Market knowledge absorptive capacity: a measurement scale

Introduction. Managers frequently question whether the effort in collecting market information and disseminating it within their firm leads to improved processing. The purpose of this paper is to provide a useful indicator to evaluate the ability of employees to process and exploit market knowledge. To this end, we develop and validate a measurement scale of 'market knowledge absorptive capacity'. Method. We utilize deductive and inductive approaches for item generation and structural equation modelling for detailed assessment of the dimensionality, reliability, and validity of the measurement scale. Analysis. We performed the analyses with LISREL 8.80 statistical package software using data from 211 industrial firms. Results. The results validate a parsimonious four-dimensional scale consisting of acquisition, assimilation, transformation, and exploitation capacities. The psychometric properties of the scale are successfully assessed. Nomological validity is confirmed by demonstrating a positive relationship between market knowledge absorptive capacity and innovation performance. Conclusions. The proposed multidimensional scale can be used as a diagnostic tool for firms to evaluate the capacity of employees to effectively absorb market knowledge. It can also be considered a valuable extension to the existing research on absorptive capacity as it helps overcome the limited nature of previous measures.