Sukoco, Badri Munir and Gunawan, Sri (2014) The Effects of Potential and Realized Absorptive Capacity on Suppliers’ Performance: The Moderating Effect of Empowerment Climate. In: 2014 ICOI THE INTERNATIONAL CONFERENCE ON ORGANIZATIONAL INNOVATION, 12 - 14, 2014, Manila, Philippines.

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Abstract

In the context of buyer-supplier relationship, few studies have discussed about how suppliers absorb new knowledge. This study proposes that internal aspects (entrepreneurial orientation) and external aspects (market orientation) both contribute to the capacity of suppliers to acquire and assimilate (potential absorptive capacity), as well as to transform and exploit knowledge (realized absorptive capacity). Further, this study argues that empowerment climate will moderate the positive effects of absorptive capacity on suppliers’ performance. Based on survey among first-tier suppliers of the largest automotive producers in Indonesia, the results of this study reveal that the effect of market orientation on realized absorptive capacity is mediated by potential absorptive capacity. The effects of entrepreneurial orientation on both of these two capacities are positive and significant. Further results indicate that the positive effect of potential absorptive capacity on performance is mediated by realized absorptive capacity. Interestingly, the moderating effect of empowerment climate oppose the proposed hypotheses. Managerial and academic implications are further presented.

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