Exploring Absorptive Capacity in Cross-Sector Social Partnerships

What is it about?

How and why are partnerships and collaborations between firms across market sectors effective and long-lasting? In part, because they provide mutual organizational learning benefits to each organization choosing to partner. We explore these benefits via a popular construct in strategic management called absorptive capacity - the capability of a firm to recognized the value of external information, acquire it, transform it, and exploit it for commercial or social ends. Our work suggests that cross-sector collaborations enhance each firm's absorptive capacity, improve competitive advantage, and increase the likelihood and success of future partnerships.

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Why is it important?

It has become increasingly evident that addressing intractable social welfare concerns requires collaboration between firms and organizations in the public, private, and nonprofit sectors. These cross-sector partnerships activate broad thinking since organizations with different missions approach problems differently. The resulting combination of knowledge and expertise provides novel solutions not otherwise reached by a single firm. Our research serves to support this idea and explores the additional benefits that exposure to new knowledge can provide to organizations that choose partner.