1. Absorptive Capacity- One size fits all?
A Firm-level analysis of absorptive capacity for different kinds of knowledge.
ZEW Discussion Paper No
Tobias Schmidt
Centre for European Economic Research (ZEW)
Tel.: ,
Tobias Schmidt
Ph.D. Student, Uni Jena, Cantner
Zentrum für europäische Wirtschaftsforschung in Mannheim

2. Motivation
Little research on the determinants and mechanisms that increase absorptive capacity
Mahnke et al. 2005; Lane et al. 2002; Veugelers 1997
Problem to find good empirical measure of absorptive capacity
Zahara and George, 2002; Becker and Peters 2000
Same absorptive capacity for all types of knowledge?
High-tech much more innovative; knowledge-intensive industry more innovative
IT => Mehr Wissen frei verfügbar und verarbeitbar
Firmen managen Wissensflüsse:
Kooperation um Zugang zu externem Wissen zu erhalten.
Viel externes Wissen verfügbar => weniger Kooperationen
Unvollständiger Schutz:
Free-riding => Kooperationsneigung runter
Schutz erhöhen in dem kooperiert
Ergebnis: Modell mit Kooperation in Abhängigkeit von incoming spillovers and appropriability.

3. Definition of Absorptive Capacity
AC: Firms’ ability to “identify, assimilate, and exploit knowledge from the environment”
Cohen and Levinthal 1989, 1990
Concept is used at the individual-, organizational-, regional-, and national-level
Narula 2004; Van den Bosch 2003
Used in economics and business administration
Belderbos et al. 2004; Lenox and King 2004
High-tech much more innovative; knowledge-intensive industry more innovative
IT => Mehr Wissen frei verfügbar und verarbeitbar
Firmen managen Wissensflüsse:
Kooperation um Zugang zu externem Wissen zu erhalten.
Viel externes Wissen verfügbar => weniger Kooperationen
Unvollständiger Schutz:
Free-riding => Kooperationsneigung runter
Schutz erhöhen in dem kooperiert
Ergebnis: Modell mit Kooperation in Abhängigkeit von incoming spillovers and appropriability.

4. Determinants of Absorptive Capacity: R&D Activities
R&D intensity and R&D budgets
intensity: Cohen and Levinthal 1989; Stock et al. 2001; Rocha 1999; Cantner and Pyka 1998; budgets: Leahy and Neary 2004 ; Grünfeld 2003
Continuous R&D activities Oltra and Flor 2003; Becker and Peters 2000
R&D lab Becker and Peters 2000; Veugelers 1997
Literature has identified a number of other motives for cooperation besides knowledge:
Knowledge: For the sake of completeness
Financial constraint and risk: share the burden
Absorptive capacity: Outside knowledge becomes mor usefull, interesting
Complementarities: Things you can’t do on your own can be done by others.
Size, industry, tech. distance:
Size: The larger the more projects the more possibilities and needs to cooperate
Industry: might be more open or closed in general, intensity of competition
Techn. Distance: easier to profit if close
Goal: Empirically investigate the influence of factors on the propensity to cooperate in innovation using German CIS III data

5. Determinants of Absorptive Capacity: Prior Related Knowledge/Skills
Absorptive capacity is path dependent Cohen and Levinthal 1990
Employees’ level of education
Rothwell and Dodgson 1991
Gatekeepers Gradwell 2003; Vinding 2000
Literature has identified a number of other motives for cooperation besides knowledge:
Knowledge: For the sake of completeness
Financial constraint and risk: share the burden
Absorptive capacity: Outside knowledge becomes mor usefull, interesting
Complementarities: Things you can’t do on your own can be done by others.
Size, industry, tech. distance:
Size: The larger the more projects the more possibilities and needs to cooperate
Industry: might be more open or closed in general, intensity of competition
Techn. Distance: easier to profit if close
Goal: Empirically investigate the influence of factors on the propensity to cooperate in innovation using German CIS III data

