Xternal knowledge absorption in information technology small and medium enterprises: Exploratory multiple case studies of the role of absorptive capacity meta-routines and exploratory regimes

Abstract

Small and Medium Enterprises (SMEs) are known to be the foundation of the business economy in every country. Information Technology (IT) SMEs in Thailand are trading companies mostly. They do not invest so much in R&D to differentiate their products from competitors, and most of them resell the products that are researched and manufactured by foreign companies. However, without investments in R&D, the competition in the market becomes strong. Some of them gain strength throughout the years, while some of them struggle year by year but still manage to survive. The survival seems to rely on the firm’s ability to adjust and gain special leverage through the caption of knowledge from within the IT industry. IT SMEs thus seems to be the perfect venue to conduct a study on absorptive capacity. The IT industry is known to be a fast-moving industry with new technology out into the market all the time, along with new standards, regulations that accommodate the IT governance, and new demands from customers. There is new knowledge to be developed for new product release. This raised a question on how these IT SMEs realized, decided, absorb, and develop knowledge from external environment to leverage their competitive capability. Drawing on data collected from IT SMEs in Thailand, this research study thus explores how new knowledge is absorbed and how absorptive capacity meta-routines and exploratory regimes contribute to this absorption process. A qualitative methodology was employed, and six IT SMEs were analyzed. Findings revealed that absorptive capacity was crucial to these SMEs, and that meta-routines and exploratory regimes were key to knowledge absorption. In particular, the contribution of exploratory regimes agent roles, behavioral factors, and impact factors all appeared to have an influence on knowledge absorption with some culturally sensitive factors that emerged as unique to the Thai environment. Financial performance indicators showed that the effort in developing absorptive capacity was positively related to the firm’s asset turnover, account receivable turnover, and gross profit margin for IT SMEs. Some refinements to the original work on meta-routines are proposed, which include modifications to the sequence of meta-routines, the knowledge transfer boundaries, and the feedback loop. Contributions to theory and practices are discussed, and suggestions for future research are offered.