Absorptive capacity and the identification of opportunities in new technology-based firms

The purpose of this work is to investigate relationships between knowledge and opportunities in new ventures. More specifically, this work proposes and empirically tests how potential absorptive capacity is related with the identification of opportunities in new technology-based firms (NTBFs). To take into account the unique nature of NTBFs we divide potential absorptive capacity into problem absorptive capacity, i.e. the ability to identify and acquire knowledge of the goals, aspirations and needs of current and potential customers, and solution absorptive capacity, i.e. the ability to identify and acquire external knowledge of solutions to fulfill them. We develop three hypotheses, which predict that both problem absorptive capacity and solution absorptive capacity will be positively related with the identification of opportunities in NTBFs and that they will reinforce each other. The findings support the importance of making a distinction between the two proposed dimensions of potential absorptive capacity and shed light on their effectiveness and interaction for the identification of opportunities. •Two dimensions of potential absorptive capacity are proposed.•Problem absorptive capacity is the ability to acquire knowledge of customer needs.•Solution absorptive capacity is the ability acquire knowledge of ways to meet them.•Empirical work in new technology-based firms confirms the distinction.