Impacts of network relationships on absorptive capacity in the context of innovation

Knowledge acquired through external network relationships is widely accepted as one of the most important resources for a firm to be innovative. This is especially true for the networked tourism industry, where capabilities associated with the acquisition, assimilation and exploitation of external knowledge (‘absorptive capacity’) are paramount. While several studies highlight the importance of network relationships to acquire new knowledge, most of them remain vague in explaining their impact on the assimilation and exploitation of the knowledge. This paper investigates the impacts of network relationships on absorptive capacity dimensions. A quantitative survey among 378 hotel businesses was carried out to measure network participation and relationship quality as well as the absorptive capacity. Regression models reveal that the quality of external relationships and the overall network size implicate access and availability of valuable knowledge and positively affect the organization’s capacity to assimilate and exploit the knowledge in pursuit of innovation.