The Role of Absorptive Capacity in Innovation and Productivity in Chilean Companies: An Adapted CDM Model Across Industries

Abstract

Drawing on an adapted CDM model, we present evidence on the role of strategic and operational absorptive capacity on innovation and productivity across industries in developing economies. Using a pooled cross-sectional sample from Chilean innovation surveys, we find that greater absorptive capacity (ACAP) helps firms to increase their innovative investment and the probability of producing technological innovations, which then increases firms’ labor productivity. Additionally, the effect of the strategic dimension is stronger than the operational dimension aspect, which means that the strategy of reaching these external sources might be more important than the skill of a firm´ internal units to acquire and transform external information. We find that while strategic ACAP is a stronger predictor of investment and technological innovation in both manufacturing and services companies, but operational ACAP has differing effects.