The potential face of absorptive capacity. An empirical investigation for an area of 3 European countries

This paper draws on the multi-dimensional characterization of absorptive capacity (AC) to empirically investigate the antecedents and the effects of its potential dimension (PAC): i.e., the firms capacity of acquiring and assimilating external knowledge, as distinguished from its realized transformation and exploitation (RAC). Based on a sample of about 10,500 firms for an area of 3 EU countries (Italy, Germany and Spain) we find that the firms reliance on external knowledge in general increases its PAC, and that this effect is magnified by the internal shocks the firm faces. However, both these effects find relevant exceptions when different kinds of external sources are considered, at different kinds of distance from the absorbing firm. Unexpectedly, social integration mechanisms in the firm makes PAC less, rather than more, inductive of innovation outcomes. On the contrary, the human capital of the firm has a positive moderating role on the PAC effects. A possible trade-off in the exploitation of the externally assimilated knowledge is suggested.