Absorptive capacity has been increasingly thought of as a potential source of innovation. From the knowledge management perspective, absorptive capacity is composed of a set of activities dealing with acquisition, assimilation, transformation, and exploitation of external and internal knowledge. This study investigates what relationship the absorptive capacity of individuals who have technical knowledge in the organization has with process innovation and product innovation.
Mobile based survey was conducted from the employees working for the largest electronics manufacturer in Korea. The analyzed data was based on 156 responses from 199 participants. The analysis result shows that four phases of absorptive capacity such as acquisition, assimilation, transformation and exploitation have different effects on process innovation and product innovation, respectively. Specifically, transformation is found to be most critical in leading to innovation.