Increasing Absorptive Capacity through Strategic Use of Network Organizations

Distributed organizations face numerous difficulties during implementation of knowledge-intensive projects. These types of initiatives require that organizations have absorptive capacity or the ability to acquire, assimilate, transform and exploit new knowledge. This case study examines IS adoption strategy based upon the effect of organizational structure on the ability of the organization to implement an large scale information system. A specific type of network organization, called a consortium, was strategically selected to increase the flows of information as well as each organization's absorptive capacity. A critical component in increasing absorptive capacity was the strengthening of the social communication network through the use of formal meeting and the emergence of informal communication ties. In addition, the tendency for organizations to engage in direct contact with other organizations they view as similar (homophily) strengthened the network. The social communication network, in turn, supported the dynamic flow of absorptive capacity elements to support network members deficient in some capabilities. Implications for other knowledge intensive initiatives, such as IS implementations, are discussed. .