The Influence of Organizational Absorptive Capacity on Product and Process Innovation

The innovativeness of an organization has an important impact on its profitability as well as on the competitiveness of a country's economy as a whole. Since the innovativeness of Slovenian organizations is low, it is important that managers and industrial policy makers know which factors influence an organizations' innovation. One of these factors is supposed to be the organizational absorptive capacity. Absorptive capacity is one of the most important concepts that have emerged in the field of organizational research in the past years. Absorptive capacity is defined as the set of organizational routines and processes through which an organization identifies and values new external information, and then acquires it, assimilates it and applies it to commercial ends. The results of this research confirm the strong and positive impact of Slovenian organizations' absorptive capacity on process innovation and the even bigger positive influence on the organizations' product innovation.