St. Petersburg University
Graduate School of Management
Master in Management
Knowledge Management Practices
as a Source of Absorptive Capacity of
Emerging Market Firms: Evidence from Russia
Master’s Thesis by the 2nd year student
Associate Professor, Marina O. Latukha
ЗАЯВЛЕНИЕ О САМОСТОЯТЕЛЬНОМ ХАРАКТЕРЕ ВЫПОЛНЕНИЯ
ВЫПУСКНОЙ КВАЛИФИКАЦИОННОЙ РАБОТЫ
Я, Питинов Сергей Владимирович, студент второго курса магистратуры направления
«Менеджмент», заявляю, что в моей магистерской диссертации на тему «Практики управления
знаниями как источник поглощающей способности компаний развивающихся рынков: свидетельства
из России», представленной в службу обеспечения программ магистратуры для последующей
передачи в государственную аттестационную комиссию для публичной защиты, не
содержится элементов плагиата.
Все прямые заимствования из печатных и электронных источников, а также из
защищенных ранее выпускных квалификационных работ, кандидатских и докторских
диссертаций имеют соответствующие ссылки.
Мне известно содержание п. 9.7.1 Правил обучения по основным образовательным
программам высшего и среднего профессионального образования в СПбГУ о том, что «ВКР
выполняется индивидуально каждым студентом под руководством назначенного ему
научного руководителя», и п. 51 Устава федерального государственного бюджетного
образовательного учреждения высшего образования «Санкт-Петербургский государственный
о том, что «студент подлежит отчислению из Санкт-Петербургского
университета за представление курсовой или выпускной квалификационной работы,
выполненной другим лицом (лицами)».
_______________________________________________ (Подпись студента)
____________25 мая 2016_________________________ (Дата)
STATEMENT ABOUT THE INDEPENDENT CHARACTER OF
THE MASTER THESIS
I, Pitinov Sergei Vladimirovich, second year master student, program «Management», state that my
master thesis on the topic “Knowledge Management Practices as a Source of Absorptive Capacity of
Emerging Market Firms: Evidence from Russia”, which is presented to the Master Office to be
submitted to the Official Defense Committee for the public defense, does not contain any elements
All direct borrowings from printed and electronic sources, as well as from master theses,
PhD and doctorate theses which were defended earlier, have appropriate references.
I am aware that according to paragraph 9.7.1. of Guidelines for instruction in major
curriculum programs of higher and secondary professional education at St.Petersburg University «A
master thesis must be completed by each of the degree candidates individually under the supervision
of his or her advisor», and according to paragraph 51 of Charter of the Federal State Institution of
Higher Education Saint-Petersburg State University «a student can be expelled from St.Petersburg
University for submitting of the course or graduation qualification work developed by other person
___________25th May 2016_________________________ (Date)
Master Student’s Sergei V. Pitinov
Thesis Knowledge Management Practices as a Source of Absorptive Capacity of Emerging
Market Firms: Evidence from Russia
Graduate School of Management
Marina O. Latukha
The most profitable innovations were found not to be built in-house, but rather
adopted from external environment. Ability to capture them was called absorptive
Claimed to be the crucial element of a firm’s development and survival, AC is
required to be built. Hence, the current study is aimed at determining the antecedent
of AC and providing insights on the factors that condition it. Namely, the research is
aimed at answering the question of how knowledge management (KM) practices can
be a source of AC for the firms of emerging Russian market. What is more, we
propose that AC would serve a mediator in the relationships between KM practices
and organizational performance.
Description of the
The results revealed that KM practices connected with learning mechanisms and work
goal, tasks and
organization are associated with higher potential AC. Whereas, realized AC is
conditioned with the practices connected with information technologies, training and
development, learning mechanisms and work organization.
Though initially relationship where AC serves a mediator was proposed, the indirect
effect of KM practices to organizational performance through AC was found
insignificant, which might be caused by time-lagged influence of AC over
Thus, the current research contributes both academically and managerially, enhancing
understanding the link between AC and KM practices and also their impact over
performance of organization; also providing specific recommendations for managers
on how KM practices can be a source of AC.
Absorptive capacity, absorptive capacity antecedents, knowledge management
practices, emerging market context, organizational performance
Сергей Владимирович Питинов
Практики управления знаниями как источник поглощающей способности
компаний развивающихся рынков: свидетельства из России
Высшая Школа менеджмента
Марина Олеговна Латуха
Было обнаружено, что самые прибыльные инновации были разработаны не
внутри компании, а позаимствованы извне. Способность заимствовать их была
Поглощающая способность (ПС) является важной для развития и выживания
компаний, и её следует развивать. Текущее исследование направлено на
определение предпосылок ПС и факторов, которые воздействуют на них. А
именно, данная работа отвечает на следующие вопросы: как определенные
практики управления знаниями воздействуют на компоненты ПС
(потенциальная и реализованная ПС) в компаниях российского
развивающегося рынка; служит ли ПС медиатором в отношениях между
практиками управления знаниями и эффективностью работы организации.
Результаты исследования показали, что практики управления знаниями
связанные с механизмами обучения и организацией труда ассоциируются с
более высоким уровнем потенциальной ПС. В то же время, на реализованную
ПС положительно воздействуют практики, связанные с информационными
технологиями, тренингами и развитием, механизмами обучения и организацией
Также было установлено, что ПС не выступает в роли медиатора в отношениях
между практиками управления знаниями и эффективностью работы
организации. Возможно, это вызвано задержанным по времени влиянием ПС на
Подводя итоги, данное исследования имеет и практическую и теоретическую
значимость, так как углубляет понимание связи между практиками управления
знаниями и ПС, а также их влияния на эффективность работы организации..
Поглощающая способность, предпосылки поглощающей способности,
практики управления знаниями, развивающиеся рынки, эффективность работы
TABLE OF CONTENTS
Introduction .......................................................................................................................................... 6
Research Background ........................................................................................................... 7
Research Gap ........................................................................................................................ 8
Research Problem, Objectives and Delimitation .................................................................. 8
Research Strategy and Organization of the Study ................................................................ 9
1 Knowledge Management Practices and Absorptive Capacity Theoretical Framework .................. 11
1.1 Absorptive Capacity and its Antecedents ..................................................................... 11
1.2 Knowledge Management Practices ............................................................................... 20
1.3 Relationships between Knowledge Management Practices and Absorptive Capacity . 28
Summary of Chapter 1 ........................................................................................................ 35
2 Empirical Study of Relationships Between Knowledge Management Practices and Absorptive
Capacity .............................................................................................................................................. 36
2.1 Research Strategy .......................................................................................................... 36
2.2 Measurement of Variables ............................................................................................ 38
2.3 Results Analysis ............................................................................................................ 41
2.4 Descriptives ................................................................................................................... 44
Summary of Chapter 2 ........................................................................................................ 49
3 Discussion and Conclusions ............................................................................................................ 50
3.1 Findings ......................................................................................................................... 50
3.2 Theoretical Contributions ............................................................................................. 58
3.3 Managerial Implications ............................................................................................... 60
3.4 Limitations and Directions for Future Research ........................................................... 62
3.5 Conclusions ................................................................................................................... 62
References .......................................................................................................................................... 64
Appendix 1 Survey ............................................................................................................................. 70
LIST OF TABLES
Table 1 Classifications of Knowledge Management Practices .......................................................... 27
Table 2 Connection between knowledge management practices and absorptive capacity antecedents
Table 3 Absorptive Capacity Measurement Scale .............................................................................. 39
Table 4 Knowledge Management Practices Measurement Scale ....................................................... 41
Table 5 Organizational Performance Measurement Scale ................................................................. 41
Table 6 Variables Description .......................................................................................................... 44
Table 7 Descriptives of variables ....................................................................................................... 48
Table 8 KM practices and PAC model description ............................................................................ 51
Table 9 RAC and KM practices model description ............................................................................ 55
Table 10 Estimates of the KM practices, AC and performance model indirect effects ..................... 58
LIST OF FIGURES
Figure 1 Absorptive Capacity Operationalization (based on Volberda et al (2011)) ......................... 19
Figure 2 Theoretical Framework of the Research .............................................................................. 34
Figure 3 Model of relationships between KM practices, AC and performance ................................. 43
Figure 4 Distribution of responses by industry .................................................................................. 45
Figure 5 Distribution of response by firms' age ................................................................................. 46
Figure 6 Distribution of responses by number of employees ............................................................. 46
Knowledge today is considered as a key strategic asset for any kind of firm (Bollinger and
Smith 2001). It does not appear sufficient to have superior market share or vast production
capabilities in order to dominate market in the period other than short-term. The increasing
complexity of customer demand enforced with the more fierce competition and strengthened with
the ever-faster product or service improvement requirement (Sargut and McGrath 2011) made
organizations reconsider the old ways of doing business and invest in flexibility development
(Reeves and Deimler 2011). What can leverage this flexibility? How can a firm be susceptive to the
changes of the external environment?
Scholars found that many innovations that helped firm to capture abnormal profits for
prolonged time period were not developed in house, but rather adopted from the sources beyond the
firm (Cohen and Levinthal 1990). This ability to capture outside knowledge was called absorptive
capacity. Many argues that absorptive capacity is one of the key determinants of the firm’s future
success, as it enhances its degree of flexibility and innovativeness (Zahra and George 2002).
However, though the importance of the concept is widely recognized, it still remains a kind
of black box (Lewin, Massini, and Peeters 2011). Nobody knows what inside is and how to enhance
it. Though there are various streams of literature describing the antecedents of absorptive capacity,
there are not many studies that tell in a detailed way what a manager should do to enhance it.
Having in mind this lack of clarity, we introduce knowledge management practices as a
mean to shed light onto practical side of absorptive capacity development. Building on the current
stream of antecedents of absorptive capacity, we investigate the intentional and conscious
knowledge management practices one could apply and test their effect on the said concept.
Another particular relationship deserves attention from our side: what is the relationship
between absorptive capacity and a firm’s performance? And what role does knowledge management
practices play in it?
Giving answers to the above stated questions is tightly connected with day-to-day activities
The concept of absorptive capacity received enormous attention in few last decades since its
emergence (Volberda et al. 2010). Its significance for practice was proven through empirical studies
indicating the positive relationship between it and firm’s performance indicators (Kostopoulos et al.
2011; Chen, Lin, and Chang 2009). The concept is claimed to have gone through reification and
rejuvenation (Lane, Koka, and Pathak 2006). Numerous studies have drawn attention to its
outcomes as well as antecedents (Bosch, Wijk, and Volberda 2003). Notwithstanding the great
attention received, there are few gaps that still remain.
Firstly, though the antecedents of the model were broadly studied, the general lack of
research onto how managerial actions and individual agents influence AC was noticed (Volberda,
Foss, and Lyles 2010) . What is more, the investigation of routines able to enhance absorptive
capacity through these antecedents was limited (Lewin, Massini, and Peeters 2011). In addition, the
strong need to explain how an individual can affects absorptive capacity process is determined
(Lane, Koka, and Pathak 2006).
Secondly, there were few studies that concentrated on general performance rather than
innovative one and there is a strong need to provide examination of it (Lane, Koka, and Pathak
2006). Bearing in mind, that even AAC definition itself explicitly implies that its main goal is to
apply knowledge to commercial ends (Cohen and Levinthal 1990). Connecting AC with financial
performance would increase understanding of it (Kostopoulos et al. 2011).
Thirdly, there has been few studies concentrating on AC investigation in the context of the
developed markets, while emerging markets context remains of limited attention (Liao, Welsch, and
To conclude, though the field received a broad attention, there are still areas for the
development that requires research.
Research Problem, Objectives and Delimitation
The increasing complexity of customer demand makes the companies seek more and more
effective ways to be competitive. Enhancing absorptive capacity has proven to be a way to operate
Though previous scholars have investigated various antecedents of absorptive capacity, no
clear management practices from the side of knowledge management aimed at their enhancement
were elaborated. Recognizing the relative complexity of absorptive capacity development with this
study we aim to provide a manager with a clear indication of what knowledge management practices
he or she should apply in order to build it. From the various knowledge management practices, we
would distinguish the most important ones. Additionally, we would show how application of these
practices would affect company’s financial performance mediated by absorptive capacity.
The thesis aims to answer the following research question: How can knowledge management
practices be a source of absorptive capacity?
The research question can be split into few sub-questions:
1. How do specific knowledge management practices influence the particular dimension of
2. Does absorptive capacity serve a mediator in the relationship between knowledge
management practices and organizational performance?
