A firm’s ability to learn new knowledge through its interaction with external partners requires sufficient technical understanding to capitalize that knowledge. This internal capability, also usually referred as absorptive capacity (AC), provides such the foundation upon which firms may learn from the external R&D alliances
suggest that AC includes the capabilities of acquiring, assimilating, transforming and exploiting knowledge. Absorptive capacity proponents suggest that AC is a result of accumulation via intense and long-term training and learning experience, which is difficult to imitate or substitute in the short term. Thus, from the process school perspective, AC is a firm’s inimitable process of recognizing assimilating exploiting transforming exploring and acquiring external knowledge. This reminds us that the input variables, such as R&D expenditures
and
may not appropriately reflect a knowledge-accumulation experience and process. The higher R&D expenditures may refer to the use in the purchase of research equipment, payment for patent licensing fees, or recruitment of highly skillful engineers or employees. In this case, higher R&D expenditures may not necessarily refer to a firm’s capacity in knowledge acquisition and transformation processes. In contrast, the people who are with in the organization to pursuit the process are the center of AC. Therefore,
It might be more appropriate to capture the extent of a firm’s AC process by measuring the firm’s highly skilled employees who involve in such the process. In fact,
H1: A firm’s R&D investment associates positively with a firm’s absorptive capacity.
also posit the importance of
highly-qualified and skilled employees on the firm’s capacity to innovate and to adapt to new technologies. Thus, a firm’s quality of human capital refers to the extent of a firm’s AC. As a result, a proportion of R&D investment
can be in the use of recruiting highly skilled employees or engineers, which can help a firm to accumulate sufficient long-term training and learning experience for highly-qualified and skilled engineers and employees. Such the highly skilled human capital refers to a better absorptive capacity in acquiring and transforming external knowledge