Absorptive Capacity: A new Perspective on Learning and Innovation Wesley M. Cohen & Daniel A. Levinthal Administrative Science Quarterly, 35 (1990): 고윤미, 한상연 2011 Fall Seminar on Technological Innovation

1 Summary #1 □ Absorptive capacity and R&D incentives Definition Absorptive capacity is the ability to recognize the value of new information, assimilate it, and apply it to commercial ends. relevance of basic & applied science importance of external sources intraindustry spillovers of R&D industry’s four-firm concentration ratio price elasticity of demand R&D intensity

2 Summary #2 □ Components of Absorptive capacity and R&D Investment Prior Knowledge Individual-Organizational-Firm Accumulated Knowledge Gate keeper Communication System Organization Structure Knowledge diversity Knowledge Overlap Path Dependence Appropriability Degree of Competition Demand Features of user Various sources of knowledge Uncertainty Competitor Interdependence Internal External Market Features of user Maturity of market Learning difficulty level

3 Summary #3 □ selection of variables for studying absorptive capability Based on surveyBased on 2 nd data Independent variables technological opportunity - science base - external knowledge R&D resources - expenditures - intensity - personnel - facilities and equipments Appropriability - spilloverR&D performance # of publications # of patents Competitor interdependence - concentration ratio - price elasticity of demand Control variables price elasticity income elasticity demand time-shirt parameter Industry maturity firm’s characters - age - size - industry classification - previous performance(t-1) additional ?

4 Summary #4 □ Analysis of R&D intensity unit of analysisOrganization sample/data 1,719 business units from 318 firms in 151 lines of business in U.S. manufacturing sector treatment /modeling Predictor of innovative activity measurement R&D intensity : responsiveness of R&D to learning incentives(relevance, ease, appropriability) findings Increase in the relevance of knowledge has more positive effects of R&D intensity. The positive absorption incentive associated with spillovers is greater when learning is difficult. control applied science basic science external sources spillover inter dependence

5 Discussion #1 □ Knowledge Diversity Vs. Knowledge Overlap Is the diversity always to stimulate the generation of new ideas? * Simon(1985), Utterback(1971) Background Knowledge(High) Background Knowledge(Low) Knowledge Overlap Knowledge Diversity ? With respect to Industrial view, Is there any differences? How can we make structure of organization for innovation effectiveness?