Economics at your fingertips  

Enhancing external knowledge search: The influence of performance measurement system design on the absorptive capacity of top management teams

David Bedford, Josep Bisbe and Breda Sweeney

Technovation, 2022, vol. 118, issue C

Abstract: External knowledge search is critical for innovation performance and centers on a firm's absorptive capacity. This study investigates whether and how two dimensions of absorptive capacity at the top management team (TMT) level, potential absorptive capacity and realized absorptive capacity, are influenced by two design choices of the performance measurement system (PMS), broad scope PMS and PMS integration, under different conditions of environmental dynamism. Based on cross-sectional survey data from firms in innovative industries, the results of our empirical study indicate that in more dynamic environments, a broader scope PMS is associated with higher potential absorptive capacity whereas higher PMS integration is associated with lower potential absorptive capacity. These associations are not observable in more stable environments. Moreover, broad scope PMS and PMS integration are both positively associated with realized absorptive capacity, independently of environmental dynamism. These findings highlight the relevance of PMS design choices for absorptive capacity, showing on the one hand the differences between the implications of broad scope PMS and those of PMS integration and, on the other hand, that the implications of PMS design choices for potential absorptive capacity (i.e. acquisition and assimilation of external knowledge) follow different patterns than the implications for realized absorptive capacity (i.e. the transformation and exploitation of such knowledge).

Keywords: Absorptive capacity; External knowledge search; Innovation; Performance measurement systems (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.technovation.2022.102586

Access Statistics for this article

Technovation is currently edited by Jonathan Linton

More articles in Technovation from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2023-02-04
Handle: RePEc:eee:techno:v:118:y:2022:i:c:s016649722200133x