Title

Partner characteristics and relative absorptive capacity in learning alliances

Date of Completion

January 1996

Keywords

Business Administration, Management|Economics, Commerce-Business|Sociology, Social Structure and Development

Degree

Ph.D.

Abstract

This dissertation examines factors influencing the development of an organization's capabilities. Prior research on capability development has been largely descriptive. It has focused on what influences the development process without examining in detail what is being developed. This dissertation moves beyond this by developing normative prescriptions based on the types of knowledge utilized by a capability and the properties of those knowledge types.^ The first part of the dissertation proposes a theoretical model of knowledge within a capability and a theoretical model of the capability development process. These are based on a synthesis of four research streams: knowledge-based capabilities, knowledge properties, organizational memory, and dynamic capabilities. A capability is argued to consist of complementary but distinct components that can be shared and reused. One component, a firm's values and norms, is critical to the way capabilities create competitive advantage. It guides how a capability functions, how it is developed, and adds sustainable uniqueness to a capability and the development process.^ The theoretical models lead to three general propositions: capabilities are modular, similar social contexts facilitate interorganizational learning for capability development, and individuals are critical to maintaining capabilities. The theoretical models also expand on Nelson and Winter's (1982) answers to the questions "Where is the knowledge stored?" and "How do firms use it to respond to change?"^ The second part of the dissertation further develops and tests the proposition that similar values and norms facilitate learning between organizations. A firm-level construct, absorptive capacity, is reconceptualized as a learning dyad construct, relative absorptive capacity. One firm's ability to learn from another firm is argued to depend on the similarity of the firms' (1) knowledge bases, (2) social context, and (3) organizational problem sets.^ The model of relative absorptive capacity is tested using a sample of pharmaceutical-biotechnology R&D alliances. As predicted, the similarity of the partners' basic knowledge, research communities, lower management formalization, research centralization, and compensation practices were found to be positively related to interorganizational learning. Contrary to expectations, upper management formalization and management centralization were negatively related to interorganizational learning. Overall, these results support the model of capability development proposed here. ^