Strategic Search and Absorptive Capacity

Absorptive capacity can profoundly impact a firm’s innovative endeavors. However, there is a notable scarcity of studies about the interorganizational factors shaping absorptive capacity and a lack of understanding about the multifaceted aspects of absorptive capacity for low- and medium-tech sector firms. This article offers new insights into how different types of external collaborations—potential and realized—impact different dimensions of absorptive capacity. By delving into the antecedents and consequences of absorptive capacity, this study aims to shed light on how low- and medium-tech firms can bolster their capacity to absorb external knowledge and harness it to advance product innovation, ultimately contributing to their long-term success. An examination of 171 firms within the Iranian automotive sector reveals that the scope of novel knowledge, as opposed to the firm’s place in the knowledge hierarchy, significantly influences potential absorptive capacity, and that realized absorptive capacity is linked to the advancement of product innovation.