How does absorptive capacity develop in small-medium-sized enterprises (SMEs)? The role of absorptive capacity, collaboration and innovation between SMEs and a regional university

The study examines how Small-Medium-sized Enterprises (SMEs) demonstrate a range of innovation capabilities when they collaborate with a regional university research centre. This collaboration is shown to be important to create and exchange new knowledge to advance the firms innovation performance. The study demonstrates the ability of firms to acquire and exploit this knowledge, which is a business competency described as absorptive capacity (AC). AC relies on several antecedents or factors to engage with a collective learning process. Collective learning is synonymous with collaboration, and from hereon is referred to as `collaborative learning', as defined by Salk and Simonin (2011). It refers to the joint action to make sense of new knowledge in a purposeful relationship such as strategic alliances and partnerships. This involves the identification, transfer, and experimentation with knowledge originating with another entity. It has the potential to enhance an existing firm's competency or create new competences within a firm (Salk and Simonin, in Easterby-Smith and Lyles (2011, p. 606)). This work is framed by key theories that discuss the contribution and role of knowledge and innovation to regional economic development, including the nature and types of industry and university collaborations. Common types of collaborations include selective alliances and partnerships to create and exchange new knowledge. Such arrangements between firms and universities can be invaluable to industry where it can apply and exploit the new knowledge to its business environment. The thesis identifies how SMEs AC is developed through collaboration as influenced by several antecedents (Lane, Koka, & Pathak, 2006; Volberda, Foss, & Lyles, 2010). One AC antecedent or factor that trigger a firm's innovation capabilities includes inter-organisational relationships with external partners. Inter-organisational cooperation occurs in many forms, motivated by associated benefits of joint parties involved in collaborative learning. Other determinants include intra-organisational, prior knowledge, business management and environmental conditions (Volberda et al., 2010). Collaborative learning and partnering is important for SMEs to overcome constraints to innovation activity attributed by limited financial and human capital. Having developed new knowledge with a university, such as a novel idea or prototype invention, a firm can explore ways its business can exploit this novelty to its market place. The study focuses on product innovations developed through phases of the New Product Development (NPD) process as outlined by Buganza, Colombo, and Landoni (2014). Product innovation performance has been recognised as a means of business renewal if firms are to survive and proposer in dynamic economic settings, characterised by fast changes in customers, technologies and competition (Danneels, 2002, p. 1095). The project adopts a qualitative case study research methodology to show how a small cohort of innovative `advanced' manufacturing SMEs collaborates with an entrepreneurial university outside an Australian capital city. The thesis demonstrates that a firm with a high level of AC can develop a range of innovation capabilities that contribute to product innovation. These capabilities can improve the competitiveness of SMEs in Australia. The study assists with understanding how innovation competency can create conditions to develop an `open' innovation system to improve the exchange and flows of new knowledge production between industry-university