INTERFIRM ABSORPTIVE CAPACITY:

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Ruben Balfoort

January 11, 2016

[

INTERFIRM ABSORPTIVE

CAPACITY:

]

The influences of governance mechanisms on

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Interfirm Absorptive Capacity:

The influences of governance mechanisms on absorptive capacity and

the effects of these capacities on learning performances

Master Thesis, Marketing Management

University of Groningen, Faculty of Economics and Business

January 11, 2016

Contact details:

Aquamarijnstraat 573

9743PN Groningen

Phone number: +31 627979809

Email: r.t.balfoort@student.rug.nl

Student Number: 2003236

Supervisor:

Dr. J. Berger

j.berger@rug.nl

Second supervisor:

Dr. Yannick Joye

y.joye@rug.nl

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Management summary

In the current 21-first century, knowledge is one of the most important resources for numerous firms. Many firms base their businesses on customer information and other available knowledge with as result that knowledge has become an important source for competitive advantage nowadays. Knowledge sharing between firms is becoming an essential reason for firms to start relationships with other firms. These firms need to develop skills to acquire and process the external knowledge. The skills and capabilities are defined as absorptive capacity as a set of organizational routines and processes by which firms acquire, assimilate, transform and exploit knowledge to produce a dynamic organizational capability (ACAP) (Zahra and George 2002). This concept is divided into two subparts; the first part is potential absorptive capacity (PACAP) and the second part is realized absorptive capacity (RACAP). These two parts have separate but complementary roles and coexist at all times and fulfill a necessary but insufficient condition to improve firm performance.

This study analyzes the influences of possible governance mechanisms to develop safeguards to protect knowledge sharing relationships and to improve these said relationships. Two important forms of governance mechanisms are contractual governance and relational governance. The influences of these mechanisms are already being researched, however, in this study the combined influence of both mechanisms is measured as well as being measured as separate mechanisms. In addition, this study is based on large amounts of data obtained from a well-developed questionnaire and takes into account the possible differences between the visions of the supplier and the buyer within the relationships.

Furthermore, in this study, the influence of the two dimensions of ACAP on the exploitative and explorative learning performances is measured. This part makes the effects of ACAP on organization performances more insightful. The possible influence of environmental turbulence on the relationships between the ACAP dimensions and the learning performances are also measured. This possibly affecting role of environmental turbulence is interesting to know, particularly in a time in which innovations and changes are becoming increasingly available. The environmental turbulence is measured as market dynamism and is measured as such by the questionnaire.

This study is based on a questionnaire, which has been filled out by 332 participants. The views of both sides of a relationship are separated which result in insights in 166 dyadic relationships between buyers and sellers. In most relationships, the roles of both parties can differ because both firms share and absorb external data sometimes. However, the buyers’ and suppliers’ perception of relationship dimensions as commitment, adaptability, communication, dependence, power and performance differ significantly. This is the reason for the distinction between the two roles.

The results of this study reveal interesting insights. First of all, the direct influences of relational governance mechanisms and PACAP and RACAP are measured as positive and significant. Relational governance seems quite important for both the PACAP and the RACAP for both the supplier and the buyer database. On the other hand, the relation between contractual governance mechanisms and PACAP and RACAP is not investigated based on a non-significant result. In addition, the results of the measurement of the combined influence of both governance mechanisms on PACAP and RACAP show a significant result, but because of the negligibly increased positive influence compared with the influences of the separate mechanisms, it cannot be concluded that the combined influence is either complementary or substituting. Despite these results, it can be concluded that relational governance seems most important while, based on other studies, contractual governance can also have positive influences when combined with relational governance. The possible advantages of contracts are also discussed.

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significant, so this variable is deleted from the model. Based on this study nothing can be concluded about the possible influence of the relationship duration on the relationships between governance mechanisms and PACAP and RACAP.

The results of the second part of this study show significant positive effects of PACAP on explorative learning performance and of RACAP on exploitative learning performance. When the moderating role of environmental turbulence was added, this role did not show significant for the buyers and for the suppliers. This implicates that environmental turbulence does not influence any of the existing as well as significant relationships between the ACAP dimensions and the forms of learning.

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PREFACE

This thesis is the final project of my master in Marketing Management. After more than five years of studying at the University of Groningen, this thesis completes this amazing period. However, I would not have been able to write this thesis without the help of others.

Firstly I want to say thank to Dr. J. Berger. He was always available and willing to help and give feedback. It became very clear that he was highly involved in the topic of absorptive capacity after being promoted on this theme. It was great discussing the topic and the progress with Dr. Berger, particularly because he also was my supervisor for my bachelor thesis.

Furthermore, I want to thank the second supervisor Dr. Yannick Joye. He was willing to assess my thesis as a second supervisor.

Lastly, I want to say thank you to Samuel Vergunst, Willem Balfoort and Rebekah Balfoort who were willing to check my thesis and discuss it with me.

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1. INTRODUCTION

In the current 21-first century, knowledge is one of the most important resources for numerous firms. Many firms base their businesses on customer information and other available knowledge. Moreover, more information is available than ever before and this information is relatively easy to transfer and share nowadays. As competition becomes more knowledge-based, a firm must develop a thorough understanding of its own knowledge, the processes by which it converts knowledge to capabilities, and the capacity of those capabilities to meet the demands of its environment (Lane and Lubatkin 1998). Knowledge can become a competitive advantage for a single firm, but when knowledge is shared between firms there is a chance the firms in the relationship both benefit from the shared knowledge and are able to combine the parts of knowledge. Firms that combine resources in unique ways may realize an advantage over competing firms who are unable or unwilling to do so (Dyer and Singh 1998). Information exchange is defined as expectations of open sharing of information that may be useful to both parties (Cannon and Perrault 1999). Much research has been done concerning this topic. Based on innovation theories, we know that interorganizational networks and interfirm relationships play important roles in innovation (Lane and Lubatkin 1998). For a firm, it can be beneficial to expand its knowledge acquiring scope beyond its boundaries and to try to form relationships with other firms to share knowledge to stimulate the level of innovation.

For relationships to become beneficial, long term cooperation is usually necessary. Particularly for long term relationships, the quality is quite important and for this reason high amounts of money are often invested in the relationship development (Luo and Kumar 2013). Firms need to develop skills to acquire and process the external knowledge. These capabilities are defined as absorptive capacity (hereinafter, ACAP) in literature on these topics. In most papers, the definition of ACAP, developed by Zahra and George (2002) is used. They define ACAP as a set of organizational routines and processes by which firms acquire, assimilate, transform and exploit knowledge to produce a dynamic organizational capability. ACAP consists of two dimensions. The first part is potential absorptive capacity (hereinafter, PACAP) and the second part is realized absorptive capacity (hereinafter, RACAP). These two dimensions have separate but complementary roles (Zahra and George 2002). Both subsets of ACAP coexist at all times and fulfill a necessary but insufficient condition to improve firm performance (ibid.).

