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Recognizing : how small firms recognize external knowledge

Rossum, Daan van (2011) Recognizing : how small firms recognize external knowledge.

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Abstract:In the literature, the capability of finding, extracting and exploiting external knowledge is described as the absorptive capacity of a firm. Absorptive capacity is a dynamic construct which contains three sub capabilities: recognizing, acquiring/assimilating and exploitation. These capabilities are present in firms in the form of processes. Each capability has its own process and can therefore be studied separately from the other capabilities. These processes are not described in much detail in theory; this leaves a gap for new research. This study will partly fill that gap through exploring the first capability: recognizing; which serves as a building block for the rest. Furthermore, the search for new knowledge is expected to be less structured in small firms, which could increase the chances of finding new insights. This study is focused on them specifically. Together with the focus on recognizing this resulted in the goal of exploring the recognizing process in small firms. To reach this goal the study was guided by the central question: How does the process of recognizing external knowledge for innovation work in small firms? In order to use the newest insights in the absorptive capacity theory the latest model, that of Todorova and Durisin (2007), was used to select the attributes that are included in the knowledge recognizing process. Elaborating on these elements in theory and differentiating for small firms resulted in some extra attributes which formed a proposed model specifically for recognizing. These attributes were: knowledge type, investments, intrusiveness, strategy and a capability developing feedback loop. Verifying this model in practice is done by using a qualitative design: the case study approach. The small firm cases selected for this multiple case study were Herikon and Almi. Both firms are situated in Twente and operate in the manufacturing industry. To assess how these case firms recognized new external knowledge, this study used the relational approach in its interviews. This approach is used to create a retrospective overview of the most important knowledge relations of the firms in the past two years and a description of how they recognized them. Altogether the eight interviews resulted in 49 different relationship descriptions. All elements of the proposed model, except investments, are confirmed in the interview analysis. This resulted in the inclusion of these attributes in the recognizing model. The new model is aimed to better describe recognizing in small firms. In this model recognizing in small firms is redefined, due new empirical insights, as: A firm’s capability to see new opportunities, search for new knowledge and estimate its potential value along with the choice for a partner. Not all activities mentioned in this definition have to be exercised in every process run through. Furthermore, the interviews revealed some additions to the relation of the attributes with recognizing. These resulted in propositions which state that:  A problem-solving reputation has a positive effect on the amount of external stimuli, which could result in new opportunities.  Internal and external stimuli will more often be handled as opportunities when there is a supportive culture in the firm.  Innovative relations with much influence in the firm positively influence recognizing. This is because these firms present innovative questions which influence especially the recognizing of opportunities.  Social integration between firms influences the search for new knowledge positively in small firms, through the search for new knowledge in existing relations. The new model and propositions will help small firm managers in their decision making to improve recognizing. For theory, this research will help with the clarification of recognizing in small firms and illustrate the usefulness of studying the steps of absorptive capacity separately. The propositions will hopefully trigger other scholars for more specific research in the relations of the recognizing model.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/61494
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