Abstract: Companies that need the ability to adjust to industry changes often find it difficult to develop new products internally. Through strategic alliances, they find means to acquire, or absorb, the knowledge they need. Understanding a company’s absorptive capacity requires separating it into two parts, latitudinal and longitudinal absorptive capacity. By defining these two types of absorptive capacity, companies are able to balance their knowledge acquisition, ultimately finding the “sweet spot” where costs do not outweigh the benefits of knowledge gained through alliances.
Authors: Jaideep Anand and Gurneeta Vasudeva
Date: Summer 2011