Information Quality and Absorptive Capacity in Service and Product Innovation Processes

Introduction All innovative activity--understood as trying out of a new opportunity or action (Witt, 1996), involves generation and use of knowledge. Knowledge is therefore often assumed to be the most valuable resource of a firm. Creation of new knowledge is conceptualized as recombination and exchange of existing knowledge (Teigland & Wasko, 2003). Brokel and Binder (2007) recently discussed two types of knowledge transfers: intended and unintended. In intended knowledge transfers, actors actively seek knowledge, whereas unintended knowledge transfers occur when an individual "stumbles upon" knowledge. They focused on the tacit type of knowledge in innovation economics. Their research showed that knowledge search processes of an individual are biased toward regionally available knowledge, and an agent's social embeddedness fosters overrepresentation of regional actors in her/his set of potential knowledge sources. This kind of policy definition (intended--unintended) is consistent with, for example, the findings of Ronde and Hussler (2005). In their study dealing with knowledge flows and localized learning processes, they found results suggesting that competences dedicated to external interactions have a more important impact on innovation than internal competences. They also found that unintended knowledge flows have less influence on innovation than deliberate ones. Hence, their analysis advocated innovation policies dedicated to support networks of regional actors. The case of organizations may be similar; knowledge transfers of a firm, for instance, might well be intended or unintended. The concept of absorptive capacity becomes intriguing here. The concept was originally defined by Cohen and Levinthal (1990) as an organization's ability to value, assimilate and apply new knowledge. Kim (1998) argued that absorptive capacity requires learning capability and develops problem-solving skills; learning capability is the capacity to assimilate knowledge for imitation, and problem-solving skills are the capacity to create new knowledge for innovation. Zahra and George (2002) defined two different types of absorptive capacity: (i) potential absorptive capacity is important in acquiring and assimilating external knowledge; and (ii) realized absorptive capacity refers to functions of transformation and exploitation of the knowledge that has been obtained. Both are important in innovation processes: potential absorptive capacity enables exploration of knowledge (often) over the weak ties of an innovation system, and realized absorptive capacity secures exploitation (often) in the weak ties of the system. Absorptive capacity is crucial when pondering questions about future-knowledge adaptation in firms and other organizations that belong in innovation systems and networks; higher absorptive capacity enables easier crossing of structural holes in the innovation system. Lee and Strong (2004) saw knowledge in general as a prerequisite for work. When they discussed knowledge for work, they meant knowledge about work processes and the resulting work performance. They also noted that, whereas conventional research has recognized the importance of knowledge and the corresponding organizational learning, actual relationships and patterns of various modes of knowledge for specific performance have not been explored. According to them, controversy remains about how modes of knowledge are involved in work practice. For example, pre-existing declarative knowledge has been found to play a role in absorbing and creating new knowledge in innovation activities (Cohen & Levinthal, 1990). Lee and Strong's (2004) view was that modes of knowledge are conceptually separate, but, during work, they are used interactively. They saw a clear need for further empirical investigation into how knowledge works in specific work domains. The work domain for our inquiry into knowledge is innovation processes. …