Absorptive Capability and Competitive Advantage: Some Insights from Indian Pharmaceutical Industry

Every firm learns through firm specific methods. This learning process is operationalized by firm’s knowledge management practices. Therefore, knowledge to result in successful learning should be assisted by a combinative framework which can enhance a firms’ absorptive capability. This in turn will play a decisive role for achieving competitive advantage. Current literature in strategic management focuses towards dynamic capability as a source of competitive advantage. Earlier studies have focused their attention on direct relationships among few selective factors like knowledge management framework only; therefore the lack of clarity can be traced to under-specification of the models that the previous studies have examined. Specifically, studies provide limited view of absorptive capability by ignoring the constituting factors which should be integrated. Absorptive capability is a type of dynamic capability. Absorptive capability as a construct involves framework for managing knowledge, ability to combine the existing and acquired knowledge and leveraging knowledge through learning for innovation. Using absorptive capability as a mediator a model to understand the drivers of competitive advantage in Indian Pharmaceutical Industry is developed.