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The effects of absorptive capacity on innovation performance: a cross-country perspective

Harris, R. and Krenz, A. and Moffat, J. (2021) 'The effects of absorptive capacity on innovation performance: a cross-country perspective.', Journal of Common Market studies., 59 (3). pp. 589-607.


This paper has two objectives: the construction of enterprise‐level estimates of absorptive capacity to allow comparison of absorptive capacity levels across Europe and the analysis of whether the effects of absorptive capacity on R&D and innovation vary across countries. The dataset is the Community Innovation Survey which provides information on the innovation activities of enterprises across Europe. Estimates of absorptive capacity are generated using a structural equation model that considers absorptive capacity to be a latent variable that predicts the use of information sources and cooperation partners for innovation activities. The effects of absorptive capacity are estimated econometrically using probit models. The results show that absorptive capacity levels vary substantially across European countries with Western European enterprises (particularly those in Germany) generally having higher absorptive capacity than Eastern European enterprises (especially Romanian enterprises). The effects of absorptive capacity on R&D and innovation are uniformly positive but also demonstrate substantial heterogeneity across countries. This has important implications for policy as it suggests that, not only should government aim to enhance levels of absorptive capacity but it should also attempt to enhance the value of external knowledge available for enterprises to exploit.

Item Type:Article
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Publisher statement:© 2020 The Authors. JCMS: Journal of Common Market Studies published by University Association for Contemporary European Studies and John Wiley & Sons Ltd This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
Date accepted:26 May 2020
Date deposited:09 June 2020
Date of first online publication:21 September 2020
Date first made open access:01 June 2021

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