The effects of Absorptive Capacity on Operational Performance within the Context of Customer- Supplier Relationships

Companies today evolve in an environment characterized by strong competitive pressures and constant innovation. Within this context, knowledge is widely recognized as a strategic resource and crucial to maintaining a competitive advantage (Teece, 1998). A firm's competitiveness thus depends on its ability to acquire new knowledge, primarily disseminated through its network of business partners (Gulati, 1999). A company's relationships with actors in its network thus constitute a major source of valuable, rare, and inimitable strategic resources (Gulati et al., 2000). Through its interactions with other organizations, a company can gain access to outside knowledge that cannot be acquired by the market and would be slow and costly to construct inhouse (Powell et al., 1996; Hardy et al., 2003). Still, it's not enough for a firm to belong to a network to profit from the competitive advantage offered by outside knowledge because the exchange of knowledge is limited and difficult to convert into performance improvement.