The Role of Absorptive Capacity and Firm Openness Strategies on Innovation Performance

Openness and absorptive capacity are both based on the notion that organizations can use external knowledge to increase their innovation outcome. The objective of this paper is to investigate the joint effect of openness strategies, firms' absorptive knowledge capacity, and the innovation performance of SMEs in a developing country. By using structural equation modeling (SEM) through PLS, the results show that internal practices and means for attracting external knowledge improve innovation performance and indicate that absorptive capacity mediates open search breadth and partially open search depth to affect innovation performance. These results highlight the additional nature of absorptive capacity and reinforce the knowledge of scholars in particularly developing countries.