Absorptive Capacity and Diversity: Neo-Schumpeterian Perspectives on Knowledge Based Innovation

One of the most influential contributions to neo-Schumpeterian economics is Cohen and Levinthal‘s papers on absorptive capacity. Since their publication in the late 1980s and early 1990s the concept absorptive capacity has had substantial impact on research in economics and management, including international business, organizational economics, strategic management, technology management and last but not least neo-Schumpeterian economics. The goal of this dissertation is to examine what many consider as neglected arguments from the work by Cohen and Levinthal and thereby illuminate an otherwise overlooked area of research.
Although research based on Cohen and Levinthal‘s work has made considerable impact, there is scarcity of research on certain fundamental points argued by Cohen and Levinthal. Among these is the importance of employee diversity as well as the type and nature of interaction between different knowledge bases. As has been pointed out in academic reviews of the literature, the stream of research following in Cohen and Levinthal‘s footsteps has almost completely ignored these arguments. In this dissertation we develop these neglected arguments further and examine them empirically. This is done by utilizing both quantitative methods as well as more qualitative ways of research.
The core of this dissertation is four empirical papers that build upon and extend Cohen and Levinthal‘s work. The focus on an underdeveloped area of research leads to a number of issues being examined that contribute to the neo-Schumpeterian economics literature and hopefully inspires further research into this area. The main findings of the dissertation can be divided into four distinct parts. First, diversity of individuals within firms is associated with firm innovative performance. This is in line with the arguments put forth by Cohen and Levinthal and subsequent researchers, but has not been verified empirically before. Second, the relationship between the diversity of individuals and innovative performance and idea generation is moderated by adherence to goals. This result might help to explain the inconsistencies in prior research on diversity. Third, when we find that educational diversity increases the number of ideas and their quality in idea generation teams. Our results suggest that teams with a diverse knowledge base generate more and better ideas than more homogenous teams. With an experimental design we verify that this relationship is not only a correlation but rather a causal relationship. Fourth, as innovation is in its essence a combination of different knowledge, the pattern and type of communication between individuals, firms and institutions, is an important part of explaining innovative behaviour.