Absorptive capacity balance and new venture performance: cultivating knowledge from regional clusters

Abstract

Applying the knowledge-based theory to the context of very young firms (new ventures) this study examines whether and how the knowledge characteristics of regional clusters influence the development of capabilities and performance of new ventures. Specifically, we focus on a crucial capability for new ventures to benefit from external knowledge and harness it for advantage: absorptive capacity. Using a sample of 140 new ventures located in 7 distinct regional clusters in Spain, we find that both, the intensity of knowledge sharing among clients and suppliers, and the social structure of regional clusters encourage new ventures to develop their absorptive capacity differently, having consequences for the balance between its potential and realised dimensions. Further, the results support the important role of absorptive capacity in mediating the effects of the knowledge environment (cluster characteristics) on new ventures’ performance. Implications for building new ventures’ absorptive capacity and cultivating knowledge from clusters are discussed.