Absorptive Capacity for Firms Development: Impending Factors for Small and Medium Sized Construction Firms

Abstract

The concept of Absorptive Capacity (AC) emanated from the presumptions of macroeconomists, who described it as the capability of an economy to adapt and absorb external knowledge. The concept was engrossed into firms through the capacity to identify the value of new, external information, assimilate it, and apply it to business perspectives. However, this study sought to explore on issues concerning AC on development of Small and Medium Sized Construction Firms (SMCFs) in Nigeria. Through qualitative interviews and quantitative survey protocols of 100 respondents, relevant responses were obtained from participants in the construction industry and research institutions. The questionnaire used was designed to obtain responses using closed ended questions for easy analysis through the Likert Scale and ranking system.  The data obtained were subjected to a computer based Statistical Package for Social Scientist (SPSS) Version 17. Other open-ended responses and interviews were thematically analyzed to determine the distribution of responses to the variables under investigation. The study finds that SMCFs in Nigeria have a mean awareness index of 4.38 out of a scale of 5.0. This finding indicates that construction firms in Nigeria are highly aware of the prospects of the implementation of AC concept for the development of SMCFs. In addition to this, the study also has identified the factors affecting the implementation of AC concept in Nigeria.

Keywords: Absorptive capacity, Small and medium sized firms, Service Organizations; Construction firms, Knowledge management, Nigeria.