The scope of the study is limited by knowledge management practices and its connection to
absorptive capacity antecedents that we have found during the literature analysis. Absorptive
capacity is measured indirectly using the already wide-used scale. The organizational performance
of the firm is measured subjectively and mostly restricted to financial indicators that may also
provide certain limitations.
Research Strategy and Organization of the Study
The deductive approach was applied to the study. The study is grounded into theoretical
research of absorptive capacity and knowledge management practices with a subsequent formulation
of proposed relationships between concepts. The relationships presented are mostly concerned with
the effect particular knowledge management practice has over particular dimension of absorptive
capacity and the effect absorptive capacity plays as a mediator between those practices and the
We deployed survey research strategy, using snowball sampling to overcome low response
rates. Survey allows to gather vast amounts of standardized data for bigger sample thus allowing to
make more meaningful implications. The survey was presented in the form of online questionnaire
link to which was sent over via e-mail.
The thesis is structured the following way. Firstly, we present theoretical framework where
we connect knowledge management practices and absorptive capacity antecedents also proposing
the relationship it should have over performance. In the second section, we describe in details the
research strategy, data gathered and their analysis. In the last section we present the discussion of
our main findings, theoretical and practical contributions, as well as the limitations of the research.
1 KNOWLEDGE MANAGEMENT PRACTICES AND ABSORPTIVE CAPACITY
1.1 Absorptive Capacity and its Antecedents
The most successful innovations were found not to origin from in-house development, but
rather from external adoption. However, few firms for example Proctor & Gamble were able to
achieve significant profits from such adoption and exploitation, while other firms failed
(Lichtenthaler 2009). To better understand this phenomenon, the research stream concentrated on
understanding how a firm can efficiently acquire information from the external environment and
apply it to commercial ends was created, the ability of the firm to do so was called absorptive
capacity (Cohen and Levinthal 1990).
The high level of absorptive capacity directly contributes to innovation level of a firm and
thus indirectly to its financial performance (Kostopoulos et al. 2011). Hence, the developing of it
can be a key issue in gaining superior performance. Through more than 25 years of development this
concept was investigated from the perspective of various theoretical lenses: learning, innovation,
managerial cognition, knowledge-based view of the firm, dynamic capabilities, and coevolution
(Volberda et al. 2010).
Within this subchapter, the concept of AC is scrutinized from its early stages as well as its
1.1.1 Absorptive Capacity Origins and Development
Cohen and Levinthal have noticed that the most successful innovations did not come from
in-house development, but rather from borrowing beyond a firm’s borders, and outlined a new
concept that later on became one of the most discussed in the field of management, absorptive
capacity. Within their seminal paper “Absorptive Capacity: A New Perspective on Learning and
Innovation” they defined it as an ability to recognize the value of new information, assimilate it, and
apply to commercial ends (Cohen and Levinthal 1990).
At that time, the theoretical background of absorptive capacity was rooted in the cognitive
science that suggested that learning efficiency was conditioned with the presence of prior related to
the field knowledge. Specifically, they inferred two ideas crucial for AC concept development:
firstly, that learning is a cumulative process, i.e. the greater amount of knowledge one learns the
greater the efficiency of it, and secondly, that the higher degree to which new knowledge is related
to the already existing one ensures higher learning efficiency. Though these findings were
previously presented at the level of individual, Cohen and Levinthal suggested that the ideas about
cognitive structures and cumulative nature of learning can be applied also on the higher level, the
Though the organizational level of AC was suggested to consist of individual ACs, it was not
only summation. Understanding the structure of communication between external and internal
environments of organization as well as the mechanisms of information distribution were required
for organizational level AC comprehension. They suggested that AC was greatly influenced with a
“gatekeeper”, a person within an organization, who served an interface between external and
internal environment and regulated the flows of the information. However, the effect of such role
could be limited and not sufficient, and the way to overcome it was having the similarity of prior
knowledge as well as variety of background among all the company employees.
Another important concept connected with AC and introduced by them was path
dependence. Path dependence arose out of the inability of the firm to realize the value of knowledge
not related to current or past activities. Thus, a firm’s scope of new information absorbed was
limited by the nature of the previous information gathered. Hence, the importance of investments at
the early stages of organizational development should not be undervalued. The limitations of the
initial knowledge and subsequent focus only on the specific area were apt to create lock-out effect
for a firm and
significantly decrease its adaptability and competitive advantage (Cohen and
Having described the origins of it, we proceed to shedding light onto AC development. To
begin with, few units of analysis were introduced in AC researches. Firstly, understanding of it was
enriched by shifting the unit of analysis to the interorganizational level. The founders of this
approach claimed that two units of interaction within the knowledge exchange, so-called teacher and
student firm, form a learning-dyad, the efficiency of which would depend on the similarity of
partners’ basic knowledge, management formalization, etc. Hence, the concept of absorptive
capacity was defined as a relative; thus meaning that a firm could have different AC levels from one
firm to another (Lane and Lubatkin 1998). Secondly, the concept of AC was also analyzed at a
country level in order to explain faster economic growth of particular countries over the others, thus
recognizing that a particular country can have its AC level (Keller 1996).
The first major event in AC understanding was initiated by Zahra and George who proposed
to re-conceptualize it by adding new dimensions and changing its definition. Deploying other
theoretical perspective, they recognized AC as a dynamic capability a firm has to develop. Within
their paper, the concept was later subdivided into two parts: potential absorptive capacity (PAC) and
realized absorptive capacity (RAC). PAC dimension was responsible for two processes, acquisition
and assimilation of information, thus meaning the ability to firm to gather knowledge from external
environment. RAC was concerned with transformation and exploitation of knowledge gathered with
PAC, thus it determined whether this knowledge was applied to commercial ends. This distinction
allowed to better grasp the dynamics within AC, as within this re-conceptualization AC was no
longer treated as a holistic unit, but the interaction between PAC and RAC determined the size of its
effect. In addition, so-called efficiency factor was introduced that presented RAC divided by PAC,
the greater amount of which meant higher AC. Introduction of such drastic changes also lead to
introduction of new definition of AC, in was re-defined as a set of organizational routines and
processes by which firms acquire, assimilate, transform, and exploit knowledge to produce a
dynamic organizational capability (Zahra and George 2002).
Meanwhile, with the increase of scope and age of the concepts, the number of works
published increased respectfully. However, the quality of the papers and their cohesiveness was
questioned. Having analyzed 289 management papers in the field, Lane et al claimed that the
concept of AC was reified. Such a strong statement was backed with the two arguments: firstly, AC
became a “taken-for-granted” concept with initial meaning lost, as within the scope of works
analyzed the initial meaning was rarely deployed and the scholars described somewhat different
concepts under the name of it; secondly, that there was no mutual connectedness and
inter-quotations between papers within the scope, thus meaning that the authors did not ground
themselves onto previous works and research the concept separately. The re-conceptualization of
Zahra & George was also a subject of critics in the Lane et al’s paper. To overcome reification, the
up-to-date works were analyzed and main research concepts within field were mapped; on the basis
of them rejuvenation model was suggested. They determined 5 dimensions that AC should posses
and proposed new definition of AC as a firm's ability to utilize externally held knowledge through
three sequential processes: (1) recognizing and understanding potentially valuable new knowledge
outside the firm through exploratory learning, (2) assimilating valuable new knowledge through
transformative learning, and (3) using the assimilated knowledge to create new knowledge and
commercial outputs through exploitative learning” (Lane, Koka, and Pathak 2006).
Most of the scholars partially accepted the AC reification. Agreeing with it, Dursin and
Todorova pointed out the fact that Zahra and George in their seminal article did not build
systematically on Cohen and Levinthal’s work, thus allowing for ambiguities. Dursin and Todorova
claimed to eliminate these ambiguities by bringing together the initial AC definition and the
up-to-date research papers on the topic. To do so, firstly, they assumed its dynamic and iterative
nature, and proposed addition of feedback loops between dimensions, antecedents and outcomes of
AC. Secondly, the omitted by Zahra and George “recognize” dimension was added back, to better
reflect initial sense implied; the four dimensions according to them were recognizing the value,
assimilation, transformation and application to commercial ends (Todorova and Durisin 2007)., thus
finding a balance between Cohen & Levinthal, Zahra & George and Lane et al.
The significant effort in the concept further development was paid by Volberda et all. Having
conducted the bibliographical analysis of the stream of AC literature, they identified major
discrepancies within in, resolved it and elaborated an integrative model. What is more, the
researches using different theoretical lenses were integrated. Firstly, they combined Cohen and
Levinthal and Zahra and George dimensions to produce the integrated model of AC process
including four dimensions as acquisition, transformation, assimilation and exploitation (recognition
was still omitted). Secondly, within the comprehensive model they systematized and described
antecedents of AC, contextual factors that might have influence over it and its outcomes; the
intraorganizational. Thirdly, they underlined the importance of further empirical research of
outcomes of AC in respect of competitive advantage, innovation and firm performance, thus giving
a start to the next stream of papers describing tangible and intangible outcomes of AC (Volberda et
1.1.2 Antecedents of Absorptive Capacity
The various papers written on the topic of AC determines different dimensions of it and
subsequently its antecedents. Thus, we suggest that the critical analysis of AC antecedents
development is required for enhancing understanding of the concept itself and shedding light onto
how it is connected with knowledge management practices. What is more, determining the factors
that condition AC existence can help us isolate the influence of knowledge management over AC
from the other factors present.
To begin with, Cohen and Levinthal while writing the AC founding paper relied strongly on
the economic theory, and as their operationalization of AC was based on RD intensity, they
suggested that the factors influencing RD as suggested by the previous research works would also
influence absorptive capacity. These factors included direct effect of ease of learning, technological
opportunity and appropriability, these three being external factors influencing AC. The first factor
suggests that in the harsh learning environment a firm becomes more reliant on R&D expenses, the
second, technological opportunity, means that a firm would increase R&D spending even in the
harsh learning environment, if the technological opportunity is high. The third one, appropriability,
traditionally for economic theory refers to the ability of the firm to capture the profit earned with the
innovations(Cohen and Levinthal 1990).
Zahra and George increased the complexity of the model. As it was said before, they split
AC into PACAP and RACAP, also changing the dimensions of it. This reconceptualization gave
them insights into how antecedents influence each particular dimension, thus they follow these
dimensions as an anchor for the proposed antecedents. Being more detailed, on top of Cohen and
Levinthal’s factors they introduced the new ones: external sources and knowledge complementarity
(that substituted “ease of learning), experience, activation triggers, social integration mechanisms
and renamed “appropriability” into “regimes of appropriability”, that would be discussed briefly in
the following sentences. Firstly, knowledge part and experience part were distributed in line with the
current at the time research streams, with the former having higher effect on PACAP and the latter
on PACAP. In addition, new element “activation factors” basically means the challenges from the
external world or within organization to accept which an organization has to develop AC. What is
more, they developed the idea of Cohen and Levinthal that AC depends on the way of
communication within firm and introduced “social integration mechanisms” that serve a connection
between PACAP and RACAP and determine the knowledge availability over the firm. Thus, Zahra
and George enriched the concept with adding more factors (Zahra and George 2002).
Jansen et all investigated the organizational antecedents and their influence over AC based
on Zahra and George model. They split all the antecedents into three groups of organization
mechanisms each associated with coordination, system or socialization capabilities. The first group
comprises the concepts relevant for coordination within organization as cross-function interfaces,
decision making participation and job rotation. The second represents the mechanisms associated
with formalization and routinization, while the third denote the connectedness within an
organization and socialization tactics. Having made an empirical research, they found that the said
areas influence RACAP and PACAP in a different way. Coordination capabilities increase PACAP,
socialization capabilities enhance RACAP, while the influence of system on AC was found to be
controversial. The analysis on the level of organizational antecedent level allowed to bridge the gap
in understanding of how organizational practices influence AC. However, the different influence
over ACAP and PACAP can be a subject of discussion, as the stream of works later on determined
the distinction between PACAP and RACAP not feasible (Jansen, Bosch, and Volberda 2005).
Lewin et al introduced a routine-based model of AC and subsequent set of antecedents,
splitting them into external and internal following Lewin and Massini’s classification (Lewin and
Massini, 2003). They identified the two set of factors, from the internal, firm, side the antecedents
would be organization structure, past experience, key people, and incentive and reward structures,
with the last two being firstly mentioned. From the external, environment, side they introduce
national innovation systems and institutional structure and R&D intensity. By doing that, Lewin et
all attempted to better operationalize AC.