A relationship between firms consists of a buyer and a supplier. In most relationships the roles of both parties can differ because both firms share and absorb external data sometimes. However, the buyers’ and suppliers’ perception of relationship dimensions such as commitment, adaptability, communication, dependence, power and performance are significantly different (Ambrose et al. 2010). For this study there is a distinction made between the roles because of the different views on relationship dimensions.

In these interfirm relationships, governance mechanisms are important. These governance mechanisms are part of the institutional context. The institutional context is defined as the institutional actors as capacity, relationships, rules, rewards and other actors and parties which are specifically related to the area in which two or more parties are interacting with each other (IFAD 2013). Managers implement governance mechanisms to safeguard owners of specialized assets from the losses, haggling, and negotiation inefficiencies resulting from exchanges with opportunistic partners’ gains (Mesquita and Brush 2008). This research analyzes two governance mechanisms: relational governance and contractual governance. The first aim of this study is related to these mechanisms.

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contractual and relational governance mechanisms. Managers can use this knowledge for making decisions on governance topics.

A second aim of this research is to analyze the influence of PACAP and RACAP on different forms of organizational learning performances. Two forms of learning are approached: explorative learning and exploitative learning. Moreover, the possibly moderating influence of environmental turbulence on the different forms of learning is measured. From a managerial point of view this study can help to obtain knowledge on the influences of a turbulent environment and base their ACAP and learning capabilities on this.

This study aims to contribute to existing literatures in two ways. Firstly, this study contributes to the literature regarding governance mechanisms. A lot of literature is written about these mechanisms. The two governance mechanisms, relational governance and contractual governance, are the topic of the first part of this study. Furthermore, the possible substitutional or complementary interplay between these two forms is investigated intensively. Consistent conclusions about this interplay are still far from being reached (Cao and Lumineau 2014). Numerous papers about governance mechanisms have distinguished between contractual governance and relational governance and analyzed both forms as substitutes of each other (Buvik and Reve 2002, Granovetter 1985; Bernheim and Whinston 1998; Bradach and Eccles 1989; Dyer and Singh 1998; Gulati 1995; Uzzi 1997; Adler 2001). On the other hand, many papers are written about the possible complementarity and interplay between the two governance forms (Cao and Lumineau 2014; Poppo and Zenger 2002; cannon et al. 2000). In this paper the two forms are also taken together to see if they are complementing each other and to analyze their influence on both dimensions of ACAP.

Secondly, this study adds to the literature about the results of ACAP such as learning performances. The aim is to analyze what the possible influences of environmental turbulence are on relationship between PACAP and RACAP with two ways of interfirm learning performances: explorative and exploitative. Particularly in a time period with fast-paced changes and innovations, knowledge about the effects of this turbulence can be incredibly useful.

This research focuses particularly on the ACAP capabilities in interfirm relationships. The relationship is researched in a dyadic way to get information from the different viewpoints. There are 166 dyadic relationships involved in the research and all of these firms filled out an extensive questionnaire about numerous relationship and knowledge sharing topics.

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2. THEORETICAL BACKGROUND

Many studies about ACAP related topics have already been conducted (Berger 2015; Zahra and George 2002; Cannon and Perreault 1999; Cohen and Levinthal 1990). This is a sign of the current interest in this topic. These aforementioned research papers form the theoretical context of this study. This chapter contains the theoretical background for this study. In the next chapter, the concepts from this chapter are combined in hypotheses which are measured and discussed in the other parts of this study.

2.1 Governance mechanisms in interfirm relationships

Relationships between firms are drivers for mutual responsibilities between the partners. Especially when the transferred knowledge is more specific or unique, the relationship is more important and worthy. To protect the worthiness of a relationship, safeguards can be developed. These safeguards can have different forms. In this study two forms of governance mechanisms are analyzed as the institutional context. The institutional context is defined as the institutional actors as capacity, relationships, rules, rewards and other actors and parties which are specifically related to the area in which two or more parties are interacting with each other (IFAD 2013) which establishes the basis for production, exchange and distribution (Williamson 1993). With regard to interfirm relationships, the institutional arrangement between firms governs the ways in which the members of the relationship can cooperate and/or compete (ibid.). The forms of governance mechanisms are contractual governance and relational governance. These both forms can protect the knowledge sharing relationship to improve the knowledge sharing. Furthermore, the mechanisms can indirectly add value to this relationship and can decrease costs. These possible advantages are further explained in the following paragraphs and in the next chapter.

2.1.1 Contractual governance

The first important form of governance mechanisms is the contractual agreement (Argyris and Liebeskind 1999). Contracts or legal bonds are detailed and binding contractual agreements that specify the obligations and roles of both parties in the relationship (Cannon and Perrault 1999). Contractual governance involves the extent to which formal incentives/disincentives (typically financial) are used to clearly specify and control service activities between a buyer (i.e., customer firm) and supplier (i.e., provider) (Handley and Angst 2014). “Transaction cost economics scholars commonly point to three categories of exchange hazards that necessitate contractual safeguards (or vertical integration): asset specificity, measurement difficulty, and uncertainty” (Poppo and Zenger 2002). With the development of contractual agreements the formalization of the relationship is increased. Formalization is the degree to which rules, procedures, instructions, and communications are formalized or laid down in written documents or formal systems (Khandwalla 1972; Jansen et al. 2005). Contracts and other forms of governance enable each party to stake a credible claim to their expected share of the value generated (Ghosh and John 1999). With the development of formal mechanisms, parties specify several verifiable contingencies, such as inputs and outputs, the level and timing of actions, task and review processes, performance benchmarks, procedures for dispute resolution, and even penalties for noncompliance (Poppo and Zenger 2002; Mesquita and Brush 2008).

