Wearing Different Hats: How Absorptive Capacity Differs in Open Innovation

Absorptive capacity is often touted as being important for the success of open innovation. Yet different absorptive capacities may be required for inbound versus outbound open innovation. Using process research of how multiple firms participated in the development of a groundbreaking anti-influenza drug, we found that firms needed to develop both supplier- and customer-types of absorptive capacity. Inbound open innovation involved customer absorptive capacity and outbound innovation required supplier absorptive capacity. In each case absorptive capacity needed to be leveraged differently. We thus extend our knowledge of how absorptive capacity benefits open innovation.