Lane et al managed to summarize all the main and important streams of antecedents and
components of AC and integrate them into holistic model. It includes quite a numerous amount of
different factors and outcomes; therefore, I would like to discuss those that were either changed or
not mentioned in the paper at all. Firstly, they split environmental conditions into two:
characteristics of knowledge and relationships, the latter was integrated from Lane and Lubatkin’s
relational component (Lane and Lubatkin 1998) and named it “characteristics of learning
relationship”. Secondly, “characteristics of firm members’ mental models” was introduced thus
recognizing individual level of AC and claiming it as a multilevel construct. Thirdly, organizational
structure the importance of research of which Cohen and Levinthal stressed is presented and named
“Characteristics of firm’s structure and processes”. Overall, Lane et all put tremendous effort in
reviewing the field of AC and integrating the relevant theories into one framework that us quite
comprehensive (Lane, Koka, and Pathak 2006).
Though Todorova and Dursin published their paper after Lane et al, they based their new
model of AC antecedents not on the Lane’s, but on that of Zahra and George. The added two new
elements conditioning AC, these are power relationships and feedback loops. The first one was
meant to have a moderating effect between AC and competitive advantage, allocation of resources
by the administration can be suggested as an example of it. The feedback loops help to explain the
dynamic nature of phenomenon better, as they depict that the previous knowledge shapes the future
one. What is more, they changed the application of “social integration factors” not to only specific
processes, but for all dimensions, as Zahra defined AC as a set of organizational processes(Zahra
and George 2002) and each process is definitely includes social interactions, which seems to be a
valid argument (Todorova and Durisin 2007).
Fosfuri et all grounded his research in Zahra and George reconceptualization, exploiting their
split into PAC and RAC. They concentrated specifically on PAC that means “the ability to identify
and assimilate external knowledge” and investigated what the antecedents of it were. Firstly, they
found that the level of involvedness into R&D cooperation determine the magnitude of PAC,
whereby external knowledge acquisition plays significant role. Additionally, knowledge search
experience is suggested by them to be a key antecedent thus underlying path-dependence
component. What is more, they proved positive correlation between PAC and organizational
performance of a company.
Yeoh (2009) applied concept of absorptive capacity to understanding the nature of
knowledge transfer among two companies in a sourcing relationship. He stressed the importance of
realized and potential absorptive capacities and also determined their antecedents. Interestingly,
PAC was studied at interogranizational level, while RAC was studied at intraorganizational level.
The findings revealed that firstly the magnitude is mediated by the industry. As for the antecedents,
from PAC side three main contexts determine it: knowledge, institutional and relational. For
knowledge context there are two factors: knowledge relatedness that means how close technology
and manufacturing of the two firms are and knowledge characteristics that imply knowledge
articulateness and complexity. As for relational and institutional contexts, the former implies
cultural relatedness, while the latter implies the nature of linkages between firms, sponsorship and
partnership-based. As for RAC antecedents, at an intraoorganizationl level, the social components
are paid attention to, namely the extent of social embeddedness (meaning trust) and closeness of
interfunctional coupling (Yeoh 2009).
The significant effort in the concept clarification was made by Volberda et al. Having
conducted the bibliographical analysis of the stream of AC literature, they combined Cohen and
Levinthal and Zahra and George dimensions to produce the integrated model of AC process
including four dimensions as acquisition, transformation, assimilation and exploitation. Secondly,
they segmented antecedents into the three categories: managerial, interorganizational and
intraorganizational (Volberda, Foss, and Lyles 2010).
The other attempt to understand the AC antecedents from learning processes perspective was
conducted by Knoppen et all. They investigated how structural, policy, psychological and cultural
mechanisms influence exploration, assimilation and exploitation of knowledge depending on
relationships within learning dyad (Knoppen, Saenz, and Johnston 2011).
As a basis of operationalization of the antecedents of AC Volberda’s classification was
chosen due to the comprehensiveness, it includes he aspects from the previous works including: the
distinction between RACAP and PACAP; environmental conditions from Jansen and Van den
Bosch et all; antecedents from organizational from Andersen and Foss, Argote, Van den Bosch and
from Lane and Lubatkin, Lante et al, Lyles and Sall; managerial
antecedents from Kogut and Zander, Zahra and George. Thus, we have taken previously discussed
managerial antecedents and included them into Volberda et al’s operationalization; the summary of
it is depicted in Figure 1
(Dijksterhuis et al, 1999l Kogut and Zander, 1992;
Lenox & King, 2004; Zahra & George, 2002; Lane et
al, 2006; Todorova & Dusin, 2007)
• Combinative capabilities
• Management cognition/ dominant logic
• Individual knowledge development/sharing
• Firm Strategy
• Participation in decision making
(Andersen & Foss, 2005; Argote 1999; Van den Bosch
et al, 1999; Jansen et al, 2005; Yeoh, 2009)
• Organizational form
• Incentive structures
• Informal networks
• Internal communication
• Formalization and routinization
• Power relationships
• Closeness of interfuncional coupling
(Lane and Lubatkin, 1998; Lane et al, 2001; Lyles and Salk,
1986; Lane et al, 2006; Fosfuri & Tribo, 2008; Yeoh, 2009)
Knowledge creation and sharing
Alliance management systems
Dyad and network knowledge development and transfer;
(Todorova & Dursin,
2007; Zahra &
(Cohen & Levinthal, 1990; Zahra & George, 2003;
Jansen et al, 2005; Van den bosch et al, 1999)
• Appropriability regimes
• Technological opportunity
Absorptive Capacity process
Innovation and R&D
Prior related knowledge
(Cohen & Levinthal, 1990; Lane et al, 2001)
Depth of knowledge
Breadt of knowledge
Retrieval of knowledge
Short-term vs. long-term
Experience with knowledge search
Figure 1 Absorptive Capacity Operationalization (based on Volberda et al (2011))
1.2 Knowledge Management Practices
In order to define and classify knowledge management practice, we firstly take a broad
perspective and describe knowledge management origins to ground our research in the theory.
Having defined main concepts related to knowledge management, we proceed to selecting the
definition of the practices, describing the current views at their classification and finally merging
them into one comprehensive classification including all up-to-date researches as well as applicable
for the research goal in respect of its practice orientation.
1.2.1 Knowledge Management
The field of knowledge management emerged only in 1991, but since then has been
developing drastically receiving a lot of attention from the scientific society. The opinion that
knowledge is the only meaningful economic resource is quite widespread (Al-hawamdeh 2002) and
it clearly reflects the importance of knowledge for today’s world. Knowledge itself today is treated
as the key competitive advantage that a company can possess. The fact that the knowledge can be
managed seems to be essential for any developing organization.
There are two streams in knowledge management. The first stresses importance of the
concept “knowledge”. According to their definition, knowledge is presented as a sum of information
that helps the person to make right decisions in reaction to some circumstances. To this stream
belong Zack, Davenport, Prusak, Nonaka and Takeuchi, etc. Zack identifies contexts of knowledge
management that are strategic, knowledge and organizational ones. In strategic he underlines the
importance of addressing of its capabilities
by a firm to exploit its knowledge and gain a
competitive advantage (Zack 1999a). In knowledge context, the significance of the existing
knowledge is stressed in respect of its competitiveness: an organization must define its knowledge
gaps now and expected in the future. Organizational context is about both formal and informal
organizational structure, the roles people play, their relations and organizational culture.
Technology context describes the technological systems available to support knowledge sharing
inside the firm. Nonaka and Takeuchi underlines the importance of values. Depending of an
individual’s culture one will understand a piece of knowledge differently, thus knowledge has
different meaning for people from different cultural background. the same is applicable to individual
values (Ikujiro Nonaka and Takeuchi 1995).
In order to understand the nature of knowledge, one should segment it into different
components. Different taxonomies were introduced in the course of the first stream. Zack suggested
that it should be classified according to its nature defining the following types of knowledge (Zack
1999b): declarative (shared understanding, describes something), procedural ( the knowledge of
procedures, how something is done), causal (shared causal knowledge, understanding why
something occurs). Nonaka’s criteria for knowledge classification was the level of diffusion. He
determines the following levels (Ikujirō Nonaka and Hedlund 1991): individual, group, organization
as a whole, interorganizational. What is more, Nonaka and Takeuchi introduced a seminal
classification of knowledge having a great importance for the KM field development into tacit and
explicit knowledge. Explicit knowledge is the knowledge shared and available within or outside of
organization, while tacit knowledge is the knowledge one can have, work with, but that is not shared
The second stream is centered on the concept of “knowing”. The dynamic nature of
knowledge accumulation is stressed. Knowledge is created within internal processes and is recorded
in the memory of individual and organization. The frameworks are focused around two features: the
understanding of the stage when knowledge flow is made and understanding of the factors that start
Within the first group of this stream, it is suggested that knowledge management practices an
organization follows can become a new source of competitive advantage for any organization.
Bolinger and Smith treat knowledge as a key asset in a postindustrial society and favor wide
implementation of technologies in order to support knowledge systematization and availability
(Bollinger and Smith 2001). Knowledge management can also be treated as a business process.
Sarvary conducted a research on consulting companies and it showed that a system of creation and
exploitation of knowledge in the industry became one of the main factors of its high efficiency
The other group within the second stream was concentrated on defining the factors that can
foster or limit knowledge flow. Von Krogh research highlights the importance of the relationship
component in knowledge flow, only good relations will motivate parties to share knowledge
(Seufert, Von Krogh, and Bach 1999). Lang follows Von Krogh theory and continues it by saying
that good relations are formed within an organization’s culture, so he states that organizational
culture is very important for efficient knowledge management (Chinying Lang 2001). Inkpen
suggests that the factors for KM right and efficient implementation are: flexible target for education,
trust culture, commitment of top management and the existence of creativity chaos. These factors
taken together according to his opinion can significantly boost knowledge exploitation efficacy
within organizations (Inkpen 1996).
1.2.2 Knowledge Management Practices
To understand how particular knowledge management practices might affect AC we firstly
have to understand its definition and secondly its landscape. The latter is required for integration of
previous theoretical works and also for ensuring that none of them is missing within our research.
The concept knowledge management practices requires clarification, as for example
Andreeva claim that various concepts such knowledge tools (Massingham 2015), knowledge
enablers (Ho 2009; Pee and Kankanhalli 2008), “knowledge management initiatives” (Chawla and
Joshi 2010), can be classified under the term. However, all of them bear the similar characteristics
within, these are intentionality, knowledge management efficiency and firm’s performance
orientation. In the frames of this research, we follow the definition suggested by Andreeva and
Kianto that bears these characteristics too; knowledge management practices are defined as those
management practices that which support the efficient and effective management of knowledge for
organizational benefit (Schiuma, Andreeva, and Kianto 2012). Further on Andreeva and Sergeeva
narrowed down the definition of knowledge management practices, claiming that it is too broad. To
do this, they suggest identifying how a separate practice can govern a particular knowledge process
(Sergeeva and Andreeva 2013). However, it proved to be difficult to elaborate knowledge
management practices concerning particular processes due to under-review of them within the
literature. Thus, in our paper we follow Andreeva and Kianto’s definition.
Having defined the concept of knowledge management practices, we would discuss current
up-to-date theoretical contributions in the field, attracting various researches where practices though
not called KM ones, but falls under the aforementioned definition. Foss et all argues based on the
bibliographical analysis that the researchers preoccupied with macro-level, but pay less attention to
micro-levels, where knowledge management practices belong (Foss, Husted, and Michailova 2010).
Thus, while selecting the most appropriate classification for our research we use the following
criteria: comprehensiveness, by that meaning that the classification should include the previous
theoretical findings, obviously favoring the most recent ones; and connectedness with managerial
incentives, the classification should not be too broad or too narrow, so to provide link between
theoretical concepts and specific management practices one could perform concentrating on
Bhatt suggests that in order to exploit knowledge to the full extent a company has to balance
its knowledge management activities. Drawing on the fact that knowledge can be of various types
depending on its form (data, information and knowledge), he argues that sole reliance on
technological and social systems implementation and development is not sufficient. He supposes
that in order to maintain this knowledge flow what is important is not the social and technological
systems themselves, but rather their interaction. In order for a data to become information and
information to become knowledge, the three components of people, technology and techniques
should be aligned. Therefore, efficient KM is not about only management information, but rather
about a shift in organizational culture that requires change in the three said components. Thus, he
introduces three main streams of knowledge management practices: those related to people, those
related to technology and those related to techniques (Bhatt 2001). Though contributing to providing
more rich understanding of KM practices and conceptual dynamics of knowledge management, the
classification provided does not give particular insights onto which practices a manager should
Gold & Malhotra determined the main processes capabilities of knowledge management that
are essential for smooth knowledge flow based on the previous researches. These capabilities are
acquisition, conversion, application and protection. The first capability is connected to obtaining
knowledge, the second one deals with transforming the existing knowledge to the useful form.