2.1.2 Relational governance

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between firms and can provide knowledge sharing stability, also in the future. Norms are expectations relating to behavior, at least shared within a group of people who have to take decisions mutually (Gibbs 1981; Heide and John 1992). Within relationships between firms, specific agents have to decide mutually. These decisions can be influenced by available norms within the relationship (Shapiro 1987). Firms in a knowledge sharing relationship with a social history increasingly rely on relational norms to govern their exchange (Granovetter 1985). Thus, longer lasting relationships can be a source for an increased development of relational governances. Relational governance is particularly suitable to cope with unforeseen events as it allows flexible reactions to issues not covered by the contract (Huber et al. 2013). The usage of relational governance (social control) mechanisms may further enhance flexibility and efficiency in buyer– supplier relationships because problems are more likely to be openly identified, examined, and resolved (Li et al. 2010; Wuyts and Geyskens 2005). “Higher levels of relational governance are associated with more interactions between the parties and less emphasis on formal contracts” (Gundlach and Achrol 1993; Ferguson et al. 2005). This is a source for efficiency which is the focus in most literature with regard to relational governance advantages. Instead of developing contracts and spending a lot of time on formalizing all sorts of agreements, norms can be a source for more trust and communication and can prevent those expensive investments. Hence, due to relational trust, individual alliance members will feel more comfortable in sharing sensitive information, and accordingly relational trust will reduce the imposed protective constraints put on sharing knowledge, which will cut the transaction costs of the exchange (Berger 2015). Moreover, trust functions as an ongoing social control mechanism and risk reduction device (Lane et al. 2001; Gulati 1995).

Relational governance can be seen as an important form of a governance mechanism to protect the interfirm relationship performance because of the reasons previously elaborated upon. Both governance mechanisms can be a source for stronger interfirm absorptive capacity which is discussed in the following paragraph.

2.2 Absorptive Capacity (ACAP) in interfirm relationships

The most commonly used definition of ACAP in research papers is the definition of Zahra and George (2002). They define ACAP as “a set of organizational routines and processes by which firms acquire, assimilate, transform and exploit knowledge to produce a dynamic organizational capability”. In other research papers other definitions are used but for this research this particular definition is used because of its dynamic character. This definition contains four different dimensions within ACAP. These four different dimensions are all important and play a different yet complementary role in explaining how ACAP can influence the organizational learning performance outcomes (Berger 2015; Zahra and George 2002). Based on the research of Lane et al. (2006), the different capabilities are based on different forms of learning with the result being that for each firm the different capabilities can have different meanings and importance levels, possibly based on developed routines. Moreover, different relations between the capabilities and organizational learning performances can exist (Sun and Anderson 2010). This reflects the ability of an organization to respond to strategic change (ibid.). For these reasons the dynamic capability view is seen as important in the ability to make distinctions between influences on and of different capabilities.

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performance reflects the concept of realized absorptive capacity. This distinction is important to make when analyzing influences of ACAP on organizational performances. The influences on learning performances will be further analyzed in chapter 3 of this study.

In this study ACAP is described and analyzed as capabilities within a relationship between firms. The focus is not on single firms but on the capability development on an interfirm level.

2.2.1 Potential Absorptive Capacity

The Potential Absorptive Capacity (PACAP) is “a firm`s capability to value and acquire external knowledge but does not guarantee the exploitation of this knowledge” (Cohen and Levinthal 1990). The PACAP concept also contains two different capabilities.

Assimilation refers to “the firm's routines and processes that allow it to analyze, process, interpret, and understand the information obtained from external sources” (Zahra and George 2002). The application of knowledge within organizations is mostly context dependent. Every single firm handles information in their unique way. The result can be that information cannot be copied directly because of the specific worth it has for one firm, but not for the other (Szulanski 1996). This can be an obstacle for firms to copy information from the other firm. Specific skills need to be developed. These skills can be developed in the assimilation process.

Acquisition refers to “a firm's capability to identify and acquire externally generated knowledge that is critical to its operations” (Zahra and George 2002). In this study, the acquisition process is described in the light of relationships with the result of mutual knowledge sharing and acquisition of knowledge from a partner in a relationship. This knowledge sharing is important for both parties thus both parties are interested in a good and open way of knowledge sharing because they are both sometimes the seller and other times the buyer of the knowledge (Cannon and Perreault 1999). The effectiveness of the two stages in PACAP depends among other factors on the level and intensity of contact and this is partly dependent on the amount of linkages a company has within a network (Matusik and Heeley 2005). In this study the influences of governance mechanisms on the effectiveness of PACAP will be measured.

2.2.2 Realized Absorptive Capacity

The Realized Absorptive Capacity (RACAP) “reflects the firm's capacity to leverage the knowledge that has been absorbed and is a function of two capabilities” (Cohen and Levinthal 1990). RACAP encompasses deriving new insights and consequences from the combination of existing and newly-acquired knowledge into operations (Leal-Rodríguez et al. 2014). The two capabilities are described below.

“Exploitation reflects a firm's ability to harvest and incorporate knowledge into its

operations” (Zahra and George 2002). For firms it is mostly useful and efficient if routines are developed to exploit knowledge. Developed routines can be a source for structure and standardized mechanisms to improve the exploitation processes. When firms are cooperating for a longer time period, these routines can be developed.

“Transformation denotes a firm's capability to develop and refine the routines that facilitate combining existing knowledge and the newly acquired and assimilated knowledge” (Zahra and George 2002). Also for this process developed routines can be useful and increase the efficiency.

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2.3 Learning performances

As a whole, ACAP can be a capability for learning based on external knowledge. There are two important forms of learning performances. The first one is explorative learning and the second one is exploitative learning (March 1991). These learning performances are related to the different ACAP capabilities. The different capabilities within ACAP can be a source for exploitative learning but can also lead to exploration. This is “because the dynamic view of ACAP assumes an open system,” whereas “the focus is on external knowledge instead of a narrow internal view” (Sun and Anderson 2010). The ACAP stage in which the relationship between companies is, can be a factor for deciding the importance of one of the learning forms. In especially the PACAP stage, the explorative learning will be most important. A foundation for achieving competitive advantage is the flexibility to act on a changing market environment. The result for partnerships between companies is a flexible and unstructured strategy between both firms in the partnership (Kandemir and Acur 2012). In the RACAP stage exploitative learning is presumably more important. This is in line with the research of Zahra and George (2002) in which is stated that explorative learning is connected with PACAP and exploitative learning is connected with RACAP.

The concepts of explorative and exploitative learning contrast with entrepreneurial search for new technological and business opportunities as well as ways to capture those opportunities with adaptive and more risk-averse learning that leverages existing knowledge (Schildt et al. 2005) Firms need to balance the explorative and exploitative learning (March 1991; Schildt et al. 2005). It depends on the existing organizational knowledge if it makes sense to optimize performance on a local peak, or to gather enough new knowledge to make "long jumps" when existing knowledge offers little insight (Levinthal 1997). The existing organizational knowledge is the basis for the decision of how to balance both forms of learning.

