Developing potential and realized ACAP: The role of market sensing and responsiveness

Abstract

This study explores how firms develop potential and realized absorptive capacity. In doing so, we extend the associations between organizational antecedents (coordination, system, and socialization capabilities) and potential and realized absorptive capacity by integrating market sensing and responsiveness as prerequisite contextual variables. The analysis is conducted using multilevel data obtained from 205 managers of 24 banks. Our findings show that coordination capabilities are positively associated with potential absorptive capacity while system and socialization capabilities are positively associated with realized absorptive capacity. Market responsiveness significantly moderates the relationship between socialization capabilities and realized absorptive capacity, such that the positive effect becomes weaker as market responsiveness increases. Also, market responsiveness significantly moderates the relationship between system capabilities and realized absorptive capacity, such that the positive effect becomes weaker when market responsiveness both increases and to a less extent decreases. The findings provide implications for research and practice on developing potential and realized absorptive capacity.