Application capability ensures that the knowledge is used for the commercial ends, while protection
capability secures the knowledge a company has and restricts access to it from unauthorized parties.
They believed that a company can obtain them through practicing routines constituting these
capabilities and elaborated the scale measuring them based on these routines (Gold and Arvind
Malhotra 2001). Thus, Gold & Malhorta presented a classification both comprising theoretical
concepts and connecting them with particular managerial routines, hence this classification is
correspondent to one of the criteria initially set.
Husted and Michailova suggest that the most failures in knowledge sharing happen due to
the fact that people are inherently hostile to knowledge sharing. Thus, eliminating the hostility the
process of knowledge sharing can be significantly more useful. Three factors according to them
condition this hostility: reasons for hoarding, reasons for rejecting, attitudes towards mistakes.
Therefore, the ability to test the organization for these factors’ presence and subsequently to mitigate
these factors is critical for a successful knowledge sharing. These practices include (Husted and
Encouraging and stimulating knowledge sharing
Managerial actions related to knowledge transmitters’ behavior
Managerial actions related to knowledge receivers’ behavior
Managerial actions associated with content-related behavior
d. Those addressing all the three dimensions
Forcing and imposing knowledge-sharing
Related to knowledge transmitters’ and receivers’ behavior
Associated with content-related behavior
Addressing all the three dimensions
Though providing more or less clear managerial incentives, this classification
comprehensiveness is questionable, as providing only measures aimed at knowledge sharing
Foss summarizes the current at the time works connected with the emerged knowledge
governance approach. The approach foundation is the hypothesis that knowledge management
efficiency can be enhanced through deployment and development of various organizational
mechanisms like reward system, job rotation and organizational structure. Grounded on Coleman’s
Social Science model, his arguments claim that KM is preoccupied with high-level processes and
lack micro-foundations. He suggests that knowledge governance approach (KGA) can address this
gap and provide KM with such micro-foundations. KGA is supposed to deepen our knowledge in
the following practical fields: understanding how different incentives condition knowledge
processes from motivation side; what the best mechanisms for the promoting of knowledge
processes are; what the threats to knowledge management are and how to mitigate them (Foss
2007). Thus, Foss attracts attention to the significant side of knowledge management: practical one
stressing the importance of elaborating the clear link between governance mechanisms and KM
outcomes, but not providing clear managerial guidelines,
Hsu contributes to KM by establishing a link between knowledge sharing practices, human
capital development and a firm’s performance. Firstly, based on prior evidence he creates a model
that accounts for how KM practices improve a firm’s performance through human capital
development as an intermediary. On the sample of 256 Taiwan organizations Hsu investigates the
influence of two knowledge sharing practices, namely, information strategy and the values of top
management, on the said above indicators. It is worth mentioning that as performance indicators not
only financial ones are chosen, but a wider set. The findings show proved his initial suggestions. In
particular, innovation strategy is found to be a significant predictor of KM practices implementation.
As for the values of management, they are found to be another variable influencing performance
through human capital developing, specifically they enhance knowledge creation process (Hsu
2008). Overall, the proposed model elaborated a connection between knowledge management
practices and organizational performance, and thus lays a foundation for more thorough link
development, though, however, the range of managerial practices provided is quite limited.
Focusing on knowledge sharing process, they claim that a certain attention is required to
analyze KM from multi-level perspective, thus creating a level of how an individual participates in
knowledge transfer within the firm. Such practices derived by them from literature analysis are
rewards systems, mobility, personal rotations and leadership (Foss, Husted, and Michailova 2010).
Andreeva and Kianto split knowledge management practices into two branches: those
connected with information technology and those related with human resource management.
Andreeva and Kianto empirically tested which effect these practices have over competitiveness and
financial performance of 234 firms in Finland, Russia and China. It was found that the said practices
are strongly correlated with a firm’s performance; interestingly, KM practices have rather big
influence over it. What is more, ICT and HRM practices are found to be complementary and
interrelated, so in order to improve performance ICT practices should be combined with HRM ones
(Andreeva and Kianto 2012). Though providing clear managerial guidelines, the classification
presents to be too broad, not providing deep enough level of analysis.
Massingham investigated how specific knowledge management tool influence the
performance of organization, he proposes the list of knowledge management best practices based on
the previous articles review. He determines 4 toolkits and 16 tools that are assessed according to the
framework elaborated by him under the three dimensions: strategy, implementation and
performance. There are the following toolkits that he defines:
1. Knowledge strategy. It comprises three tools: competency mapping, future capability
requirements and sourcing decision
2. Knowledge creation. It includes more tools that the first one: creative abrasion, parallel
thinking, SECI model, expert teams, double-loop learning
3. Knowledge retention. It consists of interviewing, mind maps, videotaping, mentoring,
strategic action framework
4. Knowledge measurement. There are the following practices: knowledge valuation, cultural
change metrics, risk management.
The effectiveness of this practices was tasted in a large longitude 5-year project. The findings
revealed that the most effective toolkit according to the elaborated measures was knowledge
strategy, followed with knowledge measurement (Massingham 2014a). However, we argue that
toolkit level is too narrow for the current research, as it concentrates rather on knowledge
management particular instruments than more general practices concerned with knowledge
Lee and Choi investigate how knowledge management enablers affect processes and
organizational performance. Based on the literature review they determined the following
knowledge enablers (i.e. knowledge management practices): those providing collaboration, trust,
learning, centralization, formalization, t-shaped skills and IT support. The finding provided the
insights into the importance of cultural factors, lower significance of IT practices if taken separately
(Lee and Choi 2014). It provides factors important for effective knowledge management, but does
not focus that much on intentional and conscious managerial incentives, as it might prove to be
challenging to determine set of practices influencing trust or T-shaped skills.
Kianto et al studied the connection between KM practices and intellectual assets. The
classification of KM practices they presented included the following dimensions: strategic KM,
organizational structure, knowledge-sharing and – creation friendly culture, ICT practices, learning
mechanisms, HRM practices, knowledge protection mechanisms (Kianto et al. 2014). Inkenen et al
propose another classification of knowledge management practices. They divided them into ten
basic categories: supervisory work, knowledge protection, strategic management of knowledge,
learning mechanisms, information technology practices, work organization, recruiting, training, and
development, performance appraisal, and compensation practices (Inkinen, Kianto, and Vanhala
References to theories
Kianto et al Lee
Kianto, and (2014)
& Hsu (2008)
Kn. Management Practices
Kn. Strategy, Kn.
Creation, Kn. Creation, Kn.
Table 1 Classifications of Knowledge Management Practices
Supervisory work relates to the degree managers foster knowledge sharing behavior through
encouragement or introducing mistakes tolerant environment. Additionally, they can create the
atmosphere that enables equal discussion and serve a knowledge sharing role model for employees.
Knowledge protection involves practices connected with utilization of patents and laws in order to
protect a company’s existing knowledge assets. Strategic management of knowledge and
competence conditions to which extent knowledge is addressed while overall company strategy
formulation. What is more, it is connected with the practices such as benchmarking against
competitors. Knowledge-based recruiting practices include such actions as assessing ability to
learn of applicants or their ability to work in various environments. Knowledge based performance
appraisal incorporates practices binding the amount of knowledge one produced, stored or exploited
with a person’s key performance indicators. Almost the same is done with knowledge-based
compensation, though the reward is provided directly for knowledge creation, sharing or application.
IT practices implements the extent to which ICT supports and fosters information search and
discovery as well as communication within the firm. What is more, it addresses the way information
is delivered conveniently for better decision making. Work organization practices are concerned
with declaring duties, meetings, interaction and processes for employees to enhance knowledge
management efficiency. Learning mechanisms addresses the way knowledge transmitted from
experienced to unexperienced employees, the way a company stores the lessons learned and the way
employees make use of its exploitation. Knowledge-based training and development practices are
connected with the extent to which employees have a chance to develop their knowledge, to which
specific training with modern knowledge are provided and to which the needs of development are
discussed with employees. What is more, it assesses if specifically-tailored for individual needs
workshops are held by the company (Inkinen, Kianto, and Vanhala 2015).
We claim that the last one (by Ikinen et al) should be basis of our research, as it satisfies to
both of criteria initially set. Firstly, it provides comprehensiveness in terms of incorporating
previous researchers. For example, it encompasses IT and HRM practices suggested by Andreeva
and Kianto, also assessing them more detailed, namely splitting HRM into set of four practices:
recruiting, training and development, performance appraisal and compensation. What is more, it is
conceptually in lines with those practices aimed at decrease of knowledge hostility. More
specifically, Table 1 reveals how Ikinen et al (2015) classification encompasses the other
classifications, only relevant ones with sufficient practical focus are included within it. Secondly, it
provides clear managerial actions associated with each of KM practices
1.3 Relationships between Knowledge Management Practices and Absorptive Capacity
Volberda et all underline the importance of understanding of microfoundations behind AC
concept. These microfoundations are said to include learning how AC arises, influence performance
and how it is transformed into managerial actions. Additionally, they notice lack of empirical
research onto how managerial actions and individual agents influence AC (Volberda et al. 2010).
Todorova and Dursin encourage researchers to draw their attention to the antecedents and drivers of
AC and understand its importance (Todorova and Durisin 2007). Jansen et all also stress lack of
research of AC at individual-level. In addition, they point out at the importance of understanding
how organizational units manage their PAC and RAC (Jansen, Bosch, and Volberda 2005).
Therefore, by bringing conscious and intentional knowledge management practices and proposing
that they have influence over AC, we aim at introducing micro-routines way of AC enhancement.
Late et all highlighted the importance of characteristics of firm members’ mental model as an
internal driver of AC development (Lane, Koka, and Pathak 2006). Yeoh emphasized the
significance of cultural aspect for PAC enhancement (Yeoh 2009). Volberda et al offered
management cognition as a main source of AC from the side of managerial antecedents (Volberda,
Foss, and Lyles 2010). Inkenen argues that supervisory work is the most crucial factor for
developing organizational factor and through these practices a company can establish an innovative
culture (Inkinen, Kianto, and Vanhala 2015). DeTienne supports this argument by saying that
without the influence over culture of the management team the distribution of mature knowledge
management practices is questionable. Holsapple and Singh suggested that leadership is a catalyst
for many knowledge-related activities.
Zahra and George claimed that one of the antecedent of AC is activations triggers, by that
meaning external and internal events regarding the company (Zahra and George 2002), one of such
this events can be a need to develop knowledge expressed by management. Lane et al underlines the
importance of firm strategies as an internal drive of AC development (Lane, Koka, and Pathak
2006). Fosfuri and Tribo argue that R&D and cooperation is a source of PAC, and decisions to
cooperate are taken in the frames of KM strategy (Fosfuri and Tribo 2008). Knowledge management
strategy deals with identifying crucial strategic knowledge and elaborating knowledge strategy, the
needs of the firm and the way of measurement and monitoring knowledge (Inkinen, Kianto, and
Vanhala 2015). Thus, we suggest that the process of needs development can become an activation
trigger for AC and R&D cooperation can be a potential way of obtaining strategic knowledge.
Through focus on value-creating activities of an organization (Grant 1996) and tailoring firms
knowledge strategy with overall strategy (Zack 1999b) strategic knowledge management practices
are able to increase organization performance.
Even Cohen and Levinthal suggested that ease of learning is one of the antecedents of AC
(Cohen and Levinthal 1990). Zahra and George proposed that one other major antecedent of PAC is
experience, according to them experience is gathered through exposure to knowledge (Zahra and
George 2002), where learning mechanisms play crucial role, their suggestion is supported by
Todorova and Dursin and Volberda et al (Todorova and Durisin 2007; Volberda, Foss, and Lyles
2010). What is more, Volberda et all also underlined the importance of knowledge creation and
sharing, that is partially conditioned with learning mechanisms within a firm (Volberda, Foss, and
Lyles 2010). Lane et all proposed characteristics of learning relationship as one of the main external
driver of knowledge (Lane, Koka, and Pathak 2006). Learning mechanisms are conceptualized as
the improvement and increase of organizational knowledge and competence, and claimed that they
are crucial for effective knowledge management. In addition, these practices are claimed to increase
firm’s performance by delivering broader access to tacit and explicit knowledge (Inkinen, Kianto,
and Vanhala 2015).
