Absorptive capacity and its impact on innovation and performance: findings from SEM and fsQCA

Innovation can provide sustainable competitive advantages to service companies that consider the absorption of external knowledge a key strategic issue. Using the four dimensions of absorptive capacity, this study examined the impact of absorptive capacity on innovation in service delivery processes and explored how this innovation influences business performance. Structural equation modeling (PLS-SEM) and fuzzy-set qualitative comparative analysis (fsQCA) were applied to a sample of 134 companies drawn from the Colombian tourism sector. The results of the SEM indicate that innovation in service delivery processes is positively influenced by two of the four dimensions of absorptive capacity: knowledge transformation and knowledge exploitation. Also, innovation in service delivery processes encourages outstanding performance and mediates the relationship between absorptive capacity and business performance. These findings are supported by the results of the fsQCA. Furthermore, although the SEM results indicate that knowledge exploitation has the greatest direct influence on innovation, the fsQCA results suggest that knowledge assimilation and transformation are necessary conditions for companies to outperform competitors.