The role of client knowledge absorptive capacity for innovation in KIBS

Purpose: This paper aims to study the relationship between the knowledge exchanged during client interactions and innovation in knowledge-intensive business services (KIBS) enterprises. It adapts the concept of absorptive capacity, i.e. the ability of the firm to successfully deal with external knowledge, to the case of client knowledge being absorbed with the support of information and communication technologies and explores whether its three main dimensions (acquisition, assimilation and application of client knowledge) are significant enablers of KIBS’ innovation propensity. Design/methodology/approach: An empirical analysis is based on a dataset of 417 Russian KIBS companies collected in 2019 following the recommendations suggested in the new edition of Oslo Manual. To examine the relationship between the three-client knowledge absorptive capacity dimensions and implementation of different types of innovation by KIBS, the study applies linear ordinary least squares and logistic regression methods. Findings: The results show that acquisition of client knowledge through the wide number of digital channels, assimilation of such knowledge boosted by its codification through a digital customer relationship management (CRM) system and application of client knowledge across different functional areas are positively associated with both product and business process innovations in KIBS. Originality/value: The paper proposes that KIBS should develop and sustain the strong internal capacity to absorb knowledge through routine day-to-day client interactions as a part of their knowledge management systems. The results also indicate that application of digital communication tools and CRM systems are beneficial for KIBS and increases their propensity to innovate.