IT practices can lower transaction cost and improve coordination and social interaction
(Alavi and Leidner 2001), which is claimed to be one of the major AC antecedents (Jansen et al.,
2005; Zahra & George, 2002). What is more, the integration of them would affect the knowledge
storage and retrieval through improved access to historical information and better opportunities for
codification (Inkinen, Kianto, and Vanhala 2015), thus affecting prior knowledge of the firm which
is suggested to be one of the main antecedents of PAC (Todorova and Durisin 2007) as well as an
antecedent of AC in general (Volberda, Foss, and Lyles 2010). Todorova and Dursin underlined
importance of social integration mechanism claiming that they serve a linkage between PAC and
RAC (Todorova and Durisin 2007). Jansen et all suggested that the degree of socialization positively
influences firms RAC. Yeoh believed that social embeddedness directly influences RAC. Thus, we
suggest that knowledge management practices connected with IT would affect PAC through
increase in the prior knowledge and affect AC in general through enhancing the link between PAC
and RAC with increase of socialization. Additionally, these KM practices are argued to increase
organizations performance (Inkinen, Kianto, and Vanhala 2015).
Practices connected with work organization determines the work design issues that enable
effective knowledge management (Inkinen, Kianto, and Vanhala 2015), to them belong the level of
involvement of employees into decision making that is suggested to be a driver of PAC.
Additionally, they include practices connected with exploiting cross-functional teams (Ikujiro
Nonaka and Takeuchi 1995), whereby closeness of interfunctional coupling is suggested as an
antecedent of RAC (Yeoh 2009). Work organization is also affect characteristics of firm’s structure
and processes (Lane, Koka, and Pathak 2006) and organization form (Volberda, Foss, and Lyles
2010) those being antecedents of AC.
Training and development practices enables monitoring and assessment of employees need
and providing them with an adequate training (Senge 1991).The deployment of such practices
allows to keep a company knowledge base up-to-date and update it systematically (Inkinen, Kianto,
and Vanhala 2015). The importance of knowledge base is highlighted as an antecedent of PAC in
many works (Zahra and George 2002; Todorova and Durisin 2007; Yeoh 2009; Volberda, Foss, and
Lyles 2010). Therefore, we suggest that knowledge management practices connected with training
and development can increase PAC through affecting firm’s knowledge base and company’s
As for knowledge management practices connected with knowledge-based compensation,
incentives structures are mentioned as one of the antecedents of AC (Volberda, Foss, and Lyles
2010). Additionally, rewards are claimed to change individual sharing behavior (Bartol and
Srivastava 2002) that is also an antecedent of AC (Volberda, Foss, and Lyles 2010). Therefore,
those KM practices can affect AC through raising employees incentives to engage into a company’s
activities and facilitating knowledge sharing, and thus increasing company’s performance.
To conclude, the brief proposition of interconnection between KM practices and AC
dimensions is presented in Table 2.
Firm's mental models (Lane et al.
Cultural aspect (Yeoh 2009)
Management cognition (Volberda et
R&D and cooperation (Fosfuri and
Knowledge sharing and creation
(Volberda et al. 2010)
Volberda et al
Knowledge base Degree
(Jansen et al 2005; Zahra and
and George 2002)
Knowledge base (Volberda et al.
2010; Zahra and George 2002)
of Characteristics of firm’s structures
Involvement in Closeness
decision making interfunctional
and processes (Lane et al 2006)
(Yeoh Organization form (Volberda et al.
Training and Knowledge base
Knowledge base (Volberda et al.
2010; Zahra and George 2002)
Knowledge base (Volberda et al.
2010; Zahra and George, 2002)
behavior (Volverda et al. 2010)
Table 2 Connection between knowledge management practices and absorptive capacity antecedents
What is more, AC is suggested to build firm’s competitive advantage (Lane, Koka, and
Pathak 2006). What is more, even its original definition itself explicitly implies that its main goal is
to apply knowledge to commercial ends (Cohen and Levinthal 1990).
However, the current scope of researches within the field still lacks investigations of
financial measures of performance (Lane, Koka, and Pathak 2006). What is more, many studies
concentrated on developing innovation as the only outcome of AC, what is inconsistent with seminal
work of Cohen and Levinthal who suggested rather general commercial knowledge exploitation, but
not the narrow focus on innovation performance (Kostopoulos et al. 2011).
AC allows to produce a greater degree of innovation, while innovation allows to be more
flexible in relation to external environment, manage complicated conditions, increase quality of
products and customer demand (Prajogo and Ahmed 2006). Subsequently, though the risk of
unsuccessful innovation exists (Baker and Sinkula 2005), there are significant positive relationship
between firm’s innovative and organizational performance (Walker 2005).
Thus, we suggest that absorptive capacity is able to influence over the organizational
performance of the firm. Bearing in mind that in our theoretical framework knowledge management
practices are used as a source of enhancing AC, we suggest that they would additionally enhance
Therefore, we propose the following theoretical framework of our study. Knowledge
management practices connected with supervisory work, KM strategy, learning mechanisms,
training and development, IT, work organization and knowledge-based compensation affect
particular dimension of AC and increase it through particular antecedents or group of antecedents, at
the same time influencing organizational performance. These proposed relationships are presented
in Figure 2.
Figure 2 Theoretical Framework of the Research
Summary of Chapter 1
Absorptive capacity development is suggested to be an essential for ever changing
competitive landscape and growing complexity of customer demand.
Therefore, firstly, we analyze what factors can serve a source of absorptive capacity, i.e. its
antecedents. We recognize the distinction between potential and realized absorptive capacity;
various antecedents of absorptive capacity have been investigated, classified and attributed to a
particular dimension where possible. Among them we determine managerial, intraorganizational,
interorganizational, related to prior knowledge and social integration mechanism ones having
integrated the up-to-date papers.
Secondly, knowledge management practices are conceptualized within these studies as
conscious and intentional managerial actions aimed at enhancing the effectiveness of knowledge
management within the organization. Based on the analysis of the literature we have elaborated the
classification of KM practices that is nor either too broad, nor too narrow. It consists of 10 KM
practices: supervisory work, knowledge protection, strategic management of knowledge, learning
mechanisms, information technology practices, work organization, recruiting, training, and
development, performance appraisal, and compensation practices.
What is more, we bridge the gap between KM practices and AC by proposing how specific
KM practice affects specific AC antecedent. Those connected with learning mechanisms, IT,
training and development are argued to influence a firm’s PAC. The ones related to IT, work
organization are claimed to be positively associated with a firm’s RAC. KM practices connected
with learning mechanisms, compensation and strategic KM are also suggested to influence KM,
though the special dimension of them haven’t been determined. However, have not been able to
trace the connection between knowledge protection, recruiting and AC antecedents.
Additionally, we suggest that as knowledge management practices are able to influence
absorptive capacity, and greater level of absorptive capacity is associated with higher financial
performance, we suggest that these practices would also increase financial performance of the
organization, whereas absorptive capacity would serve as a mediator.
Finally, we present a theoretical framework for this research that is presented in Figure 2 and
shows the proposed connection between KM practices, AC and firms’ performance.
2 EMPIRICAL STUDY OF RELATIONSHIPS BETWEEN KNOWLEDGE
MANAGEMENT PRACTICES AND ABSORPTIVE CAPACITY
2.1 Research Strategy
The aim of the research is to investigate knowledge management practices as a source of
development of absorptive capacity, additionally, we propose that absorptive capacity plays
mediating role between knowledge management practices and performance. The results of the
research will allow us to understand which conscious and intentional knowledge management
practices a manager should apply in order to increase a firm’s performance through increase in
absorptive capacity. Additionally, it will identify the amount of effect produced by these practices
through absorptive capacity as well as particular dimension it influences.
Deductive reasoning was deployed in the current research. Firstly, we grounded ourselves in
the historical theoretical contributions analysis in the fields of knowledge management practices,
absorptive capacity and performance. Secondly, based on that analysis, we have formulated the
proposed relationships between the aforementioned concepts. At last, we have checked it via survey
Beforehand, we would state the purpose of the study that is explanatory one, as with the
current research we try to establish causal relationships between the three variables: knowledge
management practices, absorptive capacity and a firm’s performance.
We propose using survey as a main strategy of the research due to the following reasons.
Firstly, for the need of the research relatively big population is required and survey allows collecting
vast amount of data in a quite resource-efficient way that is significant as there is no budget
allocated for the study (Saunders et al. 2007). Secondly, as an outcome of it a standardized data is
obtained that can be easily compared. Thirdly, it allows gathering qualitative data and organizing it
in a quantitative way that can be analyzed using different quantitative information processors
(Robson 2002) as e.g. IBM SPSS. However, using surveys can be challenging and there are some
limitations, mostly concerned about ensuring that the sample is representative and possibly
challenging data collection (Bell 2014).
Given the limited time frame of the research and relative difficulty of conducting of the
methods other than survey a mono-method is chosen.
Concerning the time-frame of the study, again because of the said time-limitations and
explanatory nature of study longitudinal time horizon is not as appropriate as cross-sectional one.
Moreover, this research seeks to shed light on less crucial elements and add more understanding to
the said variables to existing research on knowledge management and absorptive capacity. The unit
of observation is placed at an organizational level, although the unit of analysis is set at an
organization-wide level, drawing conclusions on the aforementioned link from data collected from
The geography of the survey is limited to one country. The data for the research was
collected in Russia.
The companies surveyed were chosen according to the following criteria: firstly, the
geographical one; secondly, number of employees, as we suppose that a firm has to have more than
20 employees in order to be more representative in using knowledge management practices which is
in line with current practice of KM researches; thirdly, legal form, we concentrated on those whose
aim was profit maximization.
Three data sources have been exploited during the data obtaining stage:
1. The first is Orbis, multinational database with different financial information about
companies. Orbis also allows to export e-mails of companies, after the criteria were met a
total of 200 000 companies’ e-mails were downloaded and survey was sent out. Due to the
fact, that it not always clear whether the letter was actually opened by someone or not
delivered due to various reasons, we rather use effective response rate that is equal to
approximately 6% that accounted for 35 responses.
2. The second stream of survey mail-out is the alumni database of Graduate School of
Management consisting approximately of 3000 graduates of the said school. Given the fact
that the mail out is rather targeted and welcomed, the response rate for this source 1% and
allowed to obtain 32.
In addition, the personal network of the author was used in order to increase the sample
size, 29 answers were obtained.
The questionnaire is structured in the following way:
1. Respondent’s and company’s profile. The section aims at gathering general information of
the company including control variables such as export level, number of employees, in order
to understand the profile of respondent.
2. AC measurement. This part allows to measure AC as a dynamic capability with a distinction
between PAC and RAC. To do so, the already established scale elaborated by Flatten et al
(2011) was used.
3. KM practices measurement. This part measures 8 fields of knowledge management practices
according to the theoretical framework on the already established scale elaborated by
Inkinen, Kianto, and Vanhala (2015).
4. Performance measurement. The last part is aimed at estimation of companies performance.
The performance is measured subjectively and the measurement scale is based on that by
The survey was sent out via e-mail with a text and a link to it. The online survey was made
based on SurveyGizmo platform. Before mail-out, the survey was piloted among few industry
specialists to ensure its correctness and understandability according to the guidelines (Saunders et al.
2.2 Measurement of Variables
During the development of the survey we would like to ground ourselves in the already
established constructs as much as possible (Churchill 1979), that have already been refined on the
big sample and tested for reliability and validity. Thus, we would firstly ensure the validity of the
scales both lowering the risk of measurement mistakes and reducing the amount of work to be done.
Secondly, we would concentrate more on the results analysis rather than scale elaboration that is
beneficial for the goal of the research.
2.2.1 Absorptive capacity measurement
The scale elaborated by Flatten falls under the criteria set, as its reliability and validity of
measurement on the set of two large scale German companies. What is more, the is based on the
thorough literature review (Flatten et al. 2011). One of the advantages of it is that the scale
elaborated embraces aspects beyond ones only applicable for technological firms and thus capturing
the greater degree of clarity of AC dimensions. In lines with the previous research and our
theoretical framework, two dimensions of AC are measured in order to provide us with the
estimation of PAC and RAC.
As for the first one, PAC, it is measured through surveying a firm’s development in respect
of two components: acquisition and assimilation, the processes responsible for absorbing
information from external environment. Acquisition, includes three items covering information
search within industry, beyond industry and role of management in those activities. Assimilation is
addressed by four items: cross-departmental communication and exchange of experience,
cross-departmental collaboration, speed of cross-departmental knowledge flow.
