engleski

RELEVANCE OF ABSORPTIVE CAPACITY IN CATALYZING FIRMS’ INNOVATION-DRIVEN PERFORMANCE

Research studies have established that the globally increasing phenomenon of "absorptive capacity" performs a catalytic function in firms achieving and maintaining long-term competitive advantage. Despite the fact that the term "absorptive capacity" was globally introduced more than two and a half decades ago, scholars from Central and Eastern Europe continue to neglect its relevance. To address the void in focused research on absorptive capacity operationalization in transition economies, the Republic of Croatia was selected for empirical study. The main research goal of this paper is to answer the two-part question: How does absorptive capacity catalyze innovation activity, and how does its function influence firms’ innovation and business-related performance? The catalyzing function the absorptive capacity is furthermore tabulated against the financial and commercial performance of firms as well as innovation frequency outputs. A population of over 600 firms was asked to participate in the research resulting in 104 valid answers. Collected data were statistically tested against proposed hypotheses proving that the higher level of absorptive capacity is positively correlated with innovation initiatives, which then positively correlate with their business performance. Empirical evidence produced by this paper will deepen the understanding on the absorptive capacity with the practical aim of enhancing firms’ internal processes and capacities towards higher innovation-related outputs.

absorptive capacity, innovation performance

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