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The measurement of absorptive capacity from an economics perspective : definition, measurement and importance.

Harris, R. and Yan, J. (2019) 'The measurement of absorptive capacity from an economics perspective : definition, measurement and importance.', Journal of economic surveys., 33 (3). pp. 729-756.


This paper starts by recognizing that despite the importance of absorptive capacity, economists in particular have made only limited use of the concept. Most theoretical and empirical studies derive from other fields of research. Thus, the first task is to compare and contrast the different approaches taken in measuring absorptive capacity. The rest of the paper then sets out an example of how typically economists have proceeded, using nationally representative CIS data to measure absorptive capacity across a 10‐year period and investigating if it remains stable in the long term. This is followed by considering how firms’ characteristics vary across lower to higher levels of absorptive capacity and whether such capacity determines firms’ productivity performance across both goods and service industries. Our results show that relative to other influences, absorptive capacity as measured here — net of the impact of foreign‐ownership and human capital — has a substantial influence on exporting, innovation and undertaking R&D and thus consequently firm‐level productivity. Finally, there is a discussion of why governments should consider helping firms to boost their levels of absorptive capacity.

Item Type:Article
Full text:(AM) Accepted Manuscript
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Publisher statement:This is the accepted version of the following article: Harris, R. & Yan, J. (2019). The Measurement of Absorptive Capacity from an Economics Perspective: Definition, Measurement and Importance. Journal of Economic Surveys 33(3): 729-756, which has been published in final form at This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.
Date accepted:10 September 2018
Date deposited:20 September 2018
Date of first online publication:03 October 2018
Date first made open access:03 October 2020

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