As for the second one, RAC, it is also measured with two components, transformation and
exploitation, thus representing how absorbed within PAC knowledge is changed according to the
needs of the firm and applied to commercial ends. Transformation covers four items: ability of
employees to structure and use knowledge, knowledge transformation practice, the ability of
employees to connect new and old knowledge and effectiveness of knowledge application. The
fourth variable is measured with three items: prototyping practices, technology update and the
effectiveness of new technologies update.
The variables are measured on 7-point Likert scale in lines with the previous researches. The
summary of the scale is presented in Table 3.
(Flatten et al. 2011)
Table 3 Absorptive Capacity Measurement Scale
2.2.2 Knowledge Management Practices Measurement
Again, following Churchill we use already established measures to measure extent to which
specific knowledge management practices are applied within companies. Inkinen, Kianto, and
Vanhalal grounded their scale in theoretical analysis, elaborating 10 knowledge management
practices 7 of which we use according to the theoretical framework we have elaborated. Internal
consistency of the scale was tested and proven through measurement of construct validity and
convergent validity and discriminant validity. All items were found to measure the specific
constructs they intended to (Inkinen, Kianto, and Vanhala 2015).
The set of knowledge management practices is to be measured including those connected
with learning mechanisms, training and development, IT, knowledge-based compensation, strategic
knowledge management, work organization and supervisory work. To do so, the scale elaborated by
Inkinen was adopted.
Learning mechanisms are measured with 3 items concerning the way knowledge is stored
and made use of. Training and Development measurement involves 4 items. They are connected
with the extent to which employees of a company are able to receive up-to-date knowledge within
trainings. IT practices are addressed with 6 items about the broad range of ICT usage to facilitate
information search, discovery, improve decision making and communication processes. Strategic
KM, measured with 4 items, determines the degree to which company addresses its knowledge
competences strategically. Work organization refers to 5 items that declare how daily operations are
structured in respect of decision making, meetings, working groups, etc. 7 items related to how
supervisors enable knowledge-sharing address Supervisory Work variable. Knowledge based
compensation is measured with 3 items and reflect how companies reward knowledge-related
7-point Likert scale was deployed to measure the suggested variables. The summary of the
scale is presented in Table 4.
7-point Likert scale
Training and Development
7-point Likert scale
and Vanhala 2015)
7-point Likert scale
Knowledge 7-point Likert scale
7-point Likert scale
7-point Likert scale
7-point Likert scale
Table 4 Knowledge Management Practices Measurement Scale
2.2.3 Organizational Performance Measurement
Firm performance is generally suggested not an easy task to measure (Flatten et al. 2011).
We decided to capture firm performance as a subjective measure with five items, and for each item,
the respondents specified their respective level of satisfaction with their firm’s performance relative
to its competition (Covin and Slevin 1988; Pelham 1999). Furthermore, the interpretation of
subjective, relative performance data tends to be more accurate across diverse contexts, for example,
across industries (Covin & Slevin, 1989), and a high correlation between subjective and objective
performance indicators has been demonstrated in several studies (Chandler and Hanks 1993)
Organizational performance was measured by six items developed from Khandwalla (1977)
and later on adapted to KM by Hsu (2008).The scale reflects a range of performance indicators and
included long-run profitability, growth rate of revenues, employee satisfaction, employee
productivity, goodwill and product (or service) quality.
It is measured on 7-point Likert scale. The scale is summarized in Table 5.
7-point Likert 5
(Khandwalla 1977; Hsu
Table 5 Organizational Performance Measurement Scale
2.3 Results Analysis
To begin with, there are methodological discrepancies in respect to whether Likert-scale
surveys results can be analyzed with parametric techniques. However, if analyzing not particular
items within the survey, but rather composite variables, such discrepancies can be avoided (Boone
and Boone 2012). In our research, these composite variables (e.g. RAC or PAC) are represented
with the summation of the items they comprise, which is in line with the aforementioned guideline.
In order to answer the research sub-question one, namely, how do specific knowledge
management practices influence the particular dimension of absorptive capacity, the two model has
to be built. Since we determined in the theoretical review that AC has PAC and RAC dimensions,
we have to build a model for each of it: the first one connecting KM practices and PAC; the second
one connecting KM practices and RAC.
We have conducted hierarchical linear regression with three stages to analyze first two
models. This type of the regression allows to estimate how addition of new variables influences the
model fit as assessed by R square change. However, the addition of new variables on theoretical
grounds (Pallant and Manual 2007). Thus, within first step only control variables were added as
predictors; while performing the second step we increased the complexity of model by addition of
proposed within theoretical review variables. Lastly, we added the rest of variables still not used
within the regression. Based on the results, we compared models’ fit and selected the best one. The
models of the regression are build according to design presented in Figure 2.
Since this type of regression is quite sensitive to unconditional data, few assumptions have to
be met before the test can be performed. The assumptions of it are the following independence of
errors, homoscedasticity, normality of errors, absence of multicollinearity and outliers (Tremblay,
2013). Therefore, we checked if the data is correspondent to the assumptions of hierarchical
multiple regression analysis and transformed it where required, e.g. through calculating logarithms
from age and number of employees to secure normal distribution.
Figure 3 Model of relationships between KM practices, AC and performance
To answer the second research sub-question question, namely, how these knowledge
management practices influence performance through absorptive capacity, we have to test for
mediation. Though the majority studies follow Baron and Kenny’s approach, probably, the most
well-known one, to determine whether the mediation effect presented in any relationships between
more than 2 variables (1986), the approach was heavily criticized and proven to be one with the
lowest power in determining of the aforementioned mediation effect (Fritz and MacKinnon 2007).
Therefore, for the answering the aforementioned research sub-question, the alternative approach was
chosen. We did not use Sobel’s test, as it required the distribution of indirect effect to be normal
(Sobel 1990). However, the approach involving both structural equation modelling (SEM) and
bootstrapping was suggested to be a perfect fit for mediation detection, as it is supposed to have
the greater detection power and higher reliability (Hayes 2009). The model of relationship is
presented in Figure 3.
The variables used within the three models are approximately the same, therefore they are
presented below in Table 6.
Measured amount of realized absorptive capacity
Measured amount of potential absorptive capacity
The cumulative measured amount for PAC and RAC
The extent to which KM practices connected with work organization
Logarithm of company’s number of employees
Logarithm of company’s age
Industry to which a firm belong
The extent to which KM practices connected with training and development are
The extent to which KM practices connected with learning mechanisms are
The extent to which KM practices connected with information technologies are
The extent to which KM practices connected with strategic knowledge
management are used
The extent to which KM practices connected with knowledge-based
compensation are used
Table 6 Variables Description
Before the analysis, we have screened the data, checked for errors and changed in order to
meet the assumptions of the multiple regression, that included ensuring the absence of outliers,
independence of observations, linearity of relationship, homoscedasticity of residuals, and absence
of multicollinearity (Tremblay 2013).
After the said procedures the sample of 94 observations remained for the further analysis.
Figure 4 Distribution of responses by industry
In our sample the industries were classified according to European statistical classification of
economic activities. Six industries account for approximately 87% of the whole sample. The
prevailing one is professional, scientific and technical activities having 20% of all data that can be
explained with the fact that more than half of sample belong either to the Graduate School of
Management Alumni Database where this industry is major employer or to the authors of this paper
to which the same can be applied. The following most responses-heavy industry are manufacturing
and wholesale with 19 % and 15 % respectively. These two industries are followed with information
and communication industry that accounts for significant part of the sample, 14%. Financial and
insurance activities as well as transportation and storage represent fifth and sixth the most responses
heavy industries, each accounting for approximately 10%.
Age-wise, most of the firms presented fall into category from 30 to 50 years, their number is
52. As for the category comprising firms younger than 10 years, there are only 15 such firms and
they are relatively under-represented within the sample, which may be explained with the fact that
they have not possibly met the criterion of more than 20 employees used for survey mail-out.
Additionally, the quite large portion of firms, around 30%, are well-established ones with history of
more than 50 years.
< 10 years
Figure 5 Distribution of response by firms' age
< 100 employees
Figure 6 Distribution of responses by number of employees
As it was expected, the prevailing size of firms measured through a proxy of number of
employees is less than 100 accounting for approximately 41% of the whole sample. It is worth
mentioning, that we have obtained equal number of responses from firms with the number of
employees in the range from 100 to 500 and more than 500 with 27% each. The distribution by
number of employees within the sample is depicted in Figure 6.
In Table 7 the descriptives of the variables used are presented. The level of PAC among the
sample is averagely moderate with mean equal to 32,88 (whereas maximum is 49, so representing
67% of maximum) with minimum as low as 14 (28% of 49 possible) and maximum of 49 (98% of
all possible). As for the RAC, the level of it is approximately the same as for PAC, and is equal to
33,26 (68% of 49 possible). The standard deviations for both of the dimensions are relatively low.
Number of employees Emp
KM practice: strategic SKM
KM practice: training TD
KM practice: learning LM
Table 7 Descriptives of variables
However, as for KM practices they are found to be under-developed within the current
sample. Knowledge-based compensations showed the lowest ratio of mean to maximum possible
one, that is equal to 54% with minimum as low as 3. The second lowest score according to the said
ratio is strategic knowledge management with 59%. These low ratios indicate that these two KM
practices field are least developed in Russia, if we allow ourselves to make generalization.
Supervisory work belongs to the most developed field of KM practices with the aforementioned
ration of 84% followed with work organization and 76% respectively.
Performance-wise, the mean performance represents 76% of possible maximum, thus we can
conclude that generally the employees surveyed perceived performance of their companies
Summary of Chapter 2
The survey was deployed as a main research strategy of this study, as it allows to gather
relatively large amount of data and can aid shedding light onto casual relationships mentioned in the
research questions, at the same time allowing for greater generalizability. The research is
explanatory in nature and a cross-sectional one.
The survey was elaborated that consists of four sections: company and respondent’s profile,
absorptive capacity, knowledge management practices and performance measurement. During the
survey preparation, we aimed at the usage of already established concepts and adopted scales from
Khandawalla (1977) and Hsu (2008), Inkinen, Kianto, and Vanhala (2015) and Flatten et al. (2011).
The control variables included number of employees as a proxy of firm size, industry and firm age.
The three sources of data gathering were used; e-mails for electronic questionnaire send out
were obtained from alumni database of the Graduate School of Managements, Orbis database and
personal network that allowed to gather 94 responses cumulatively.
The analysis of the responses was conducted quantitatively deploying two statistical
processes: IBM SPSS and Amos, add-on module for the IBM SPSS, the former used for the first
research sub-question and the latter for the second one.
As for the first research sub-question, the findings revealed that there is a positive association
between knowledge management practices and dimensions of absorptive capacity. Namely,
potential absorptive capacity can be influenced with the set of two knowledge management
practices: those connected with learning mechanisms and those connected with work organization
that is in line with the theoretical review. What is more, four knowledge management practices,
specifically those connected with learning mechanisms, training and development, work
organization and IT, were found to influence firm’s realized absorptive capacity.
However, though in the first chapter we proposed that absorptive capacity could mediate the
relationship between knowledge management practices and performance, this proposition was
proved to be wrong and no significant evidence of indirect effect of knowledge management
practices through absorptive capacity over organizational performance was not found.
3 DISCUSSION AND CONCLUSIONS
As it was said before, the aim of the thesis was to provide a manager with quite detailed
guidelines of what specific management practices he or she should apply in order to increase firm’s
absorptive capacity and subsequently performance. Within this section we provide the answers
according to the set research sub-questions.
How do specific knowledge management practices influence the particular dimension of
KM Practices and PAC
The model is designed to measure whether particular KM practices have significant
influence over PAC in order to test the proposed relationships. As it was said before, the model was
tested in three following steps:
1. In the first step we tested only control variables, namely industry, number of employees and
2. In the second step we added those KM practices that were proposed to affect PAC,
specifically those connected to training and development, learning mechanisms, information
technology and work organization.
3. In Step 3 we assessed all the KM practices used in the study.
Thus, the regression equation is shown in Equation 1 below, while the description of the
variables used within the equation can be found in Table 6.
