- Capability to recognize the value of knowledge
- Capability to assimilate the knowledge, and
- Capability to apply new external knowledge (to commercial ends)
“Wine can absorb water. Oil cannot!”
Have you ever questioned why sometimes during the knowledge transfer process, two persons who were listening to the same story or attending the same seminar at the same time, end up with a different level of understanding? One factor that causes this scenario is related to their absorptive capacity.
The concept of Absorptive Capacity (of Knowledge) was introduced in the 1990s by Cohen and Levinthal as a new perspective of learning and innovation. They defined absorptive capacity as, “an ability of person or enterprise to identify, assimilate and exploit knowledge from the environment.”
This capacity focuses on the ability of the knowledge receiver/receptor to exploit external knowledge, to recognize the value of new information, assimilate it and apply it. It is influenced by the receiver’s related knowledge (background), beliefs, and basic assumptions.
Absorptive capacity is multileveled: individual level; corporate level; and, national level.
As mentioned above, an absorptive capacity of knowledge comprises three capabilities:
Several studies show that absorptive capacity at a corporate level depends on three factors: the type of new knowledge offered by the transmitting company; the similarity between the compensation practices and the organizational structures of both the receiving and emitting companies; and, the familiarity of the receiving company with the combined organizational problems of the emitting company.
Absorptive Capacity has become an essential element in many fields, including: organizational learning; knowledge management; an understanding of strategic alliances; and, innovation management. Indeed, absorptive capacity is the basic foundation for knowledge creation and transfer, and a major influence in the level of individual and corporate innovation. And while it is good to motivate people to share their knowledge, it is also important to realize that all the knowledge shared might not be fully “valued” by the receiver, since some of us are more “oily” than others!