UNIVERSITY- INDUSTRY COOPERATION AND FIRM’S KNOWLEDGE ABSORPTIVE CAPACITY NEXUS

Abstract

Firm’s knowledge absorptive capacity has been touted to help firms achieve high innovative performance hence it has become an entrenched managerial activity due to the changing perspective of what makes a firm more competitive over other firm. Due to improvement in technology and increased contact due to globalization, access to and possession of discrete information by firms help to sustain the firm’s competitive advantage. It may also serve as an enabler for distinctive firm positioning which contributes to firm innovativeness. The pool of inimitable knowledge within the firm helps the firm to engage in many innovative activities because the firm will possess both tacit and codified knowledge which other competitors do not have. Some scholars have found that it is more beneficial for firms to seek external knowledge through collaborations with universities and the government because the firm cannot produce all the knowledge it needs. In light of the above, the paper seeks to ascertain whether the firm’s knowledge absorptive capacity affects the propensity to collaborate with Universities. A logistics regression model has been used employing data from the Harmonized European Union Community Innovative Survey 2012-2014 for the empirical analysis. Our results show that the firm’s acquisition of external knowledge and engagement in internal research and development activities influence the firm’s propensity to collaborate with universities for innovation. For the management of knowledge in the firm, we argue that since not all the firm’s knowledge could be purchased due to the long-term cost associated with it, it is imperative for management to help stimulate employee knowledge sharing atmosphere through a collaborative working environment.