The contingent effect of absorptive capacity

Andrew A. King

Technological advancement and innovation requires the integration of both external knowledge and internal inventiveness. In this paper, we unpack the concept of absorptive capacity and separately explore the effect of different types of prior experience on the capacity to adopt external knowledge and make internal inventions. We also measure how absorptive capacity is influenced by changes in design "paths". We investigate nine open source programming contests in which 875 software programmers submit over 4.7 million lines of code. We conduct our analysis at the individual level and identify how programmers gain the ability to adopt and invent valuable code. Our evidence both confirms the theory of absorptive capacity and suggests refinements to it. We find that prior experience with both adoption and invention can indeed improve the capacity to adopt and invent valuable code, but we...