Absorptive capacity from foreign direct investment in Spanish manufacturing firms

•Absorptive capacity from foreign direct investment (FDI) causes technical progress.•We examine the main factors determining the absorptive capacity from FDI.•Research and development (R&D) activities improve absorptive capacity from FDI.•The absorptive capacity from FDI is higher if the production process is more complex.•The obtaining of public funding for R&D makes worse the absorptive capacity from FDI. This paper deals with the determinants of absorptive capacity from foreign direct investment (FDI) spillovers. We study how firm behavior, capabilities, and structure drive absorptive capacity such as research and development (R&D) activities and expenditures, R&D results, internal organization of innovation, external relationships of innovation, human-capital quality, family management, business complexity, and market concentration. Our results enhance and complement previous evidence of the determinants of absorptive capacity, particularly with different approaches to innovative activities as mediators of the capability.