Building absorptive capacity through international corporate venturing

Abstract

Twenty years after the Cohen and Levinthal 1990 paper, the field of absorptive capacity is characterized by a wide array of theoretical perspectives and a wealth of empirical evidence. The conventional focus in the corporate venturing literature is on evaluating ventures based on business growth and financial performance. This view completely ignores the important role of internal ventures in capability development. The purpose of this article is to advance understanding of absorptive capacity by focusing on a firm’s capability to acquire, assimilate and transform external knowledge through the actions of its corporate venturing units. The relationship between absorptive capacity and corporate venturing might explain why some companies are better than others in acquiring and assimilating new external knowledge. It might also lead practitioners to question current views in internal venture evaluation and add routines and processes for transferring newly acquired capabilities between new ventures and existing business units.