A trust-based framework for enhanced absorptive capacity: improving performance, innovation and competitive advantage

In rapidly changing and dynamic environments an organisation must have dynamic capabilities to sustain its competitive advantage among rivals. Knowledge Management research has investigated these capabilities. One such a capability is absorptive capacity (AC) that can be described as the ability of an organisation to acquire, assimilate, transform and exploit knowledge gained from external sources to apply to commercial ends. Although AC has been extensively studied as a construct during the last two decades, survey·based empirical studies have only paid attention to the linear relationship between AC and performance measures. However, trust-related issues have not yet been studied with respect to AC operationalisation in organisations. This research seeks to offer a holistic approach for studying how trust influences AC as an antecedent as well as a fundamental ingredient, bridging knowledge sharing, transfer and absorption. This paper looks at how organisations can enhance their AC with more sophistication by establishing trust culture and by qualifying trust as an antecedent for enhancing AC. The basic premise of this paper is that enhanced absorptive capacity has four interrelated linkages. The first linkage relates to trust values and trust-worthiness leading to knowledge sharing. The second linkage relates to knowledge sharing and its antecedents, leading to knowledge transfer. The third linkage relates to knowledge transfer and its antecedents leading to knowledge absorption, The fourth linkage relates to knowledge absorption and its antecedents enhancing AC. The paper also argues that the effective enhancement of AC demands various enablers in each linkage, such as information technology infrastructu re and social integration mechanisms. A framework is proposed to establish these linkages and to open further research avenues.

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