The second topic in this part of the study is on the possible moderating influence of environmental turbulence on the relationship between the different absorptive capacities and both forms of learning performances. This moderator is included because the expectation is that when turbulence increases, innovation and new knowledge become more important. This can be a source for the development of ACAP combined with different forms of learning. The environmental turbulence presumably activates the search for new knowledge and the importance of learning based on this new knowledge. The concept of environmental turbulence is explained in paragraph 2.4. The direct relationships and the possible influence of environmental turbulence will be measured in subsequent chapters.

2.3.1 Explorative Learning Performance

Explorative learning performance is the first form of learning and concerns the exploration of new possibilities and includes terms such as search, variation, risk taking, experimentation, play, flexibility, discovery and innovation (March 1991). “Exploratory learning corresponds to the notion of potential absorptive capacity” (Zahra and George 2002). The essence of exploration is experimentation with new alternatives. “Returns from exploration are systematically less certain, more remote in time, and organizationally more distant from the locus of action and adaption” (March 1991). Exploration can generally be characterized by breaking with an existing dominant design and a shift away from existing rules, norms, routines, activities and so on, in view of novel combinations. Hence, exploration is not about efficiency of current activities and cannot be planned for (Van Haverbeke et al. 2006). This need to be reflected in the internal organization design because exploration is associated with organic structures, loosely coupled systems, path breaking, improvisation, autonomy and chaos, and emerging markets and technologies (He and Wong, 2004).

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the firm’s activities, including its knowledge base (ibid.). This way of learning can be an important source for competitive advantage because of the constant search for new opportunities in a turbulent environment. In this situation the internal organization structure should become more organic and expose a fairly broad range of prospective “receptors” to the environment (Cohen and Levinthal 1990). The internal organization should be more externally focused. A foundation for achieving competitive advantage is the flexibility to act upon a changing market environment. The result for relationships between companies is a flexible and unstructured strategy between both parties within the relationship (Kandemir and Acur 2012).

2.3.2 Exploitative Learning Performance

Exploitative learning is, in essence, the refinement and extension of existing competences, technologies, and paradigms. Its returns are positive, proximate, and predictable (March 1991). It reflects the concept of realized absorptive capacity (Zahra and George 2002). This way of learning seems in short term most efficient because of the already available knowledge that can be connected with the newly obtained knowledge.

When an organization is more internally focused for acquiring new knowledge, the acquired knowledge will be based on prior knowledge. External knowledge has a greater degree of overlap with prior knowledge, and is more easily acquired, assimilated, transformed and exploited by the organization (Sun and Anderson 2010). This internal prior knowledge acquisition focus can be a result of a strong internal cooperation in which members developed an internal language, coding scheme, or, more generally, “any particular body of expertise could become sufficiently overlapping and specialized that it impedes the incorporation of outside knowledge” (Cohen and Levinthal 1990). For exploitative learning performance to be successful, the internal organization of a firm needs to be based on mechanistic structures, tightly coupled systems, path dependence, routinization, control and bureaucracy (He and Wong 2004).

2.4 Environmental Turbulence

In stable environments, external changes exist but tend to be predictable and incremental with low rates of change (Duncan 1972). In most cases, and especially in a time like the twenty-first century, stable environments are scarce and instead of that most of the time environmental turbulence exists. A turbulent environment, in this study measured as market dynamism, is a dynamic, unpredictable, expanding, fluctuating environment; it is an environment in which the components are marked by change (Volberda and van Bruggen 1997) and “refers to uncertainty and instability within the market” (Jaworski and Kohli 1993). Fast changes in technology, business practices, and economic conditions are calling for new ways of addressing old problems (Cannon and Perrault 1999).

Numerous factors can influence the stability of a market. The problems an organization can face are not only exogenous, technical ones but also social and political problems whose existence and character are affected by the character of organizational attention structures. Organizations enact their own environments (Levinthal and March 1993). Whatever occurs in the environment of a channel is likely to affect the degree of uncertainty experienced by its members (Achrol and Stern 1988). Channel members are the persons who have to deal with the environmental influences and their perceptions are important for their description of the current market as well as the way they choose to act based upon this. In this study the questionnaire asks key informants in both the supplier and the buyer roles of a relationship about their perception of the environment. The suppliers are asked to rate their perception of the environmental uncertainty in the supplier market. The buyers are then asked to rate their perception of environmental turbulence in the market in which they sell their acquired goods.

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Organizational members are concerned with predicting future states of the environment because those states affect current decisions (Achrol and Stern 1988). Especially in dynamic environments with much environmental turbulence, the future can be hard to predict. Firms are hardly able to base their business on the current situation because this situation is changing constantly. As a result, particularly in these turbulent environments, firms tend to rely on external knowledge (Wilden and Gudergan 2015). Business environment turbulence ensured focused attention on knowledge as a dominant source of competitive advantage. To survive selection pressures, firms need “to recognize new external knowledge, assimilate it, and apply it to commercial ends” (Jansen et al. 2005). The degree of environmental turbulence can influence organizational performances like learning. A firm’s innovation processes are embedded in an environmental context (Jansen et al. 2006; Levinthal and March 1993). The absorptive capacity of firms can influence the way firms act in different environments. When a firm confronts increased turbulence, it also gains indispensable opportunities to reconfigure their marketing capabilities, technological capabilities, or both (Wilden and Gudergan 2015). This is particularly the case when flexibility is high. The whole of ACAP becomes more important when environmental turbulence exists and firms have to innovate and develop new possibilities. Environmental uncertainty also has consequences for the internal organization. The greater the environmental uncertainty, the more the decision-making will be characterized by wide participation, open communication channels, and influence-centered in expertise rather than in formal authority (Khandwalla 1972). In the same research it is stated that the greater the uncertainty faced by an organization, the more it will tend to employ tools and techniques to reduce it, such as forecasting, research and development, model building, electronic data processing, searching for growth opportunities, etc. (ibid.). This is a basis for internal flexibility and the search for new knowledge and opportunities to innovate and to learn in a turbulent environment. Moreover, in relatively stable settings, absorptive capacity is critical to innovation, but the positive performance effects are limited.

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3. HYPOTHESES

This chapter contains the expectations based on the theoretical background elaborated on in chapter 2. In this chapter the theories are combined to develop hypotheses about the relevant topics. The hypotheses are depicted in the conceptual model in figure 1. In total, ten hypotheses are proposed.

