Absorptive Capacity in Knowledge Management Essay

Absorptive Capacity in Knowledge Management - Essay Example From this paper it is clear that the final result of absorptive capacity is thus innovation and already performance. Absorptive capacity may be construed as a four-tiered concept. It requires acquisition, proceeded by assimilation followed by transformation and eventually exploitation (Smith et. al., 2005). Acquisition involves the process of obtaining knowledge from external sources. The organization needs to have mechanisms for identifying that knowledge first. In essence, the acquisition process should be related to their core operations. Assimilation ought to follow this process; here, firms must capitalize on their processes and routines in order to interpret, analyze as well as understand the external knowledge. Once assimilation has occurred, the company ought to combine current and assimilated knowledge into one platform through transformation. This may involve a modification for existing practices. Finally, exploitation needs to take place, where a company leverages on its t ransformed capabilities by placing them into their operations. Acquisition may be influenced by a number of variables. The intensity and speed of knowledge acquisition has an effect on the outlook.