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Appropriating value from external technology: Absorptive capacity dimensions and innovation strategy

Author

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  • Ricart, Joan E.

    () (IESE Business School)

  • Adegbesan, Tunji

    (IESE Business School)

Abstract

Innovation from external sources has continued to grow in importance in recent years, in defiance of conventional wisdom advocating internal sourcing of core technologies. One important reason for the previous emphasis on internal sourcing of core technologies relates to concerns of horizontal and vertical appropriability. Thus, the question arises of whether and how firms can reconcile horizontal and vertical appropriability with the rise of the external sourcing of new technologies. Must firms sacrifice value appropriation on the altar of value creation? To answer these questions, we delve beneath individual technological innovations to examine the technical and market capabilities underlying them. Specifically, we show how the amount of value a firm stands to appropriate relative to competitors and relative to technology suppliers depends on the fit between its innovation strategy and its previous investments in distinct dimensions of absorptive capacity. At the same time, we also show how first-order capabilities and dynamic capabilities interact to determine firm performance. Thus, we shed light on how and when the move to 'open' innovation will affect the amount of value innovating firms stand to appropriate.

Suggested Citation

  • Ricart, Joan E. & Adegbesan, Tunji, 2007. "Appropriating value from external technology: Absorptive capacity dimensions and innovation strategy," IESE Research Papers D/669, IESE Business School.
  • Handle: RePEc:ebg:iesewp:d-0669
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    Cited by:

    1. Elena Cefis, 2010. "The impact of M&A on technology sourcing strategies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 19(1), pages 27-51.
    2. Fuentelsaz, Lucio & Gómez, Jaime & Palomas, Sergio, 2012. "Production technologies and financial performance: The effect of uneven diffusion among competitors," Research Policy, Elsevier, vol. 41(2), pages 401-413.

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    Keywords

    Innovation strategy; external sourcing; technology innovation; value appropriation;

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