3.1 Conceptual model

The ten proposed hypotheses are depicted in the conceptual model. The conceptual model consists of two parts. The first part, in which influences of governance mechanisms on the ACAP dimensions are measured, PACAP and RACAP both function as dependent variables. The second part, in which the influences of the ACAP dimensions on learning performances are measured, PACAP and RACAP both function as independent variables. In the second part the moderator ‘environmental turbulence’ is included in the model.

Figure 1. Conceptual model

3.2 Governance mechanisms

This paragraph elaborates on the influences of the different governance mechanisms upon the varying dimensions of ACAP, separately, but also when the governance mechanisms are combined.

3.2.1 Contractual governance

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of contractual agreements will be decreased acquisition and assimilation efforts of individuals in a firm. This is a source for decreased innovation possibilities for a firm as a whole.

In line with the studies of Jansen et al. (2005; 2006) the expectation is that the contractual agreements are negatively related to the acquisition and assimilation of firms in a knowledge sharing relationship between firms. PACAP is based on flexibility, and contractual agreements can hinder that flexibility, therefore the expectation in this study is that contractual governance is negatively related to the on flexibility based potential absorptive capacity of a firm. The proposed hypothesis based on this is:

Hypothesis 1a: Contractual governance is negatively related to potential absorptive capacity

(PACAP).

In line with the aforementioned studies of Jansen et al. (2005; 2006), the expectation is that contractual governance has a positive influence on RACAP. The RACAP of firms is more structured and based on routines when compared to the PACAP dimension. Formalization will enhance these on structure-based capacities because it supports the retrieval of knowledge that has already been internalized (Lyles and Schwenk 1992; Jansen et al. 2005). Formalization will prevent individuals from deviating from “established behavior”, which will constrain exploration efforts (ibid.; Berger 2015). However, the likelihood that unit members within a firm will identify opportunities based on new external knowledge, related to already existing knowledge, increases (Jansen et al. 2005). The developed routinization and codification will enhance the transformation and exploitation process to combine the new external knowledge with already existing knowledge (ibid.).

Therefore, the expectation with regard to the relationship between contractual governance and RACAP is in line with the aforementioned studies of Jansen et al. (2005; 2006), which results in the following hypothesis:

Hypothesis 1b: Contractual governance is positively related to realized absorptive capacity (RACAP).

3.2.2 Relational governance

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besides the fact that it can be cost efficient to safeguard specific assets with relational norms instead of with the time consuming development of contracts.

Based on this, relational governance can benefit firms in a relationship with improved cooperation and increased trust and flexibility. The flexible nature of PACAP and the flexibility stimulating influence of relational governance fit well together. Therefore, the expectation is that relational governance is positively related to PACAP.

Hypothesis 2a: Relational governance is positively related to acquisition and assimilation (PACAP).

Particularly in the beginning stages of a relationship, contractual government will be most important to protect the relationship and make mutual responsibilities explicit. When the relationship exists for a longer period of time, formal agreements become more relaxed (Buvik and Reve 2002) which results in increasing importance of trust and norms. Because of the increasing development of relational governance, more information is shared. As a result of the increased trust between partners within a relationship, the communication and cooperation will become more intensified. Relational norms can be a source for mutual solidarity when for both firms the continuation of the relationship is important (Kaufmann and Dant 1992; Stern 1988). This solidarity will improve the total relationship resulting in an improvement in all capacities.

The expectation is that relational governance also has a positive influence on the exploitation and transformation capabilities of a firm within an interfirm knowledge sharing relationship. This leads to the following hypothesis.

Hypothesis 2b: Relational governance is positively related to exploitation and transformation

(RACAP).

3.2.3 The interdependence between governance mechanisms.

As previously stated, the influence of the separate governance mechanisms and their influence on ACAP and RACAP have been researched already by Jansen et al. (2005; 2006). Heide and John (1990) analyzed the shift from more contractual based governance mechanisms to relational governance mechanisms, however, they also mentioned the co-existence of the two mechanisms. Other studies are done about the possible complementarity or substitution of the two governance mechanisms when taken together although there is currently no agreement about the role of the combined mechanisms. Also in this study, the governance mechanisms are combined and measured to see if both roles together have a significant varying influence on PACAP and RACAP then when analyzed as separate mechanisms.

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Based on this elaboration, relational governance can be seen as important, particularly in later stages of relationships, while contractual agreements become more inefficient and harbors more disadvantages. Investments in relational norms and trust are important for the improvement of interfirm relationships. This can also help save money when compared with investments in contractual agreements. These investments in trust, can reduce transaction costs by ‘replacing contracts with handshakes’ (Adler 2001). Uzzi (1997) as well as Gulati (1995) argue that cost inefficiency is a result of the development of contractual governance. In the paper from Uzzi (1997), it is argued that embeddedness of exchanges within social structures circumvents and thus economizes on time otherwise spent in costly contract renegotiations.

It is also argued “that the use of rational, formal control has a pernicious effect on cooperation” (Ghoshal and Moran 1996). Together, these views imply that in the presence of relational governance, formal contracts are an unnecessary expense at best, and at worst counterproductive (Poppo and Zenger 2002). Formal contracts are less necessary when relational governance is developed and the availability of contractual governance makes the development of relational governance less convenient. Indeed, the empirical findings of the research of Buvik and Reve (2002) “demonstrate that the longer a business-to-business relationship lasts, the more the contractual governance is relaxed”.

The existence of contracts can have other limits. First, contracts may be incomplete because it is impossible to write a complete contract that anticipates all possible events and clarifies the appropriate actions of each party (Cao and Lumineau 2014). This lack of specificity can be a source for opportunistic behavior. Secondly, contracts may signal a lack of trust which is detrimental for cooperative interfirm relationships (Ghoshal and Moran 1996; Poppo and Zenger 2002; Cao and Lumineau 2014). Lastly, contracts may be interpreted and used differently by both partners. Some firms use contractual terms more rigidly while other firms use the terms more flexibly (Cao and Lumineau 2014). This can lead to a mismatch between the partners in a relationship based on contractual agreements.

