Exploring the Micro Dynamics of Absorptive Capacity: A Systemic Mixed Method Approach

Management of absorptive capacity has the potential to increase the capability of organisations through the effective use of new knowledge generation and its use within organisations. There is a growing call from academics and practitioners to better understand the underlying structures at play within an absorptive capacity process.

The broad aim of this research project is to model and explore the micro dynamics of an absorptive capacity process using a systemic mixed method approach. Located within absorptive capacity literature, this research seeks to investigate some of the key historical, contextual, and micro-dynamic aspects of absorptive capacity. On this account, absorptive capacity is taken to be a dynamic and emergent property of organisations that arises through complex interactions in a specific historical context and is not reducible to a specific set of causes.

To accomplish this a sequential mixed method systemic framework was used consisting of system dynamics as the dominant method and soft systems methodology as the supplemental method applied to a business unit within The New Zealand Customs Service in the quest to increase their ability to respond to both internal and external forces. The study began with soft systems methodology at the problem structuring and qualitative causal loop modelling stage, which in turn, was used to inform the construction of the quantitative stock flow system dynamics model. Soft systems methodology was then used again with system dynamics at the final implementation and organisational learning stage of the systems thinking and modelling process proposed by Maani & Cavana (2011). A business unit within The New Zealand Customs Service, and other relevant interested parties, took part in the group model building session to generate the variables used to construct the qualitative causal loop diagrams of an absorptive capacity process using Vensim PLE software. The causal loop diagrams were then used to inform the construction of the system dynamics computer simulation model, constructed using Powersim Studio 10 software. Model validation consisted of feedback from personnel that included existing, past, present and those with a close working relationship to The New Zealand Customs Service.

iii The qualitative group model building session resulted in a richly debated expression of ideas, culminating in a shared understanding of the barriers each face in building capability within The New Zealand Customs Service. Validating the model and testing different scenarios with interested New Zealand Custom Service parties helped them learn how their actions affect the accumulation and use of absorptive capacity, and identify behaviour changes they intend to make.

In conclusion this research contributes to the management of absorptive capacity, and the research fields of absorptive capacity and systems thinking, through the application of a sequential mixed method approach to understand and inform how the micro level dynamic behaviours can affect the identification, assimilation and exploitation of new knowledge within organisations, not otherwise possible without a combined qualitative and quantitative systemic approach.