Absorptive Capacity

Definition

According to a research paper written in 2004 by Susan J. Harrington and Tor Guimaraes, absorption, or absorptive capacity is “the ability to recognize the value of new information, assimilate it, and apply it to commercial ends.[i]” Plainly put, it is an organization’s ability to incorporate new knowledge, changes to processes, and just generally, to transform itself both initially and continually.

This concept is based on a few principles, including the following:

  • More knowledgeable leadership are more able to more successfully lead their organization to success in change initiatives
  • Better internal communication leads to greater success rates with change initiatives
  • Companies that value both an internal and external focus are most likely to have greater absorptive capacity[ii].

In Harrington and Guimaraes’ research, they found a strong correlation between these items. As we see in the figure below (Figure 2.6.2.3, originally featured in Harrington and Guimaraes’ research) organizaitonal culture translates to absorptive capacity, which leads to transformation success.

Absorptive Capacity Framework illustration
Figure 2.6.2.3 Absorptive Capacity Framework illustration

Also, note those four items under “Corporate culture” in Figure 2.6.2.3. They are the same four quadrants we explored briefly in the Competing Values Framework. Harrington and Guimaraes’ work on absorptive capacity utilized the CVF model to better describe the type of organizational culture that was most prime to adopt and adapt to change:

In sum, organizations that emphasize the values of the group, developmental and rational culture dimensions should maximize their absorptive capacity.  A culture strong in these three dimensions may lead to increased learning capacity and knowledge-sharing capability. Alternately, hierarchical cultures with their emphasis on stability and control are most likely to result in resistance to change and fewer receptors to the environment.

In layman’s terms, there are a few ways to increase your organization’s absorptive capacity:

  • Increase leadership’s knowledge and ability to articulate the need for change, as well as what the change entails
  • Shift your company away from the “control” quadrant, and more towards “collaboration,” “competition,” and “creation” ones to set your organization up for more success with change initiatives
  • Improve the effectiveness of your internal communication channels and method

[i] Harrington, Susan and Tor Guimaraes. “Corporate Culture, Absorptive Capcity, and IT Success.” October 2004.

[ii] Harvey, M., Palmer, J., & Speier, C. (1998).  Implementing intra-organizational learning: A phased-model approach supported by intranet technology.  European Management Journal, 16(3), June, 341-354.

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