6. Determinants of Absorptive Capacity: Organization and HRM
Organizational structure
Gradwell 2003; Welsch et al. 2001; Van den Bosch al. 1999; Lane and Lubatkin 1998
Human Resource and Knowledge Management
Mahnke et al. 2005; Jones and Craven 2001; Vinding 2000; Cohen and Levinthal 1994
Involvement of managers
Lenox and King 2004
Literature has identified a number of other motives for cooperation besides knowledge:
Knowledge: For the sake of completeness
Financial constraint and risk: share the burden
Absorptive capacity: Outside knowledge becomes mor usefull, interesting
Complementarities: Things you can’t do on your own can be done by others.
Size, industry, tech. distance:
Size: The larger the more projects the more possibilities and needs to cooperate
Industry: might be more open or closed in general, intensity of competition
Techn. Distance: easier to profit if close
Goal: Empirically investigate the influence of factors on the propensity to cooperate in innovation using German CIS III data

7. Absorptive Capacity for Different Knowledge
Learning depends on the similarity between “teacher” and “student” Lane and Lubatkin 1998
Prior experience and related knowledge Dussauge et al. 2000; Cohen and Levinthal 1990
Scientific knowledge Becker and Peters 2000; Nelson and Wolff 1997
Literature has identified a number of other motives for cooperation besides knowledge:
Knowledge: For the sake of completeness
Financial constraint and risk: share the burden
Absorptive capacity: Outside knowledge becomes mor usefull, interesting
Complementarities: Things you can’t do on your own can be done by others.
Size, industry, tech. distance:
Size: The larger the more projects the more possibilities and needs to cooperate
Industry: might be more open or closed in general, intensity of competition
Techn. Distance: easier to profit if close
Goal: Empirically investigate the influence of factors on the propensity to cooperate in innovation using German CIS III data

8. Data: Mannheim Innovationpanel
Survey of the innovation behavior of German firms conducted by the ZEW on behalf of the ministry for education and research (BMBF)
Enterprises with 5 or more employees in
Manufacturing (since 1993)
Service Sector (since 1996)
Mannheim Innovationpanel (MIP) 2003
Innovation activities during the period 2000 – 2002
Comparable to CIS III
Responses from about 4,500 enterprises
Responses from about 2,100 innovators

9. Empirical Model: Dependent Variables
Three types of absorptive capacity (AC):
AC for knowledge from own industry (NACE2)
AC for knowledge from other industries (NACE2)
AC for knowledge from universities or other public research institutes
Construction: Question on contribution of external actors to innovations => Focus on “exploitation” component of AC.

10. Independent Variables: R&D and Skills
R&D activities:
Continuous R&D (dummy)
R&D intensity, R&D intensity squared
Prior related knowledge/Skills:
Share of employees with higher education

11. Independent Variables: Organization and HRM
Stimulation of innovation activities and knowledge sharing (index, factor analysis)
Collaboration between departments on innovation projects (dummies):
Informal contacts between employees
Open communication of ideas and concepts
Joint strategy development
Mutual support with problems
Meetings between heads of departments
Temporary exchange of personnel
Seminars and workshops involving several departments

12. Independent Variables: Control Variables
Size (number of employees)
Situated in East Germany (dummy)
Industry groups (6 dummies):
Other manufacturing (reference group)
Low-tech industries
Medium-low-tech industries
Medium-high-tech industries
High-tech industries
Low-tech services
High-tech services

14. 1. Probit Estimation
2. Triprobit (GHK-Simulator)

16. Conclusion R&D and Skills plays an important role in determining AC
Stimulation of innovation activities and knowledge sharing is important for AC
Factors contribute differently to AC for different kinds of knowledge
Intra-industry knowledge requires experience rather than R&D
Further research on different types of AC necessary
Proxies for AC should be chosen with respect to the knowledge to be acquired.
Knowledge flows, especially outgoing
Legal protection unique for Germany (system?)
Different motives like we have just seen
Intramural R&D budgets just one way to capture absorptive capacity
Looks like decision is taken simultaneously

17. Absorptive Capacity- One size fits all?
A Firm-level analysis of absorptive capacity for different kinds of knowledge.
ZEW Discussion Paper No
Tobias Schmidt
Centre for European Economic Research (ZEW)
Tel.: ,
Tobias Schmidt
Ph.D. Student, Uni Jena, Cantner
Zentrum für europäische Wirtschaftsforschung in Mannheim