Enhancing the inflow of knowledge: elaborating the absorptive capacity cycle in SMEs

Small- and medium-sized enterprises (SMEs) often do not have slack resources with which to develop internally a broad spectrum of capabilities and to observe in depth the firm's environment. Therefore, they need to carefully develop abilities to absorb knowledge from outside the firm's boundaries so as to have access to cutting-edge knowledge in spite of limited resources. One strategy is to establish knowledge management (KM) projects for this purpose. In this paper, we describe how KM projects and subsequently emerging KM routines in SMEs facilitate the enhancement of the firm's absorptive capacity (AC; i.e., the ability to recognize, capture, and assimilate external knowledge). Our results indicate the importance of recognizing potential knowledge providers prior to any absorption of knowledge from external sources. Furthermore, we emphasize the relevance of routines for absorbing knowledge and we distinguish between KM routines that are deliberately developed for absorbing knowledge and KM projects where knowledge absorption happens unconsciously. Finally, we point out that different stages of an AC process follow different logics (exploration vs. exploitation) and, thus, a skilful management of the AC cycle is necessary to leverage externally absorbed knowledge.