Organizational Learning of Absorptive Capacity and Innovation: Does Leadership Matter?

Abstract

Following the process-based definition of absorptive capacity, this study seeks to explore the mediating role of transformational and transactional leadership styles in the relationship between the three learning processes of absorptive capacity and innovation. Based on a survey in the United Arab Emirates (UAE), it was found that transformational leadership mediates the relationship between exploratory and transformational learning processes and innovation. It was also found that transactional leadership did not mediate the relationship between the internal exploitative learning process and innovation. While several researchers have noted a need to develop a better theoretical understanding of the mechanisms explaining the interplay between absorptive capacity and innovation, we provide theoretical explanations of the underlying mechanism and further offer explanations as to why some firms are better able to convert external knowledge into strategic innovations when compared with others. The implications of these findings for theory and practice are delineated.

The Influence of Entrepreneurial Psychological Leadership Style on Organizational Learning Ability and Organizational Performance

“…The influence of leaders on their development has also been explored by many scholars. Darwish et al (2020) found that transformational leadership can adjust the relationship between exploratory and transformational learning processes and innovation based on the investigation and analysis in the United Arab Emirates and enhance enterprise learning. Ricardianto et al (2020) used sampling techniques to analyze the influence of leadership style, work-life balance, and employee engagement on the work efficiency of 290 crew members.…”

“…Entrepreneurship is a process in which entrepreneurs optimize and integrate their own resources or make efforts to create greater economic or social value. It can not only realize self-employment and complete individual ideas but also play an important role in economic development and the expansion of social work positions ( Laguía et al, 2019 ; Saebi et al, 2019 ; Darwish et al, 2020 ). Organizational performance refers to the quantity, quality, efficiency, and profitability of organizational tasks completed in a certain period of time, which is the core issue of strategic management research, and how to effectively improve organizational performance is naturally the most concerned issue for entrepreneurs ( Guterresa et al, 2020 ).…”

The Impact of Leadership on Absorptive Capacity: New insights from the UAE

“…Research recognizes that emerging market firms have relatively underdeveloped absorptive capacity (Bilgili, Kedia, & Bilgili, 2016; Darwish, Zeng, Rezaei Zadeh, & Haak‐Saheem, 2019). Yet scant attention has been paid to the conditions that constrain or facilitate firms' absorptive capacity development within emerging market economies.…”

“…Although there is a burgeoning body of literature on absorptive capacity and how it can enhance organizational performance (Zahra & George, 2002; Todorova & Durisin, 2007; Volberda, Foss, & Lyles, 2010), the role of intraorganizational factors remains relatively underinvestigated (Flatten, Adams, & Brettel, 2015; Vera & Crossan, 2004). From this perspective, leadership constitutes a particularly important internal dimension (Nonaka & Takeuchi, 1995; Darwish et al, 2019). Existing research indicates that leadership is the core of organizational activities, influencing the development of organizational capabilities and learning processes (Singh, 2008; Aragón‐Correa, García‐Morales, & Cordón‐Pozo, 2007; Pablo, Reay, Dewald, & Casebeer, 2007), and leadership is critical to enabling and sustaining of capabilities such as absorptive capacity (Berson, Nemanich, Waldman, Galvin, & Keller, 2006; Teece, 2007).…”

“…In this study, we explore the interplay between leadership and absorptive capacity, and how this differs from existing research evidence compiled in more balanced economies, and we draw out the implications for theory and practice. Unlike firms in developed economies, firms in less mature markets depend largely on the external environment to acquire knowledge (Darwish et al, 2019). While the term “emerging market firms” implies a uniform category of firms, existing research shows that emerging economies vary greatly with regard to their overall progress toward economic development (Hoskisson, Wright, Filatotchev, & Peng, 2013).…”