A Critical Review of Absorptive Capacity Measurement and Misspecification in Business Research

The aim of this research is to critically review absorptive capacity conceptualization and operationalization. Although Cohen and Levinthal [1] emphasized multidimensionality of absorptive capacity, researchers have conceptualized it as a unidimensional construct, encompassing knowledge acquisition, assimilation, transformation and exploitation. From epistemological and ontological perspectives, knowledge acquisition and assimilation differ from other capacities, namely, knowledge transformation and exploitation. Knowledge acquisition and assimilation represent knowledge conversion from explicit-to- tacit and tacit-to-tacit processes that should be done at the individual level of analyses. Accumulated and assimilated knowledge with organization learning facilitate the transformative process to exploit knowledge for business purposes. Thus, absorptive capacity (ACAP) should be conceptualized and operationalized as a multilevel, multidimensional and latent construct involving distinctly dynamic capabilities. It involves a new way of thinking from epistemological and ontological perspectives. In addition, there is a paucity of research regarding ACAP measurement and specification. The current research provides a theoretical framework on how the measurement of ACAP should be taken in terms of its relation to indicators and order level.