Assimilating external knowledge: A look at university-industry alliances

Expanding on the notion that absorptive capacity is a multi-dimensional construct, we elaborate on a pivotal component of absorptive capacity, assimilating external knowledge (AEK), by examining the extent to which certain key internal and external factors are related to AEK and whether the type of knowledge (tacit knowledge versus explicit knowledge) moderates these relationships. Using survey questionnaire data from senior executives in firms collaborating with university research centers our focus in this study was AEK in the way of the firm advancing new products, new processes, and improvements to existing products and processes. Our results show that a more technologically uncertain external environment is positively associated with AEK and firm age is associated with AEK in a curvilinear, inverted U-shape fashion such that as firms mature they assimilate external knowledge better up to a certain point when diminishing returns come into play. We also found tacit knowledge and explicit knowledge moderate these relationships in different ways. Our findings can help managers develop strategies to maximize AEK to increase innovation, shorten technology development time, and reduce R&D costs. We also inform managers and policy-makers on the value of university-industry alliances for driving innovation and advancing new technologies. We conclude with additional implications for future theory development, empirical research and management practice.