Barriers to Absorptive Capacity in Emerging Market Firms

We identify how barriers to absorptive capacity limit success in integrating external technology by firms in emerging markets. By comparing a failure and a success case, we refine previous barriers to absorptive capacity and classify them into internal (managerial biases and weak social integration mechanisms) and external (muted activation triggers, conflicting source relationships, and feeble appropriability regimes). We also identify how particular home country conditions in emerging markets (higher restraints on incentives, higher information asymmetries, and weaker contract protection) heighten the barriers. These ideas refine our understanding of the concept of absorptive capacity and the barriers by using agency theory as the theoretical grounding of the explanatory mechanisms. They also provide a better understanding of the influence of the home country on the technology strategy of firms