Y = b0 + b1 WO + b2 Emp + b3 Ind + b4 TD + b5 LM + b6 IT + b7SW + b8 SKM + b9 KBC + ɛ,
Equation 1 Regression equation: KM practices and PAC
Having run the hierarchical multiple regression in IBM SPSS we have received the results,
summary of which are depicted in Table 8. All the three models proved to be statistically significant
(p < 0,01). However, variable Age was excluded, as it created unacceptable autocorrelation level as
assessed by Durbin-Watson (2,654, whereas acceptable level is from 1.5< t < 2.5). Stage 1 model
including two control variables is able to explain only 9,6% of variance, within it number of
employees was not statistically significant. When the complexity was increased by adding KM
practices connected with learning mechanisms, work organization, IT and training and development,
the model fit drastically rises to 54,4%, indicating the correctness of theoretical review made. The
subsequent addition of variables only lowers the model fit.
whereas p < 0,1 is “*”, p < 0,05 is “***”, and p < 0,01 is “***”
Table 8 KM practices and PAC model description
The results suggest that control variable number of employees (if not taken as a logarithm) is
positively associated with PAC implying that the bigger the firm is, the higher PAC it might have
(-2,29, p < 0,01), whereby control variable industry is not statistically significant (p>0,05).
The influence of variables TD and IT has not proven to be statistically significant (p>0,1).
Thus, we have not found statistically meaningful positive relationship between both KM practices
associated with training and development and information technologies and PAC.
LM and PAC
KM practices connected with learning mechanisms address the way knowledge is
transferred, the way a company stores the lessons learned and the way employees make use of its
exploitation. Knowledge management practices connected with learning mechanisms are positively
associated with the firm’s PAC (0,71, p < 0,01), thus meaning that the greater extent to which these
practices are applied within the firm, the greater its AC.
The positive relation of LM and PAC might be explained by the fact that through elaboration
of more effective learning mechanisms a firm also develops the ability to acquire and assimilate
(that are two main elements of PAC) knowledge (Bosch et al. 2005). Following the logic proposed
by Cohen & Levinthal (1990), the prior to learning knowledge limits the scope of knowledge search
and acquisition causing path dependency. Therefore, these practices allow to increase the amount
and scope of knowledge and to decrease a possible lock-out a firm might have concentrating only on
the current knowledge.
As development of learning mechanisms includes the better and more efficient storage of
best practices and lessons learned, it must accumulate experience that is one of the antecedents of
PAC according to Zahra and George (2003). The broader scope of prior knowledge and experience
might allow a firm observe a broader range of opportunities of knowledge acquisition (Cohen and
Levinthal 1990). The prior knowledge gathered by firm conditioned by learning mechanisms that
are deployed within it and determines the extent to which they allow the firm to get out of path
dependency and observe richer environmental landscape.
What is more, learning mechanism must also influence intraorganizational antecedents of
AC as they must influence the learning relationships between two firms during knowledge exchange
activities (Lane, Koka, and Pathak 2006).
WO and PAC
KM practices connected with work organization are concerned with declaring duties,
meetings, interaction between employees and external stakeholders and processes to enhance
knowledge management efficiency. The findings showed these practices positively influence the
firm’s potential absorptive capacity (0,64, p < 0,01).
These findings are in line with the previous researches. For example,
employees in decision making is suggested to be one of the antecedents of PAC and within this set
of practices such choice is made (Bosch et al. 2005). Through such empowerment, the independency
of employees might increase as well as the degree of centralization decrease, thus meaning that
within the frames of daily decisions the greater scope of information from greater number of actors
is involved that ensures the higher quality of decisions made.
Additional impact on PAC by these practices can be traced through affecting such items as
informal communication and lower degree of formalization. Through increase in informal
communication, knowledge flows within firm might increase as well within as well as between
departments, and therefore knowledge distribution would change, as more employees would obtain
information they never received before. Through lower degree of formalization, the employees
might be better able to guide their own activities and more perceptive to external opportunities, as
they no longer would have to follow strict routines. Therefore, their ability to acquire and assimilate
information from external environment might increase, as these practices might affect individual
knowledge sharing behavior.
What is more, KM practices connected with work organization affect firm’s structures and
processes (Lane, Koka, and Pathak 2006). Within these structures and processes, knowledge flows
within are determined. Thus, through improving the efficiency of processes, e.g. through
introduction of specific processes connected with meetings, a firm could increase its AC. Lastly,
these practices might determine the processes firms apply to dealing with external knowledge
sources and thus allows to capture broader scope of knowledge increasing its ability both to acquire
and assimilate it.
IT and PAC
KM practices connected with IT determines the extent to which ICT supports and fosters
information search and discovery as well as communication within the firm. The findings revealed
that there is no statistically significant relationship between such practices and PAC in contrary to
our suggestions. Though these practices are claimed to affect prior knowledge base of the firm
(Inkinen, Kianto, and Vanhala 2015) that us strongly connected with the firm’s PAC (Todorova and
Durisin 2007) and lower transaction costs and improve coordination (Alavi & Leidner, 2001), such
effect was not found (p > 0,01). The possible explanation behind the absence of the effect might be
presence of nonlinear relationship between them.
KM practices and RAC
Equation 2 represents the formula for the second model, KM practices and RAC. As with the
previous equation, the variables description can be found in Table 6.
Y = b0 + b1 Age + b2 Emp + b3 Ind + b4 TD + b5 LM + b6 IT + b7SW + b8 SKM + b9 KBC +
b10WO + ɛ,
Equation 2 Regression equation: KM practices and RAC
The model is designed to measure whether particular KM practices have significant
influence over RAC in order test the suggested relationships. Following the same approach, the
model was tested in three steps:
1. In the first step, only control variables such as number of employees, industry and age were
used as independent variables for prediction of RAC.
2. In the second step, those KM practices that were proposed to affect RAC were added
including those connected to information technology and work organization.
3. Lastly, the rest of variables was added.
On finishing analysis with IBM SPSS, we provided the brief summary of the results of the
aforementioned steps of hierarchical multiple regression in Table 9.
whereas p < 0,1 is “*”, p < 0,05 is “***”, and p < 0,01 is “***”
Table 9 RAC and KM practices model description
The results of all the three steps are statistically significant (p < 0,01). Step 1 including only
control variable is able to explain only 13,1% (as assessed by adjusted R2) of variance. With the
increase in еруcomplexity by adding proposed KM practices connected with IT and work
organization, the model fit was significantly raised to 72,8%. The addition of the rest of the
variables leveraged it until it reached 80,7%. Given the superior model fit of Step 3, it is deployed
for further analysis.
Interestingly, the control variable did not show statistical significance, the only one, number
of employees, is statistically significant at p < 0,1, the level of which we would not accept. Thus,
age of the firm and industry it belongs as well as number of employees do not condition a firm’s
As we have determined in the theoretical framework, KM practices connected with IT have
positive association with RAC (0,36, p < 0,01). It implies that the vaster amount of the IT
management practices a manager applies fostering for example information search and discovery or
improving communication efficiency, the higher should be the firm’s RAC. What is more, we have
confirmed positive relationship between KM practices connected with work organization and RAC
(0,40, p < 0,01). Thus, the extent to which a manager is involved into setting the productive work
setting for example involving the employees into decision making or establishing rather flexible
work duty for them enhancing their independence.
What is more, on top of the KM practices that were proposed to have influence over RAC in
Chapter 1, we have found that two other KM practices had statistically significant influence over
RAC, these are the practices connected with learning mechanisms (0,47, p < 0,01) and training and
development (0,36, p < 0,01) which have moderate effect over AC. Though we have not found any
evidence of these in the theoretical literature, these relationships are definitely meaningful. Hence,
it implies that if a manager contributes to development of information transferring processes
between employees (e.g. through mentorship) and its further exploitation as well as to proving them
with opportunities to deepen their expertise through various trainings (including those specifically
tailored for an individual’s needs), he or she will be able to enhance its firm’s RAC.
LM and RAC
Knowledge management practices connected with learning mechanisms were also found to
be source of RAC (0,47, p < 0,01). This relationship has not been suggested initially, as there was no
clear link between the antecedent and these practices. However, the evidence found are significant.
We suggest that the link between these practices and RAC exist due to the following reasons.
As a brief reminder RAC deals with transformation and commercial exploitation obtained with
PAC. Thus, the possible explanation might be that the ability to transform knowledge also depends
firstly on the processes and routines that govern dealing with knowledge and secondly on the
experience of dealing with knowledge in general, that is obtained within learning mechanisms
practices. Therefore, we suggest that the more a manager invests into the development of learning
mechanisms, namely, into learning transfer between employees, way it is stored and exploited, the
higher RAC his or her firm will have.
WO and RAC
Knowledge management practices connected with work organization were also found to be
positively associated with firm’s RAC (0,40, p < 0,01). This is in line with previous studies that
claimed there was a connection between closeness of interfunctional coupling and RAC (Yeoh
2009). The connection between those two variables can be traced to the following reasons. Firstly,
work design determined with these practices enables more efficient knowledge transformation.
Secondly, the greater interaction between department not only increase knowledge flow, but also
contributes to the understanding of business situation and thus enhances one’s ability to determine
the gaps to be fulfilled and to subsequently fulfill them, Thirdly, it allows to deepen internal
networking creating additional links between the employees and increasing their knowledge base.
TD and RAC
Though not being suggested initially, the significant association between RAC and KM
practices connected with training and development was found (0,36, p < 0,01). Mostly, these
practices are claimed to affect the firm’s knowledge base (Volberda et al. 2010), which is the
antecedent of PAC, not RAC.
However, there can be few explanations to this unexpected finding. Firstly, receiving
adequate training and development must increase one’s ability to transform existing knowledge to
connect it with the new one. Secondly, the general increase in expertise must also attribute to the
ability of employees to apply the transformed knowledge to commercial means. They must be able
to better identify product and process innovation opportunities and see ways to improve it with the
existing knowledge. Additionally, we claim that the presence of tailored to one’s needs trainings
must increase employees’ motivation to work in specific areas and this motivation coupled with the
expertise received must positively affect the ability to exploit the knowledge to commercial ends.
IT and RAC
Knowledge management practices connected with IT were initially suggested and further
approved to have a positive association with the firm’s RAC (0,36, p < 0,01). The influence of these
practices goes in the different directions. Firstly, IT practices are able to create a common ground
for interaction organization-wise bridging different organizational units and departments. It builds
better degree of socialization crucial for RAC (Bosch et al. 2005). Secondly, they are claimed to
increase knowledge based of the firm through providing various convenient tools for knowledge
storage and retrieval (Inkinen, Kianto, and Vanhala 2015). We suggest that these practices enhances
expertise of the employees allowing them to better transform knowledge they possess.
Does absorptive capacity serve a mediator in the relationship between knowledge
management practices and organizational performance?
Already having in possession the information about which particular variables had
statistically significant association with AC, we eliminated those practices that did not have such
association from the current model. Hence, only the four of them left: KM practices connected with
training and development, learning mechanisms, information technology and work organization.
Following guidelines of Wang and Hu (2010) we performed bootstrapping procedure with
2000 bootstrap samples and 95% bias-corrected confidence interval. The analysis yielded the
following result depicted in Table 10, the indirect effect over organizational performance through
AC as a mediator is low and insignificant at 95% confidence interval and two-tailed significance test
for all the knowledge management practices presented in the model. Thus, we can conclude that
there is no indirect effect among KM practices and organizational performance through AC.
whereas p < 0,1 is “*”, p < 0,05 is “***”, and p < 0,01 is “***”
Table 10 Estimates of the KM practices, AC and performance model indirect effects
Thus, we did not find evidence that AC mediates the relationship between knowledge
management practices and organizational performance within the current sample. There are few
possible explanations behind these findings.
Firstly, it might be caused with performance measurement specificity. In the previous
literature, the outcome of AC is mostly measured through innovative performance only. Though the
correlation between innovative and financial performance was found to be significant in the sample
of developed countries (Walker, 2004), it might not be so in the emerging markets context that we
Secondly, the sample of the firms within the study is industry-rich and is not limited by only
technological companies. Not-technological companies are claimed to be less involved into
innovative activities and thus must benefit less from its increase from AC development. And if
assume that the main outcome of AC is innovative one, the non-reflection of building AC onto
firm’s performance is quite understandable
The other possible reason for the absence of proposed relationship is that the financial
performance and innovative performance do not occur at the same time, but are time-lagged. As this
study is not longitude in nature, the current research strategy probably was not able to capture the
subsequent increase in financial performance after innovative performance enhancement.
3.2 Theoretical Contributions
The crucial problem of lack of practical perspective on how firms’ AC can be approached by
managers is attempted to be addressed with this research. The study investigated the relationship
between the prominent components of the management literature: knowledge management practices,
absorptive capacity and performance. Theoretical implications are discussed further.
