Technological and market knowledge are among the most valuable resources that a firm can utilize for competitive advantage. Absorptive Capacity (ACAP) or a firm's ability to acquire, assimilate, transform, and apply knowledge, has long been a central construct in organizational studies. Yet, there is limited research on a marketing context of ACAP. In Essay 1, I extend the scope of ACAP beyond technology-related context and develop a comprehensive model integrating performance-enhancing mechanisms and antecedent processes of ACAP in market-related context. The survey results suggest that ACAP of market knowledge positively influences firm performance by enhancing customer acquisition and retention capability of the firm. The findings also indicate that market orientation, trust, and ties strength are significantly related to both exploring and exploiting dimensions of ACAP. Finally, the mediating role of a firm's balance in cost leadership and differentiation strategic focus is also discussed. In addition, I separately conduct another survey to explore the ACAP of technological knowledge. Mixed findings in previous studies on a debate between innovation- and quality improvement-performance relationships prompt the need for further research investigation of the underlying mechanisms. Consistent with ambidexterity literature, the findings suggest that a firm's balance in explorative and exploitative innovation strategy (Strategic EE Ratio) will effectively facilitate an implementation of market orientation within a firm; thus, enhancing both exploring and exploiting dimensions of ACAP. As a result, strong ACAP will enhance innovativeness and new product quality, leading a firm to improve new product performance and increase overall firm performance. Also, the empirical test reveals a curvilinear effect of Strategic EE Ratio and market orientation, and supports a mediating role of market orientation in a Strategic EE Ratio-ACAP relationship. In addition, the moderating effects of technological and quality orientation are discussed. In both essays, I conclude with a discussion of the implications for practice and future research. Universally, the critical roles of ACAP and a strategic balance between exploration and exploitation are reinforced by the empirical results of both essays.
Read
