Absorptive Capabilities and Competitive Advantage: The Linkage

Abstract

The main goal of this study is to analyze the influence of absorptive capabilities on competitive advantage. Based on survey data from 247 Portuguese small and medium-sized enterprises (SMEs) findings suggest that:
Acquisition, assimilation and exploitation’s absorptive capabilities are positively associated with cost leadership;
Transformation’s absorptive capabilities are not positively associated with cost leadership;
Acquisition and transformation’s absorptive capabilities are positively associated with differentiation; and
Assimilation and exploitation’s absorptive capabilities are not positively associated with differentiation.
This study deepens our understanding and provides novel insights into strategic management literature, since it combines multiple factors and has obtained the importance of each construct in SMEs business competitive advantage. Moreover, this paper presents further evidences of the strategies that small firm managers should pursue and policy makers should promote.