In business administration, absorptive capacity is theory or model used to measure a firm's ability to value, assimilate, and apply new knowledge. It is studied on multiple levels (individual, group, firm, and national level). Antecedents are prior-based knowledge (knowledge stocks and knowledge flows) as well as communication. It is studied involving a firm's innovation performance, aspiration level, and organizational learning.
The theory was first introduced in 1990 by Cohen and Levinthal. It involves organizational learning, industrial economics, the resource-based view of the firm and dynamic capabilities. This theory has undergone major refinement, and today a firm's absorptive capacity is mostly conceptualized as a dynamic capability.
Two concepts related to absorptive capacity are: