Organizing to Gain from User Interaction: The Role of Organizational Practices for Absorptive and Innovative Capacities

We address how organizational practices may leverage the knowledge absorption from users in the context of innovation. We focus on practices that enhance communication and knowledge sharing between management and employees and between departments, and on pecuniary rewards for engaging in knowledge sharing. Such practices leverage knowledge absorption and lead to higher innovative capacity. Thus, we identify some of the organizational dimensions of absorptive capacity that are needed to benefit from the “user innovation model” and provide quantitative support for the propositions put forward. The paper draws on a survey of 169 Danish private firms. The survey was implemented in 2001 among a sample of the 1000 largest Danish manufacturing and service firms.