Organizational Productivity and Absorptive Capacity: A Conceptual Modeling

This paper aims to design a mathematical model for organizational absorptive capacity, which is both deterministic and directional. Banking on maximization conditions, time duration needed for an organization to shift from exploration to exploitation and vice versa, has been determined. Using simultaneous differential equation matrix, effects of absorptive capacity constituents on marginal productivity of organization have been analyzed. The model depicts relationship of organizational memory, revenue stream, time taken for creating the knowledge base with their respective elasticities with organizational absorptive capacity, and respective productivities of organizational capital and capability alongside organizational absorptive capacity, considering knowledge exploration and exploitation phases.