Chapter Listing | Return to 1997 Topical Index


ANALYSIS

The relation between firm absorptive capacity, firm sales growth, and research productivity is analyzed through OLS regression analysis. Growth in sales and research expenditure is calculated for each business unit from 1993 to 1995. Only business units that provided complete R&D and sales data were included in this analysis, reducing the sample to 231. Absorptive capacity is assessed with measures of knowledge acquisition about competitors (KAACMP), knowledge acquisition about customers (KAACST), knowledge acquisition about new developments (KAANDS) and intra–firm knowledge dissemination (IFKD) that are computed by adding the standardized scores from the questions that loaded on each construct (Nunnally, 1978).

The results of the analysis of the effect of external knowledge acquisition and intra–firm knowledge dissemination on sales growth and research productivity can be found in Table 2. Model I reveals that no significant relations exist between the explanatory variables and sales growth (except for R&D growth). Step–wise reduction of Model I eliminates all variables except for R&D growth. Model II presents the results of the systematic varying parameter model showing the impact of external knowledge acquisition and intra–firm knowledge dissemination on research productivity.

Two constructs, knowledge acquisition about competitors and intra–firm knowledge dissemination, are significant and positive. The model is significant at the 0.001 level and explains 10 percent of the variance in sales growth. This result indicates that firms which are more proactive in seeking external knowledge about competitors and disseminating knowledge internally experience increased productivity of their research expenditures.

To investigate how organization size affects the relationship between the elements of absorptive capacity and research productivity the sample was split into three size classes. The size classes were organizations with up to 20 employees, organizations with between 20 and 100 employees, and organizations with over 100 employees. These classes were suggested by Smilor (1995). In the interests of brevity only the results from re–estimating Model II for each size class is presented (Table 3).

In size class I, acquisition of knowledge about customers has a positive effect on research productivity. This suggests that small firms who acquire more knowledge about their customers desires will experience more sales per dollar invested in research. Interestingly the acquisition of external knowledge has no effect on research productivity for business units in size class II. This result may be a reflection of organizations that are in the stage of exploiting internal stocks of knowledge and are therefore, not expending resources on gathering new knowledge.

In size class III all of the elements of absorptive capacity are significant. Knowledge about competitors and new developments has a positive effect on research productivity. Surprisingly contrary to the results in size class I, knowledge about customers has a negative effect on research productivity. One possible explanation of this result is that the benefits from knowledge about customers in larger firms only manifests itself in increased sales growth after a period of time. The time–line of this study may not be sufficient to capture the positive benefits and instead we are seeing the effect of resource expenditures.

TABLE 2

Dependent Variable: Percent Sales Growth (1993–1995)

 

Model I

Model II

Model IIa

Intercept

0.0077

(0.0658)

0.0175

(0.0668)

0.0122

(0.0639)

Percent research expenditure growth (1993–1995) (1)

0.1933***

(0.0674)

0.2762***

(0.0893)

0.2547***

(0.0655)

Knowledge acquisition about competitors (2)

0.0383

(0.0749)

0.0703

(0.0741)

0.0743

(0.0691)

Knowledge acquisition about customers (3)

-0.0046

(0.0749)

-0.0021

(0.0741)

 

Knowledge acquisition about new developments (4)

0.0331

(0.0760)

0.0181

(0.0762)

 

Intra–firm knowledge dissemination (5)

-0.0323

(0.0733)

0.0243

(0.0742)

0.0241

(0.0703)

(1*2)

 

0.1917***

(0.0735)

0.1848***

(0.1368)

(1*3)

 

0.0409

(0.0657)

 

(1*4)

 

-0.0067

(0.0823)

 

(1*5)

 

0.2004**

(0.0902)

0.2074***

(0.0833)

Multiple R–Squared

0.0435

0.0982

0.0964

F statistics

2.047

2.674

4.8

p value

< 0.1

< 0.001

< 0.0001

N

231

231

231

*Significant at the 0.1 level, **Significant at the 0.05 level, ***Significant at the 0.01 level

 

Top of page | Chapter Listing | Return to 1997 Topical Index


1997 Babson College All Rights Reserved
Last Updated 03/19/98