketing Journal, 10(1), 13–23.

Winter, S. (2000). The satisficing principle in capability learning. Strategic Management Journal, 21, 981–96.

Wonglimpiyarat, J. (2010). Innovation index and the innovative capacity of nations. Futures, 42(3), 247-253.

Wu, J. & Shanley, M.T. (2009). Knowledge stock, exploration, and innovation: research on the united states electromedical device industry. Journal of Business Research, 62(4), 474-483.

Xun, D. & Xuehan, G. (2014). The effect of absorptive capacity on innovation performance: Empirical research on the mediating effects of knowledge transfer efficiency. BioTechnology an Indian Journal, 10(7), 1735-1740.

Yam, R. C. M., Guan, J. C., Pun, K. F., & Tang, E. P. Y. (2004). An audit of technological innovation capabilities in chinese firms: some empirical findings in Beijing, China. Research Policy, 33(8), 1123–1140.

Zahra, S.A. & George, G. (2002). Absorptive capacity: a review, reconceptualization, and extension. Academy of Management Review, 27(2), 185-203.

Zheng, S., Zhang, W., & Du, J. (2011). Knowledge-based dynamic capabilities and innovation in networked environments. Journal of Knowledge Management, 15(6), 1035–1051. doi:10.1108/13673271111179352.

Zook, C. & Rigby, D. 2002. Open-market innovation. Harvard Business Review (October).

Downloads

Published

2021-04-01

How to Cite

Raharso, S. .-. (2021). Innovation Capability Performance through Potential and Realized Absorptive Capacity: an Empirical Study in the West Java Mini Market. Jurnal Penelitian Ekonomi Dan Bisnis, 6(1), 1–16. https://doi.org/10.33633/jpeb.v6i1.4043

Most read articles by the same author(s)

Obs.: This plugin requires at least one statistics/report plugin to be enabled. If your statistics plugins provide more than one metric then please also select a main metric on the admin's site settings page and/or on the journal manager's settings pages.