The influence of absorptive capacity on collaborations between universities and SMEs in Germany

Claudia Wingerter
Ludwigshafen University of Business and Society

Marcus Sidki
Ludwigshafen University of Business and Society

Innovation is a key factor for the performance of corporations in Germany and for the German economic development as a whole. Knowledge and technology transfer through collaborations between universities and industry support companies in their efforts to increase their innovation based performance (Becker and Dietz 2004, Arvanitis et al. 2012). Usually, large companies collaborate more with universities than small and medium sized enterprises (SME) (Davey et al. 2018). However, especially SME characterize the German corporate landscape (99.3% of all companies with 61.2% of all employees in the year 2016, Federal Statistical Office 2018) and are often referred to as the backbone of the German economy. A current research project undertaken at Ludwigshafen University of Applied Sciences, intends to examine this discrepancy. We aim to investigate the transfer competence of SMEs in Germany taking into account different university transfer channels. By identifying critical success factors, we generate insights on ways to improving and reinforcing cooperation activities between universities and SMEs.

To analyze the transfer competence of an SME, we apply the theoretical construct of “absorptive capacity” by (Cohen und Levinthal 1990). The authors examine how to find, assimilate and apply external knowledge as a critical factor for the innovation process within a company. The concept of absorptive capacity comprises not only of the sum of the learning and problem-solving abilities and capacities of all individuals belonging to an organization. Adequate communication structures are also required within the company as well as externally in order to be able to make use of these gathered abilities. "Prior related knowledge" of its employees plays an important role as an antecedent to confer this ability for the existing magnitude of absorptive capacity in an organization. Based thereon, the authors conclude that conducting own research and development contributes to developing this ability. Zahra und George (2002) advance in a reconceptualization and extension of the original theoretical construct and define absorptive capacity as a set of organizational routines and processes in a company. They categorize the ability into four dimensions: acquisition, assimilation, transformation and exploitation.

Building upon the existing theory of absorptive capacity, we hypothesize that high absorptive capacity affects and determines the degree of success of a transfer activity and subsequently the arising benefits for a company. More specifically, we can formulate the question on the impact that absorptive capacity has in the particular case of university-industry interaction with a focus on SMEs. For this purpose, the transfer channel conceptualization will be used as the field of examination. Transfer channels are ways in which knowledge swaps between universities and the corporate sector, such as publications, joint research projects, theses, guest lectures etc. Thus, we formulate the following research questions:
- Does absorptive capacity affect the selection of the university-industry transfer channel?
- Does the program of a university transfer channels affect the ability to find external knowledge, assimilate it and apply it?

Examining how to measure absorptive capacity of SMEs is the first step in order to approach these research questions. Although some studies have addressed absorptive capacity in recent years, there is no consistent operationalization so far. The theoretical construct gives some reference points, such as the importance of prior related knowledge or communication structures. The problem to measure absorptive capacity directly leads to non-validated measured variables and prevents comparability of the different studies. The literature review conducted by Zahra and George (2002) raises doubts whether the researchers used the same attributes of the construct. Some researchers try to measure absorptive capacity through innovation and collaboration activities (e.g. R&D budget, R&D intensity, amount of joint research projects) of companies (e.g. Schmidt 2005, Fabrizio 2009). Other studies additionally use the organizational structures, such as knowledge management, incentive systems, human resources as an indicator of absorptive capacity (e.g. Flatten et al. 2011, Ströh 2014, Valentim et al. 2016). However, a low number of employees, often small or even absent R&D departments and no permanent ongoing R&D activities are typically for SME. Hence, the question arises whether the previously used variables are suitable for SMEs and subsequently, which measured variables would be an alternative.

Due to the inconsistent operationalization, we apply an inductive approach to answering the research questions. In the first quarter of 2019, a qualitative empirical study will be conducted to identify and analyze possible ways of measuring the absorptive capacity of SMEs. By conducting interviews with German SMEs (expected n = 10) and applying qualitative content analysis, the above-mentioned measures as well as alternative ways to operationalize absorptive capacity will be addressed. This approach shall lead to the generation of hypotheses on variables specified for SMEs. The results of the research project are planned to be presented in a poster session during the University-Industry Interaction Conference 2019.
Based on the gathered insights and the formulated hypotheses, we further plan to conduct a quantitative-empirical survey of SMEs in late 2019.