Most relationships, however, are developed based on contractual agreements, and, in long-lasting relationships, there are still contractual agreements despite the fact that contractual governance becomes more relaxed. Not all the limits of contractual agreements are detrimental, for contracts can also offer advantages. Despite contractual agreements possibly being a source for opportunistic behavior, clauses can also be developed that specify punishments, which can limit the gains from opportunistic behavior (Poppo and Zenger 2002). Sometimes, contractual agreements are able to limit their own possible disadvantageous consequences. Moreover, the existence of contractual agreements increases the expectations that the other firm will cooperate in line with these agreements. This cooperative behavior and trust in the present can increase the cooperative behavior and trust in the future (Poppo and Zenger 2002; Ambrose et al. 2010). The development of trust and mutual expectations can also be a source for a decreased need for contractual agreements when the relationship exists for a long time period. In addition, because of the still-existing possible limits and drawbacks of contracts, relational governance can be necessary. This implicates that in most relationships between firms, both governance forms exist (Bradach 1997), and contractual governances are not only developed because of its importance beginning relationship periods. The interesting possibility is that both forms are not substitutes but work together and complement each other. This is the focus of the research of Poppo and Zenger (2002).

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Based on this elaboration on governance mechanisms, it becomes clear that mostly both governance forms coexist, whereas relational governance mechanisms become more important in most relationships, and contractual governance mechanisms become less important and can in fact be increasingly disadvantageous. Because of the coexistence of both governance forms in most relationships, the expectation is that relational governance can complement the contractual governance mechanisms by developing trust between partners. Relational governance mechanisms will catch the described disadvantages of contracts which mostly still exist. The total relationship will be improved and advantages of both governance mechanisms are available. The expectation is that for the entirety of the ACAP stages, the combined governance mechanisms will complement each other and have a strong positive influence on PACAP and RACAP, stronger yet than the expected influences in chapters 3.2.1 and 3.2.2 of the positive influences of the separate mechanisms. The hypotheses based on this elaboration are:

Hypothesis 3: The governance mechanisms (i.e. relational governance and contractual governance)

have a stronger influence on PACAP compared to when measured separately.

Hypothesis 4: The governance mechanisms (i.e. relational governance and contractual governance)

have a stronger influence on RACAP compared to when measured separately.

3.3 Learning performances

The second part of this study concerns the influences of PACAP and RACAP on learning performances combined in part with the possible influence of environmental turbulence. The four hypotheses with regard to learning performances are described in this part of chapter 3. In contrast with the first part of the study, PACAP and RACAP are analyzed in the second part as independent variables, rather than as dependent variables as in the first part.

In the study from Tsai (2001), the conclusion is that a greater level of ACAP enhances the organizational learning of an organizational unit. The dimensions of ACAP, PACAP and RACAP, can be a source for organizational learning performances. This aforementioned distinction made between PACAP and RACAP is important in this part of the research because each separate dimension of ACAP is underpinned by a specific learning process that exhibits a dynamic capability view of ACAP (Lane et al. 2006). This study implicates that it is important to make a distinction between the ACAP dimensions due to their being based on different learning processes. It is arguable that the effects of ACAP on the further development on firm performances like learning also depend on different ACAP stages (Veugelers 1997; Cohen and Levinthal 1990; Lane et al. 2006). Presumably, ACAP can have an influence on the joint learning and value creation within an interfirm relationship (Lane et al. 2001; Lyles and Salk 1996). The aim of this study is to analyze the influences of RACAP on exploitative learning performance and of the influences of PACAP on explorative learning performance. The possible moderating role of environmental turbulence is also taken into account.

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Based on this, it is expected that RACAP is positively related to exploitative learning, because of the same nature based on routinization and structure.

Hypothesis 5: Realized absorptive capacity (RACAP) is positively related to exploitative learning

performance.

For the PACAP, acquisition and assimilation are based on flexibility and the search for innovations and new knowledge. Formalization will reduce the likelihood that individuals will deviate from “established behavior”, and, thus, can be seen as a firm’s constraint to be explorative (Jansen et al. 2005). “The reliance on rules and procedures hampers experimentation and ad hoc problem-solving efforts” (March and Simon 1958, Jansen et al. 2006). Moreover, these capabilities are influencing firm performances such as learning, particularly explorative learning performance. This form of learning corresponds to the notion of potential absorptive capacity (Zahra and George, 2002). Explorative learning is about the exploration of new possibilities and includes terms such as search, variation, risk taking, experimentation, play, flexibility, discovery and innovation (March 1991). The acquisition and assimilation capacities are both externally focused and are dependent on new external knowledge. This is in line with the description of explorative learning performance because of the external and innovative nature.

Based on this elaboration, assimilation and acquisition are mostly flexible and harbor an external focus that is also the nature of explorative learning. The expectation is that PACAP is positively related to explorative learning.

Hypothesis 6: Potential absorptive capacity (PACAP) is positively related to explorative learning

performance.

3.3.1 Learning performances and environmental turbulence

Environmental turbulence can have an important influence on organizational learning. In some studies, environmental uncertainty is described as the most critical contextual factor with regard to exchange performance (Palmatier et al. 2007; Heide and John 1990, Noordewier et al. 1990). When the business environment is turbulent, firms need to develop new ways to stay competitive. Exogenous environmental change makes adaptation essential, but it also makes learning from experience difficult (Weick 1979; March 1991). The flexibility to innovate and to change becomes more important. The capacity to innovate is what gives companies the ability to respond faster to the rapid changes of the environment and these innovation outcomes have come to be considered as one of the pivotal drivers of the long-term success of firms (Leal-Rodríguez et al. 2014). Increasing market turbulence stimulates the search for new knowledge to innovate. The turbulence of the business environment has ensured focused attention on knowledge as a dominant source of competitive advantage. For firms it is important, to survive selection pressures, “to recognize new external knowledge, assimilate it, and apply it to commercial ends” (Jansen et al. 2005). Thus, increasing market turbulence stimulates the search for new knowledge. Based on the expectations described in the aforementioned hypotheses, the expectation is that within the relations between the ACAP dimensions and the two different forms of learning, environmental turbulence influences these existing relationships.

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The improvement of RACAP in interfirm knowledge sharing relationships can also be based on contracting, as described in the previous paragraph. In a turbulent environment, contracts can quickly become outdated. Contracts are only valid with regard to the specific agreements involved for a specific time period which can be an inefficient way of protecting in an environment with many changes. Contracts are typically written for a fixed duration and, in effect, depreciate because they only provide protection during the designated length of the agreement (Dyer and Singh 1998). This implicates that structured and well defined relationships between firms are not necessarily a good solution within a turbulent environment. When environmental turbulence exists, an organizational system based on codes and structures, the knowledge of the code and individuals is systematically degraded through changes in reality (March 1991) resulting in the fact that codes and structures become obsolete. The aims of relationships are to improve performances like learning and to stay competitive.

