Sunday 26 September 2010
What is absorptive capacity?
Much of the AIC’s work in commercialisation entails working closely with firms to identify emerging technologies and assist in building new value chains, through which new products or services can be taken to market. For example, the TechClinics we have delivered in sectors such as biofuels or energy storage have helped identify new opportunities for firms to provide products or services that are otherwise missing. This and the other services we provide have given the AIC the opportunity to explore the barriers to successful commercialisation and what prevents an idea evolving along a value chain to be used by an end customer in the market.
One such barrier is the ability of a firm to act on or use new knowledge or intellectual property (IP) required for the development of a novel product or service. In technical jargon, this is known as the firm’s “absorptive capacity”. Absorptive capacity is an important concept for industry development, because unless a business possesses such a capacity, technology transfer, and a firm’s ability to innovate, will be severely limited. This is because innovation by definition requires novel implementation (doing something new that delivers value), and novelty often begins as an idea or as IP, but it could of course be an intermediate product or technology.
Through our work and interviews with nearly one hundred innovative firms around Australia, we have formally researched absorptive capacity and found that it can be improved not only through enhanced information and knowledge, but also through enhanced access to networks and links with access to information and capabilities. We also found that a critical mass of internal scientific and engineering capability is required to uptake new technologies, and although that might be less than 10% of staff in medium and large companies, small companies are at most risk of not having sufficient critical mass. Undertaking in-house R&D and having internal R&D capacity also positively influences the absorptive capacity firms wishing to uptake new technology or IP.
The internal processes of firms with high absorptive capacity are also better organised, with such firms having well-defined ways of identifying opportunities and progressing them. They also possess internal capabilities to develop new products, processes and service, and if they need additional capacity they often source it from research organisations.
Collaboration with research organisations is an important mechanism used by firms to gain access to skills, knowledge and technology. Collaboration is assisted by personal relationships and interactions, and by the skills base and credibility of the organisation itself. The AIC is Australia’s leading provider of support to help firms achieve this.
If you’ve ever wondered why commercialisation depends so much on collaboration, it’s to help leverage the absorptive capacity within a firm so they can enter or build new value chains (within a sector). It is by using such value chains that an idea can successfully transition through all the hands necessary to reach its market.
To find out more about the AIC’s collaboration programs and services please contact 07 3853 5225 or e-mail info@ausicom.com or visit our website.
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