Firstly, grounded onto the careful literature review, antecedents of AC were determined and
classified. The classification is based on the work of Volberda et al (2010) and enriched with
important articles on the topic written later. It comprises 5 groups of factors: managerial
antecedents, intraorganizational antecedents, interorganizational antecedents, prior related
knowledge, social integration mechanism and environmental conditions. Therefore, with this
classification we contribute to the increase of understanding the dynamics of AC concept increasing
the variety of factors within it (Zahra and George 2002; Todorova and Durisin 2007; Volberda,
Foss, and Lyles 2010; Lane and Lubatkin 1998).
Secondly, we contributed to understanding of the concept of KM practices by highlighting
discrepancies in its definition, and bridging one of the most prominent one, that defines KM as
intentional management practices that which support the efficient and effective management of
knowledge for organizational benefit (Schiuma, Andreeva, and Kianto 2012), with the current
theories on actions that correspond to this definition (Husted and Michailova 2002; Massingham
2014b; Gold and Arvind Malhotra 2001) (though sometimes not being called KM practices).
Additionally, we have justified and elaborated the benefits of classification of KM practices
introduced by Inkinen, Kianto, and Vanhala (2015), proving that it comprises all the relevant
elements investigated in the field in the previous researches. Thus, we have defined, justified the
usage and enumerated the 10 specific groups of KM practices connected with supervisory work, KM
strategy, work organization, training & development, etc.
Thirdly, we developed theoretically and tested empirically the link between particular
dimensions of AC and the aforementioned KM practices. The logic behind the connection between
the said components is that specific KM practices are able to influence specific antecedent of AC,
thus increasing its overall level. The establishment of the link contributes to the theories describing
AC as a dynamic capability that can be enhanced (Volberda, Foss, and Lyles 2010; Zahra and
George 2002) and also sheds light onto the noted need to find how managerial actions can affect it
(Lewin, Massini, and Peeters 2011; Lane, Koka, and Pathak 2006). To establish the links, we used
aforementioned KM practices, the majority of which were suggested to have connections with AC
through influence over antecedents according to the theoretical review, these connections are
mentioned in Table 2. However, not all of the proposed practices were found to comply to our initial
suggestions, thus providing a challenge for the topic further development and clarification.
Specifically, we found evidence of four practices to affect either a particular or both dimensions of
PAC. Additionally, we separate the effect of KM practices on particular dimensions of AC, namely
PAC and RAC, thus increasing understanding of them (Fosfuri and Tribo 2008; Enkel and Heil
2014) through elaborating the reasons behind these influence. What is more, we established the link
between particular KM practices and these dimensions, thus showing how managerial actions can
influence them, the need to understand which was underlined (Volberda et al, 2010). This
connection was established on the micro level and to some extent the said KM practices can be
treated as AC routines (Lewin, Massini, and Peeters 2011). Additionally, the link establishment
contributes to realization of the wide range of the outcomes that KM practices can have on
organization, that is extended from intellectual capital (Inkinen, Kianto, and Vanhala 2015) to AC in
the case of the paper.
Lastly, we have investigated the influence over AC over firms’ performance and noted the
lack of the researches on the topic beyond innovative performance (From intro). Thus, we have
proposed to connect AC influence with organizational performance including wide array of
parameters assessing both financial and organizational factors. The model built reflected the
following reasoning: based on the literature review we understood that AC influences performance;
based on the first research question answer we realized which KM practices affect AC, thus we
suggested that KM practices might also influence organizational performance whereas AC served as
a mediator. However, the empirical findings showed that the indirect effect of KM practices over
organizational performance is negligible and insignificant. With the understanding of it, we have
contributed to understanding of to what extent KM practices can influence organizational
performance through AC. Though the evidence of relationship was not found, the possible
explanations behind it should urge the researchers of AC performance outcomes to estimate both
innovative and organizational performance or apply longitude design to understand the reasoning
3.3 Managerial Implications
The managers today face the greater complexity of environment both from side of
competitors and customers and also fast-paced technological change. In order to remain competitive
one should be able to exploit external sources of knowledge to the maximum, that ability can be
described as AC. Therefore, to enhance it, a manager can follow the set of practices described within
this research. The set of intentional and conscious knowledge management practices was presented
and the effect they have over particular dimensions of absorptive capacity was tested. Though we
have not found the presence of indirect impact of absorptive capacity over performance, there are
studies that explicitly tells that there such effect exists (Kostopoulos et al. 2011; Lane, Salk, and
Lyles 2001; Fosfuri and Tribo 2008). Therefore, the identified managerial practices can aid a
manager in increasing his or her firm’s performance.
AC is a multidimensional concept consisting of potential and realized components and
these components are claimed to be not just summation (Volberda et al. 2010). As we have
discussed before, the effectiveness of AC is also determined with the connection between PAC and
RAC that is done through social integration mechanisms (Zahra and George 2002). Therefore, a
manger can diagnose the current level of PAC and RAC a firm has and address the opportunities of
its enhancement with the knowledge management practices we have tested.
More than that, a manager can also identify which dimension of AC capacity is
underdeveloped and address it with the specific KM practices. For example, to address PAC, the
two groups of knowledge management practices can be used: those connected to learning
mechanisms and those associated with work organization, as our study has found the positive
correlation between them and PAC. Concerning the former, they mainly tackle the methods of
knowledge transfer from experienced to experienced employees and includes practices such as
mentoring. What is more, it addresses the way a firm stores lessons learned and best practices and
the way they are further exploited. As for those connected to work organization, they are making use
of managers’ ability to set the duties for employees, declare the formats of meetings (formal or
informal, equal discussion or not), etc. to increase knowledge flow effectiveness. Therefore, a
manager establishing knowledge-friendly learning mechanisms and work organization will be able
to take advantage of higher PAC and enjoy more efficient knowledge acquisition and assimilation.
If speaking about RAC, set of four KM practices is positively associated with higher level of
it. These practices are those connected with IT, work organization, training and development and
learning mechanisms. As two of them were already discussed we would continue describing the rest.
IT practices includes the improvement the extent to which information technologies foster
knowledge search and communication within company. Training and development practices
comprises the provision of employees with training (general and tailored to individual needs), their
needs discussion. Thus, through provision of training, improving IT systems, enhancing learning
mechanisms and increasing efficiency of work organization, one could improve RAC.
3.4 Limitations and Directions for Future Research
There are few following limitations of the research.
Firstly, as it was already mentioned we concentrated on organizational performance outcome
of absorptive capacity. The future research might address these gap by also introducing innovative
performance in the model, thus being able to judge not only how absorptive capacity increase
innovative performance, but also how innovative performance increase financial performance, that
would give a greater degree of explanatory power to the model of relationship.
Secondly, the limitation might be also presented with cross-sectional design of the study, as
the innovative performance outcomes might not be able to transform into financial ones
immediately. Thus, introduction of longitude research might eliminate this limitation, as it can
capture the time-lagged nature of this translation.
Thirdly, the generalizability of the results is under question. The results cannot be
generalized to all the emerging markets due to the specific features of the environment of Russia
Federation. Future research may confirm the results of this study on the other emerging markets and
compare them to those of Russia.
Within this study we tried to elaborate on the answers to the two research sub-questions: how
specific KM practices influence particular dimensions of AC and whether AC serves a mediator in
the relationship between KM practices and organizational performance.
Having conducted literature review, we provided the integrative model of antecedents of AC
based on that of Volberda et al (2010) that combines the relevant up-to-date researches. In addition,
we brought the recent definition of KM practices to historical researches and came up with the
justified choice of the most appropriate classification based on the comparison of different views,
that includes ten knowledge management practices. Lastly, we developed a theoretical connection
between KM practices and AC with the following logic: KM practices might influence the
antecedents of AC and AC subsequently. Within this relationship, we split AC into two dimensions,
PAC and RAC, and traced the influence of a particular KM practice to each.
To reveal the answers for the research questions stated, survey strategy was deployed, the
survey that was sent out measures the three said components (AC, KM practices and organizational
performance). Having collected the responses, we analyzed them quantitatively and came up with
the following results. As proposed KM practices connected with work organization and learning
mechanisms influence PAC through development of knowledge-friendly environment and
employees’ learning skills and knowledge base respectively. As for RAC, we have found that it
could be influenced by four KM practices. Transformation and exploitation of knowledge, two main
components of RAC, are affected with learning mechanisms that might increase ability to transform
knowledge; work organization that might improve the working environment, IT that might foster
knowledge transfer, and training and development that might increase employees’ ability to
transform and exploit knowledge as well as their motivation to do so. However, we have not found
the evidences that AC serves a mediator in the relationship between KM practices and
organizational performance, and suggest that in the future researches both organizational and
innovative performance should be measured in order to understand the reasons behind it.
What is more, we provided managers with the connection between conscious and intentional
actions and AC. Having diagnosed the level of AC within his or her firm, a manager can address
particular dimension of it, PAC or RAC, with the set of specific practices. If he or she understands,
that, for example, PAC of the firm is relatively low, KM practices connected with learnings
mechanisms or work organizations can be applied.
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APPENDIX 1 SURVEY
Years on this position
Country of origin
Please fill in or select appropriate response
Please fill in or select appropriate
8. Headquarters location (country)
9. Number of employees
10. Age (year of foundation)
11. Geographic scope of operations
Knowledge Acquisition: Please specify to what extent your 1=Strongly
company uses external resources to obtain information (e.g., disagree
personal networks, consultants, seminars, internet, database,
professional journals, academic publications, market research,
The search for relevant information concerning our 1
industry is every-day business in our company.
Our management motivates the employees to use 1
information sources within our industry.
Our management expects that the employees deal with 1
information beyond our industry.
Assimilation: Please rate to what extent the following
statements fit the communication structure in your company:
In our company ideas and concepts are communicated 1
Our management emphasizes cross-departmental support 1
to solve problems.
In our company there is a quick information flow, e.g., if 1
a business unit obtains important information it
communicates this information promptly to all other
business units or departments.
Our management demands periodical cross-departmental 1
meetings to interchange new developments, problems,
Transformation: Please specify to what extent the following
statements fit the knowledge processing in your company:
Our employees have the ability to structure and to use 1
Our employees are used to absorb new knowledge as well 1
as to prepare it for further purposes and to make it
Our employees successfully link existing knowledge with 1
Our employees are able to apply new knowledge in their 1
Exploitation: Please specify to what extent the following
statements fit the commercial exploitation of new knowledge in
your company (NB: Please think about all company divisions
such as R&D, production, marketing, and accounting):
Our management supports the development of prototypes.
Our company regularly reconsiders technologies and 1
adapts them accordant to new knowledge.
Our company has the ability to work more effective by 1
adopting new technologies.
Knowledge Management Practices
Supervisors encourage employees to share knowledge at
Supervisors encourage employees to question existing 1
Supervisors value employees’ ideas and viewpoints and 1
Strategy is formulated and updated based on company 1
Supervisors allow employees to make mistakes, and they 1
see mistakes as learning opportunities
Supervisors promote equal discussion in the workplace
take them into account
Supervisors share knowledge in an open and equal 1
Supervisors continuously update their own knowledge
Strategic management of knowledge competence
knowledge and competences
Strategy addresses the development of knowledge and 1
Strategic knowledge and competence is systematically 1
benchmarked against competitors
The responsibility for strategic knowledge management 1
has been clearly assigned to a specific person
Knowledge-based training and development
Employees are provided with opportunities to deepen and 1
expand their expertise
The company offers training that provides employees 1
with up-to-date knowledge
The employees have an opportunity to develop their 1
The company rewards employees for creating new 1
competence through training
tailored to their specific
The employees’ development needs are discussed with 1
The company rewards employees for sharing knowledge
The company rewards employees for applying knowledge
apprenticeship ,and job orientation, for example
The company systematically collects best practices and 1
The company makes systematic use of best practices and 1
Technology is utilized to enable efficient information 1
search and discovery
Technology is utilized to enable internal communication 1
throughout the organization
Technology is utilized to communicate with external 1
Technology is utilized to analyze knowledge in order to 1
make better decisions
Technology is utilized to collect business knowledge 1
related to its competitors, customers, and operating
environment, for example
Technology is utilized to develop new products and 1
services with external stakeholders
Employees have an opportunity to participate in decision 1
making in the company
Work duties are defined in a manner that allows for 1
Informal interaction is enabled between members of our 1
Face-to-face meetings are organized when necessary. 1
When necessary, working groups with members who
possess skills and expertise in a variety of fields
Working groups with members who possess skills and 1
expertise in a variety of fields
When needed, our company makes use of various expert 1
The company has higher long-run profitability than its 1
The company has higher growth prospect in sales than its 1
The company’s employees have higher productivity than 1
those of competitors.
The company has better goodwill than its competitors.
The company has better quality products or services than 1
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