Absorptive capacity and new product development

Gregory N. Stock, Noel P. Greis, William A. Fischer

Research output: Contribution to journalArticlepeer-review

293 Scopus citations


New product development, specifically the ability of a company to develop products that outperform their competitors in the marketplace has been shown to benefit from the acquisition and use of external information. In this paper, we examine the relationship between absorptive capacity and new product development performance. Absorptive capacity is defined as the ability to acquire external information, assimilate it, and exploit it for commercial ends (Cohen & Levinthal, 1990). We would expect that greater absorptive capacity, which provides a greater capability to acquire and exploit external information, would lead to more effective new product development. In this paper, we test this proposition using data from the computer modem industry over a 24-year period. Absorptive capacity is operationalized by R&D intensity, and new product development performance is measured by the technical performance of new products. Our results indicate that the relationship between absorptive capacity and new product development performance is nonlinear. An "inverted-U" shape suggests diminishing returns for absorptive capacity. Implications and possible directions for future research are discussed.

Original languageEnglish (US)
Pages (from-to)77-91
Number of pages15
JournalJournal of High Technology Management Research
Issue number1
StatePublished - Apr 2001
Externally publishedYes


  • Absorptive capacity
  • New product development

ASJC Scopus subject areas

  • Computer Science Applications
  • Strategy and Management
  • Information Systems and Management
  • Marketing
  • Management of Technology and Innovation


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