The influence of absorptive capacity on market-driving innovation performance

Market-driving product innovations are argued to be a source of sustainable competitive advantage. A firm’s absorptive capacity (ACAP) or the organizational dynamic learning capability to acquire and exploit external knowledge is increasingly being recognized as one of the most influential determinants of market-driving innovations and business performance; yet, there is limited empirical evidence to understand these relationships atthe NPD program level.Drawing on resource-based view and dynamic capability theory this research examines the influence of ACAP, with its subsets, potential absorptive capacity (PACAP)and realized absorptive capacity (RACAP),on specific outcomes of market-driving innovation performance (MDIP). Using partial-least squares structural equation modelling and a sample of 179managers of top innovative companies in Thailand,we find that ACAP significantly influences the before-launch stage and post-launch stage performance outcomes of market-driving innovations at the program level -specifically, the ability to maintain breakthrough integrity of product concepts through the process, to achieve early success with customers and speed-to market, and to open windows of opportunity-and ultimately, financial performance.This study contributes to the advancement of market-driving innovations, not only for Thailand, but also more broadly for other countries and locations; thus, leading to significant theoretical and practical implications.