SME ABSORPTIVE CAPACITY – The Role of Organizational Practices

Science-industry interactions with respect to innovation have become an increasingly important phenomenon. A major driver for this development can be seen in a changing science and industry context, such as the emergence of the entrepreneurial university and the rising importance of knowledge to industrial R&D. Whereas, in general, a substantial increase in the number of interactions between science and industry can be observed during the last two decades, there is evidence indicating that the impact of public research on industrial innovation is disproportionately greater for large firms and start-ups than for small and medium-sized enterprises (SMEs). Commonly, this has been explained by the view that SMEs have a lacking absorptive capacity – a worrying issue given that 99.8 % of European enterprises are SMEs and contribute to about 70 % of total employment. In order to address the lacking absorptive capacity, this paper investigates the role of organizational practices as support mechanisms for knowledge transfer. Underpinned by work on knowledge transfer within and between firms, it is suggested that the implementation of organizational practices such as processes, activities, structures and methods may improve absorptive capacity by on that on the one hand allowing firms to make better use of expertise and resources in its external environment, and on the other hand making the storage and leverage of experiences from past interactions possible