Abstract

An important source for a firm’s competitive advantage is its external knowledge-related relationships. Absorptive capability is a firm’s ability to recognize the value of new, external information, assimilate it, and apply it to commercial ends. It pertains to knowledge creation and utilization that enhances a firm’s ability to gain and sustain a competitive advantage. Four capabilities compose a firm’s absorptive capacity: acquisition, assimilation, transformation, and exploitation. This paper focuses acquisition, which is a firm’s capability to identify and acquire external information and knowledge. Information and communication technologies (ICT) and Knowledge Management Systems (KMS) can play an important role in inter-organizational knowledge processes and flows. The paper discusses how ICT and KMS can be used to enhance knowledge acquisition. The core business process used for illustration is (new) product development.

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