CHAPTER III RESEARCH METHODOLOGYS
3.10 Knowledge Absorptive Capacity
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firm-level characteristics or a firm’s innovative behavior, such as new processes of manufacturing and new processes of services.
Based on case studies, all firms provide employees the autonomy to decide on their work. Employees can instigate act and think without interfere, and are free to communicate. Regarding the independence to design their own job responsibility, however, decisions are made by executives with higher authority at each decision level. For example, case A “allows employee to think and work; however, employees have to talk to the supervisor first”; in case B, “employees can design their own jobs under the extent of staffs’ responsibility”; and case C “gives employees an opportunity to offer ideas within each responsibility.” However, final decisions are from top management, and the owner has greater autonomy in terms of decision- making.
Hence, employees are not free to work, and their decision-making depends on high authorities or the owner of the firm. In summary, the variables in the theories and in the real context are different. Risk-taking in medical device manufacturing is a calculated risk. All firms need to study the target customer before deciding on new projects, as the high cost of R&D in medical projects influence differences between risk-taking in theory and the real world. Autonomy in theory reflects the role of employees; it explains the independence of the employee in creating success in their job.
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Based on these case studies, customer feedback, the production design of foreign devices, and external research agents are sources of external knowledge to develop a firm’s new products (see Table 22). Thai medical device manufacturers use government-driven policy to create new products through external R&D activities.
For example, medical research institutes transfer medical technology to case B, which has the marketing capability to turn medical research projects into commercial products. Case A and case B showed that firms used their experience or prior related knowledge to select which external R&D they would invest in, and they acquire and assimilate the external knowledge. Then the transformation and exploitation of external knowledge contribute to the success of commercial ends. This findings are consistent with a study by Cohen and Levinthal (1990), who argued that the success of a firm’s performance is path-dependent. Similarities between external knowledge and the firm’s prior related knowledge enhance its opportunities to apply new external knowledge to the basic knowledge that the firm has called potential ACAP; however, new knowledge cannot cause realized ACAP to bring about commercial-end benefits.
In addition, knowledge ACAP stimulates the effectiveness of entrepreneurial behavior process. External knowledge stimulates a firm’s responsiveness to customer need. For example, case B argued that “firms should update new medical trend to create the fit between their product’s quality and worldwide customers’ need.” Case C also showed that “firm used new knowledge to develop new products that have never been produced before, such as life science technology products.” Moreover, knowledge ACAP enhances the way to do new things such as enhancing the ability to
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Table 22 Within Case and Cross Case Analysis among Aase A, B, C, D and E of Knowledge ACAP
Knowledge
ACAP Case √/ × Characteristics
Acquire external knowledge
Case A √ Customer feedback/ copy foreign devices.
Case B √ University/ medical sciences department of Thailand/ Intellectual Property Institute of University
Case C √ Use external knowledge from various sources e.g., NSTDA*, NECTEC
Case D √ Merger and acquisition (M&A) Case E Merger and acquisition (M&A) Utilize external
benefits until commercial end
Case A × Develop from existing product/ trial / launch Case B √ Technology transfer/ production/ distribution
and marketing
Case C √ Patent /Trial/ reliability and accuracy testing/
certified/ launching.
Case D √ Technology selection/ product trials/ clinical evaluation/ launching
Case E √ Technology selection/ product trials/ clinical evaluation/ launching
Note * NSTDA: National Science and Technology Development Agency of Thailand
** NECTEC : National Electronics and Computer Technology Center of Thailand
export abroad. For example, case B showed that “new knowledge facilitates B to work with researchers from the university to develop diagnostic test kits to look forward to export in the future.” However, all cases argued that the success rate of new medical devices is a challenge. Cases A, B, and C stated that it takes many years to develop new products. Their problems include the high cost of certified processes,
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and not all medical research in the laboratory succeeds in being commercial products in the market.
In the literature, knowledge ACAP refers to the ability of a firm to recognize the value of new external information, assimilate it, and apply it to commercial ends (Cohen and Levinthal 1990). Knowledge ACAP results from a prolonged process of investment and knowledge accumulation within the firm, and its development is path- dependent (Cohen and Levinthal 1990). Therefore, the persistent development of the ability within the firm to absorb knowledge is a necessary condition for its successful exploitation of knowledge outside its boundaries. Based on this case, this study argues that medical device firms must accumulate knowledge related to their expertise in specific medical fields. Hence, it is essential to address these questions and attempt to investigate medical device firms in these related constructs: firm performance, EO, and knowledge ACAP.
The benefits of ACAP, including moderating the relationship between EO and performance, are the objective of the quantitative method. In the literature, empirical evidence showed that knowledge ACAP influences the dimensions of EO (Engelen et al., 2014a; Sciascia et al., 2014; Hernandez-Perlines, 2018). However, only the direct impact of proactiveness on performance of SME businesses (Kraus et al., 2012) was investigated while competitive aggressiveness has not been studied despite being an important dimension that explains why firms succeed in various contexts of study (Lumpkin and Dess, 2001; Hughes and Morgan, 2007). Based on these arguments, the following is postulated:
Hypothesis 3: Knowledge ACAP positively moderates the relationship between proactiveness and firm performance.
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Based on these case studies, the competitive aggressiveness of medical device companies is different from other contexts because the long life cycle of medical devices allows for a longer period for each product to sell in the market. However, prior studies have not studied this aspect. Hence, to clarify the gap in these studies, based on the previous arguments, the following is postulated:
Hypothesis 4: Knowledge absorptive capacity positively moderates the positive relationship between competitive aggressiveness and firm performance.