Determinants of absorptive capacity: the value of technology and market orientation for external knowledge acquisition

Purpose This paper aims to draw on a knowledge-based view to emphasize that internal technological and market knowledge is critical to developing absorptive capacity. Design/methodology/approach This is a conceptual paper, which draws on recent transformations of management practices. Thus, the paper builds on prior academic contributions. Findings Firms increasingly establish innovation processes that involve an active acquisition of external technologies, often through alliances and licensing. To explain differences across firms in external knowledge acquisition, marketing and product innovation researchers have recently adopted a process perspective of absorptive capacity, which refers to a firm’s ability to explore, retain and exploit external knowledge. This paper develops a conceptual framework with propositions relating technology orientation, responsive market orientation and proactive market orientation to the three process stages of absorptive capacity under different conditions of environmental dynamism. Originality/value Beyond the relevance of technology and market orientation for fostering internal innovation, this paper points to their importance for successfully acquiring external technological knowledge. In light of increasingly open innovation processes, absorptive capacity is an essential complement to internal innovation in linking technology and market orientation to firm performance.