Based on this elaboration, the expectation is that environmental turbulence has a negative moderating influence on the existing relationship between RACAP and explorative learning performance.

Hypothesis 7a: Environmental turbulence negatively affects the relationship between RACAP and

exploitative learning performance.

Due to the increasing need for new knowledge to stay competitive, flexibility becomes more important to absorb this external knowledge in a changing environment. A developed PACAP helps firms track changes in their industries more effectively and therefore facilitates the deployment of necessary capabilities, such as production and technological competencies, at the opportune moment (Zahra and George 2002). PACAP has a flexible nature because fewer routines, structures and contractual agreements are developed. This flexibility can be important in turbulent environments because firms that are flexible in using their resources and capabilities can reconfigure their resource bases to capitalize upon emerging strategic opportunities (Raff 2000; Zahra and George 2002). In the research from Khandwalla (1972), it is stated that the greater the uncertainty faced by an organization, the more it will tend to employ tools and techniques to reduce it, such as forecasting, research and development, model building, electronic data processing, searching for growth opportunities, etc. (ibid.). This is a basis for internal flexibility as well as the search for new knowledge and opportunities to innovate and to learn in a turbulent environment.

Explorative learning is also based on flexibility, variation, risk taking and experimentation (March 1991). This flexibility in learning and the relationship with PACAP is a good basis for a better performance in a turbulent environment.

Based on this, it can be expected that environmental turbulence positively influences the relationship between PACAP and explorative learning performance due to the flexibility-based relationship between PACAP and explorative learning.

Hypothesis 7b: Environmental turbulence positively affects the relationship between PACAP and

explorative learning performance.

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4. METHODOLOGY

4.1 Research design

This study consists of two parts. The first part analyzes the effects of governance mechanisms on PACAP and RACAP. Firstly, the influence of the distinct governance mechanisms, relational governance and contractual governance are measured separately. Secondly, their combined influence on PACAP and RACAP is measured. The second part analyzes the possible moderating influence of environmental turbulence on the relationship of RACAP and explorative learning as well as for PACAP and exploitative learning.

The study has a conclusive nature because the goal is to test specific hypotheses and examine relationships (Malhotra 2010). The information needed is clearly defined and the used sample is large and representative (ibid.). The data analysis is quantitative because it is based on a sample of 166 dyadic relationships. The primary data is collected by a questionnaire designed for different studies regarding ACAP topics. The findings of this study can be used as input in decision making processes.

4.2 Sample and data collection

The data needed for this research is collected by the participating heads of purchasing or high-ranking technology managers. These participants were asked to supply contact data of four people within their companies who were central to their customer relationships (Berger 2015). Parts of the total questionnaire were already developed and used in former research, but the questionnaire is completed and used as a totality by Berger (2015). To prevent measurement errors, data was obtained from key informants from both sides of the dyad (John and Reve 1982; Heide and John 1992; Lane and Lubatkin 1998; Selnes and Sallis 2003). When data is collected from only one side of the relationship, there is only a single view which can be a source for measurement error. Mostly it is clear which firms are the buyers and which firms are the sellers in a relationship. This is important because different papers state that the perceptions of the relationship might differ for each partner (Oosterhuis et al. 2013; Ambrose et al. 2010).

The data is obtained from industries like automotive, machinery, chemicals, pharmaceuticals, semiconductors and electronics (Berger 2015). According to the research of Lichtenthaler and Ernst (2007) on different knowledge strategies in these industries, this choice can improve variance.

To prevent the selection of solely the best and most important relationships between firms, the relationships were selected following a 2x2 design, with relationship durations greater or less than two years on one dimension, and average or crucial importance of products or components on the other dimension (Berger 2015).

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4.3 Measurement development

The questionnaire used for this study has been developed and used by different researchers in the ACAP research area. The questionnaire is completed for the research of Berger (2015) and this complete questionnaire has also been used for this paper. All scales developed for other studies “were adapted or extended in order to measure the specific vertical, interfirm relationship purpose of this study.” The questionnaire contains “first- and second-order constructs. A first-order construct is a latent construct that has observed variables as indicators, whereas second-order constructs have other latent (first-order) constructs as their indicators” (Berger 2015, p.91). In this study a differentiation exists “between formative and reflective measurement scales based on the causal link between the indicators and latent constructs. If a construct consists of formative indicators, the indicators measure separate aspects of the same construct, and, thus, are not directly related” (Hair et al. 2011). The latent construct changes if indicators are deleted or if the values of the indicators change (Berger 2015). In some cases, reversed coding was used on several indicators to prevent respondents from filling in the questionnaire without paying attention.

In this study Partial Least Squares (PLS) are used. This is a variance-based “Structural Equation Model (SEM) that combines factor analysis and multiple regression analysis” (Hair et al. 2011; Berger 2015). The usage of PLS in this study is because the analytical model includes higher order constructs and formative constructs.

Contractual governance is ‘the degree of formal contractual control in the buyer-supplier relationship’ (Geringer and Hebert 1989). The measures for this construct were obtained from other research projects of Deshpande and Zaltman (1982), Buvik and Reve (2002), Cannon and Perreault (1999), and Jansen et al. (2006).

Relational governance is a second-order construct. This construct is based on measures of flexibility norms, information exchange norms and solidarity norms, which are first-order constructs (Heide and John 1992).

The potential absorptive capacity (PACAP) is a second-order construct and is measured by first-order constructs. These constructs are the two phases of PACAP, acquisition and assimilation (Zahra and George 2002). “Acquisition refers to a relationship’s capability to identify and acquire externally generated knowledge that is critical to its operations” (Berger 2015, p.93). Assimilation refers to “the firm’s routines and processes that allow it to analyze, process, interpret and understand information obtained from external sources” (Berger 2015, p.93). The measures for these constructs are based on previous research by Jansen et al. (2005), Camisón and Forés (2010) and Szulanski (1996).

The realized absorptive capacity (RACAP) is also a second-order construct and is also measured by first-order constructs. These constructs are transformation and exploitation (Zahra and George 2002). Transformation refers to “a firm’s capability to develop and refine the routines that facilitate the combination of existing knowledge as well as the newly acquired and assimilated knowledge” (Berger 2015, p.93). The measures are based on previous studies of Bontis et al. (2002) and of Cadiz et al. (2009). Exploitation refers to “routines that allow firms to refine, extend, and leverage existing competencies or to create new ones by incorporating acquired and transformed knowledge into its operations” (Berger 2015, p.93). The measures are based on studies of Cadiz et al. (2009), Camisón and Forés (2010) and Jansen, van den Bosch and Volberda (2005).

