Handbook of Regional Innovation and Growth
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Handbook of Regional Innovation and Growth

Edited by Philip Cooke, Bjørn Asheim, Ron Boschma, Ron Martin, Dafna Schwartz and Franz Tödtling

Today, economic growth is widely understood to be conditioned by productivity increases which are, in turn, profoundly affected by innovation. This volume explores these key relationships between innovation and growth, bringing together experts from both fields to compile a unique Handbook.
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Chapter 16: Absorptive Capacity in a Regional Context

Maria Abreu


Maria Abreu INTRODUCTION Absorptive capacity was famously defined by Cohen and Levinthal (1989) as the ability by a firm to ‘identify, assimilate and exploit knowledge from the external environment’ (Cohen and Levinthal, 1989, 569). In essence, the firm needs to achieve a sufficient level of previous knowledge in order to be able to adopt innovations developed elsewhere, interpret the results of basic science and follow its own research and development (R&D) programme. While the concept has intuitive appeal at the firm level, extending it to more aggregate dimensions such as regions or countries is not entirely straightforward. The regional development literature has always understood the importance of pre-existing conditions for facilitating the regional growth process. These include education and learning, R&D organizations, government agencies, networks of firms, and local rules, norms and traditions. These factors are variously known as regional capabilities, initial conditions and historical settings; the absorptive capacity literature aims to understand the pre-existing conditions that are relevant to the knowledge creation process. As we will see, the concept has immense intuitive appeal but is, in part for historical reasons, difficult to define precisely. It has evolved sometimes in tandem but often independently in fields as diverse as development economics, industrial organization and management science. The aim of this chapter is to present a critical review of the absorptive capacity literature, considering strands from different disciplines and providing an overview of the historical evolution of the concept. It discusses the issues involved in the operationalization of the...

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