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Articles - Cohen &Levinthal (1990)

8 important questions on Articles - Cohen &Levinthal (1990)

Our empirical analysis of R&D investment suggested that firms are in fact sensitive to

the characteristics of the learning environment in which they operate

Thus, absorptive capacity appears to be part of a firm's decision calculus in allocating resources for innovative activity. Despite these findings, be cause absorptive capacity is intangible and its benefits are in direct, one can have little confidence that the appropriate level, to say nothing of the optimal level, of investment in ab sorptive capacity is reached.

Thus, absorptive capacity appears to be part of a firm's decision calculus in allocating resources for innovative activity. Despite these findings, be cause absorptive capacity is intangible and its benefits are in direct, one can have little confidence that the appropriate level, to say nothing of the optimal level, of investment in ab sorptive capacity is reached.

Absorptive capacity is more likely to be developed and maintained as a byproduct of routine activity when the knowledge domain that the firm wishes to exploit is closely related to its current knowledge base.

Absorptive capacity is more likely to be developed and maintained as a byproduct of routine activity when the knowledge domain that the firm wishes to exploit is closely related to its current knowledge base.

When, however, a firm wishes to acquire and use knowledge that is unrelated to its ongoing activity, then the firm must dedicate effort exclusively to creating absorptive capacity (i.e., absorptive capacity is not a byproduct).

When, however, a firm wishes to acquire and use knowledge that is unrelated to its ongoing activity, then the firm must dedicate effort exclusively to creating absorptive capacity (i.e., absorptive capacity is not a byproduct).

Thus, while the current discussion ad dresses key features of organizational structure that deter mine a firm's absorptive capacity and provides evidence that investment is responsive to the need to develop this capa bility, more research is necessary to understand the decision processes that determine organizations' investments in ab sorptive capacity.

Thus, while the current discussion ad dresses key features of organizational structure that deter mine a firm's absorptive capacity and provides evidence that investment is responsive to the need to develop this capa bility, more research is necessary to understand the decision processes that determine organizations' investments in ab sorptive capacity.

For them, absorptive capacity depends greatly on prior related knowledge and diversity of background. The investments a firm makes into its research and development (R&D) efforts are therefore central to their model of development of absorptive capacity. The absorptive capacity is seen as cumulative, meaning that it is easier for a firm to invest on a constant basis in its absorptive capacity than investing punctually. Efforts put to develop absorptive capacity in one period will make it easier to accumulate it in the next one.

For them, absorptive capacity depends greatly on prior related knowledge and diversity of background. The investments a firm makes into its research and development (R&D) efforts are therefore central to their model of development of absorptive capacity. The absorptive capacity is seen as cumulative, meaning that it is easier for a firm to invest on a constant basis in its absorptive capacity than investing punctually. Efforts put to develop absorptive capacity in one period will make it easier to accumulate it in the next one.

Bsorptive capacity is also said to be a reason for companies to invest in R&D instead of simply purchasing the results post factum (e.g. patents). Internal R&D teams increase the absorptive capacity of a company. A firm’s investment in R&D then impacts directly its absorptive capacity. The more a firm invests in research and development activities, the more it will be able to fully appreciate the value of new external information.

bsorptive capacity is also said to be a reason for companies to invest in R&D instead of simply purchasing the results post factum (e.g. patents). Internal R&D teams increase the absorptive capacity of a company. A firm’s investment in R&D then impacts directly its absorptive capacity. The more a firm invests in research and development activities, the more it will be able to fully appreciate the value of new external information.

Cohen and Levinthal also stressed that diversity allows an individual to make “novel associations and linkages”. They therefore encourage the hiring of diverse teams in order to have a variety of individuals working together and exposing themselves to different ways of looking at things.

Cohen and Levinthal also stressed that diversity allows an individual to make “novel associations and linkages”. They therefore encourage the hiring of diverse teams in order to have a variety of individuals working together and exposing themselves to different ways of looking at things.

The question on the page originate from the summary of the following study material:

The Economics of Innovation An Introduction | 9781781007747 | G M P Swann

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Articles - Cohen &Levinthal (1990)

8 important questions on Articles - Cohen &Levinthal (1990)

Our empirical analysis of R&D investment suggested that firms are in fact sensitive to

Absorptive capacity is more likely to be developed and maintained as a byproduct of routine activity when the knowledge domain that the firm wishes to exploit is closely related to its current knowledge base.

When, however, a firm wishes to acquire and use knowledge that is unrelated to its ongoing activity, then the firm must dedicate effort exclusively to creating absorptive capacity (i.e., absorptive capacity is not a byproduct).

Cohen and Levinthal also stressed that diversity allows an individual to make “novel associations and linkages”. They therefore encourage the hiring of diverse teams in order to have a variety of individuals working together and exposing themselves to different ways of looking at things.

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