Absorptive Capacity Framework in Knowledge Intensive Environment—Study on Pharmaceutical Companies of Pakistan

Abstract

Industrial growth has forced the companies especially knowledge in nature to adopt latest knowledge critical to their processes in order to maintain their market position. Due to fast growth in every field in the present technological environment, it is not possible for any firm to produce its required knowledge even if it is knowledge intensive in nature. Therefore, the companies have to rely on the external knowledge to upgrade their processes. The companies focus on their capabilities to absorb the external knowledge critical to their operations effectively. This is referred as Absorptive Capacity in literature. The concept of Absorptive Capacity was introduced in 1990 and there has been extensive research on this construct since then. Most of the research on this construct has focused either on external antecedents to develop absorptive capacity such as inter-firm collaboration or has taken into account organizational antecedents such human resource management and its processes in broader perspective for its development. The intra organizational micro level antecedents, such as behavior mechanism and internal knowledge process, have been ignored in extant literature. Moreover, the employees are considered the basic ingredients in knowledge activities but scant studies in absorptive capacity literature are found which incorporate micro level antecedents for the development of this construct. In this research work, the impact of Organizational Mechanisms related to Formalization, Cross Functional Integration and Job Rotation of employees within the company and Human Behavior Mechanisms related to tacit knowledge sharing, Affective Commitment and Instrumental Ties on Absorptive Capacity have been studied through quantitative study. Contribution of middle managers as boundary spanners, Knowledge transformation process and critical success factors for the development of absorptive capacity have been evaluated through qualitative portion of study. The data was collected from pharmaceutical companies of Pakistan. The impact of all the independent variables on absorptive capacity was studied on dependent variable (absorptive capacity) by using multiple regression analysis. The gaps of the quantitative study were filled through qualitative portion and framework was developed by analysis of results and nature of relationship between independent and dependent variables both in qualitative and quantitative portions of study.