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Absorptive Capacity in New Zealand Firms: Measurement and Importance

Harris, R.; Le, T.

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Authors

T. Le



Abstract

To the best of our knowledge, this paper reports the first set of nationally representative results on the importance of ‘absorptive capacity’ (generally defined as a firm’s ability to internalise external knowledge) for firms. Using data principally from the Business Operations Survey 2005–15, we measure absorptive capacity in New Zealand (NZ) firms across a 10-year period and investigate if it remains stable in the long term. This is followed by considering how firms’ characteristics vary across levels of absorptive capacity and most importantly whether such capacity determines firms’ productivity performance across the primary, manufacturing and service sectors. Our results show that relative to other influences, absorptive capacity as measured here—net of the impact of, for example, foreign-ownership and human capital—has a substantial influence on exporting, innovation and undertaking R&D, and thus consequently firm-level productivity. Set against relatively poor productivity performance, the paper concludes with a discussion of how government should consider helping firms to boost their levels of absorptive capacity in NZ.

Citation

Harris, R., & Le, T. (2018). Absorptive Capacity in New Zealand Firms: Measurement and Importance. Science and Public Policy, 46(2), 290-309. https://doi.org/10.1093/scipol/scy058

Journal Article Type Article
Acceptance Date Jul 10, 2018
Online Publication Date Oct 16, 2018
Publication Date Oct 16, 2018
Deposit Date Jul 17, 2018
Publicly Available Date Oct 16, 2020
Journal Science and Public Policy
Print ISSN 0302-3427
Electronic ISSN 1471-5430
Publisher Oxford University Press
Peer Reviewed Peer Reviewed
Volume 46
Issue 2
Pages 290-309
DOI https://doi.org/10.1093/scipol/scy058
Public URL https://durham-repository.worktribe.com/output/1325663

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Copyright Statement
This is a pre-copyedited, author-produced version of an article accepted for publication in Science and Public Policy following peer review. The version of record Harris, R. & Le, T. (2019). Absorptive Capacity in New Zealand Firms: Measurement and Importance. Science and Public Policy 46(2): 290-309 is available online at: https://doi.org/10.1093/scipol/scy058





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