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stressed, to exclude the transfer of knowledge that is new to recipient, but existing to the sender (Berger 2015).

Exploitative learning performance refers to “the extent, to which the partners consider their relationship worthwhile, equitable, productive and satisfying” (Van de Ven 1976; Ruekert and Walker 1987). The measure of this construct is based on the study of Selnes and Sallis (2003).

Environmental turbulence, in this study measured as market dynamism, is a first-order construct and refers to the uncertainty and instability within the market (Jaworski and Kohli 1993). It also measures the competitive intensity and rate of technological change. The measure used is obtained from the research of Jaworski and Kohli (1993).

4.4 Control variable

4.4.1 Relationship Duration

According to the ‘Relational Contracting Theory’ the expectation is that lasting relationships are the basis for norms, trust and personal relationships that, in turn, influence the relationship structure (Macneil 1978; 1980; Powell 1990). When firms have been cooperating for a longer period and this cooperation is experienced as satisfactory, the expectations of the cooperating firms for each other will increase, as well as the rise of trust and norms between the firms. In the literature review of Ambrose et al. (2010), it is stated that there is a general agreement that communication between partners leads to increased trust and commitment, and that trust and commitment leads to increased satisfaction and relationship success (ibid.). In addition, the research of Li et al. (2010) states that the length of cooperation is an important determinant of the use of control mechanisms in both domestic and international buyer–supplier cooperation (ibid.).

Based on this elaboration, it is arguable that a relationship changes in the period that the relationship exists. The relationship between governance mechanisms and ACAP can be influenced by these changes. This is a reason to measure the influences of this extra variable to see if an influence does indeed exist.

4.5 Data analysis

The data analysis of the structural model is done in SmartPLS 3 and, as a robustness check, also in IBM SPSS Statistics 20. The first part analyzes the effects of governance mechanisms on PACAP and RACAP. Firstly, the influence of the distinct governance mechanisms, relational governance and contractual governance are measured separately. For both governance mechanisms, all questions are taken together with SPSS. A distinction must be made between the buyer and the seller data. For each mechanism, the buyer and the seller data are separated. All influences on PACAP and RACAP are measured and analyzed separately. Moreover, the control variable ‘relationship duration’ is included to measure the possible influence of this variable on the model. The whole structural model is added to SmartPLS and, with bootstrapping, the p-values and beta levels are measured.

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5. RESULTS

This chapter contains the results of the different analyses. First, the validity and the reliability are measured. Secondly, the possible influence of the control variable ‘relationship duration’ is measured. Thirdly, all relations between the different independent- and dependent variables are measured. The last step is the measurement of the possible affecting role of the moderator ‘environmental turbulence’. All of the results are measured for both separate databases.

5.1 Data validity and reliability

The first step is the measurement of the adequacy of the measurement models with SmartPLS. SmartPLS analyses typically consist of two separate steps. In the first step, the measurement model, also referred to as the outer model, estimates the relationships between each latent construct and its associated indicators. In the second step, completed only when the measurement models are proven to be sufficiently strong, the structural model will be assessed (Berger 2015).

The structural model is based on two parts which are used in this measurement as two separate measurement models. These models are the ‘supplier-only’ and the ‘buyer-only’ databases.

The measurement model adequacy is tested by estimating the convergent and discriminant validity (Berger 2015). Convergent validity refers to the extent to which indicators of the same latent construct converge or have in common a high proportion of variance while discriminant validity refers to the degree to which a latent construct is truly different from other latent constructs (Berger 2015; Hair et al. 2010). For this analysis, it was also important to make a distinction between reflective scales and formative scales because a different testing approach is needed for the construct and convergent validity (Hair et al. 2010). First the reflective scale measurements will be described.

5.1.1 Reflective scales

For the reflective scales, the indicator reliability is measured first. The loadings should all be above 0.5 and should be significant (Hair et al. 2010). In this case the p-value should be lower than .05. For all of the constructs, the p-values were lower than .05 so all constructs are significant. Moreover, all reflective scales indicators in this study had loadings above .50. In addition, the Cronbach`s Alpha provides an estimate for construct reliability, based on indicator inter-correlations. It assumes that all indicators contribute equally to overall reliability, and uses equal weights (Berger 2015; Henseler et al. 2009). It is satisfactory if the Cronbach’s Alpha value is equal to or above .70 (Nunnally and Bernstein 1994). For the reflective scales of both databases, all Cronbach’s Alpha values are above .70.

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Table 1: Construct validity and convergent validity of reflective scales

Constructs/ indicators Buyer and supplier database

Standard Loadings Cronbach’s Alpha Composite Reliability Assimilation .79 .86 Assimilation1(rev. Coded) .647 Assimilation2 .780 Assimilation3 .816 Assimilation4 .763 Assimilation5 .677 Exploitation .77 .84 Exploitation1 .690 Exploitation2 .686 Exploitation3 .792 Exploitation4 .850 Exploitation5 .572 Contractual Governance .83 .87

ContracGov1 (rev. Coded) .567

ContracGov2 .786 ContracGov3 .858 ContracGov4 .787 ContracGov5 .633 ContracGov6 .714 Flexibility .74 .85 RelGov1 .818 RelGov2 .842 RelGov3 .774 Information Exchange .78 .86 RelGov4 .741 RelGov5 .783 RelGov6 .773 RelGov7 .810 Solidarity .83 .90 RelGov8 .879 RelGov9 .897 RelGov10 .821

Relational Governance(2nd order) .80 .88

Flexibility .774

Information Exchange .880

Solidarity .874

5.1.2 Formative scales

INTERFIRM ABSORPTIVE CAPACITY:

Ruben Balfoort

January 11, 2016

[

INTERFIRM ABSORPTIVE

CAPACITY:

]

The influences of governance mechanisms on

Interfirm Absorptive Capacity:

The influences of governance mechanisms on absorptive capacity and

the effects of these capacities on learning performances

Master Thesis, Marketing Management

University of Groningen, Faculty of Economics and Business

January 11, 2016

Contact details:

Aquamarijnstraat 573

9743PN Groningen

Phone number: +31 627979809

Email: r.t.balfoort@student.rug.nl

Student Number: 2003236

Supervisor:

Dr. J. Berger

j.berger@rug.nl

Second supervisor:

Dr. Yannick Joye

y.joye@rug.nl

PREFACE

TABLE OF CONTENTS

1. INTRODUCTION

2. THEORETICAL BACKGROUND

3. HYPOTHESES

4. METHODOLOGY

5. RESULTS