Structural process model of absorptive capacity for stakeholder’s integration in decision-making: dynamic capability perspective

Purpose This paper aims to present empirical test to analyse a structural process model based on the constructs of absorptive capacity considering sustainability aspects. It integrates dynamic capability perspective to strengthen the existing literature. Findings of the study may help organisations to renovate business processes related to absorptive capacity and improve decision-making considering sustainability attributes. Design/methodology/approach Sample for data analysis covers 389 managers of firms demonstrating some traits of sustainability orientation and operating in a developing economy like India. Structural equation modelling is applied to test a casual model. Findings Result of this study reveals that a formal system that drives knowledge sharing, storing and exploitation of knowledge, a structured way to appropriate and reward intellectual property rights can be fundamental to development of absorptive capacity. Such a system conducive to knowledge exploration and acquisition must lead to exploration of new knowledge sources and new knowledge. A firm’s knowledge acquisition system shall be able to deliver to acquire external as well as internal knowledge spread across departments. Research limitations/implications This study considers commercial output as an aspect of innovative capability, so this attribute is not included in absorptive capacity. Practical implications The study may help organisations to develop a systemic approach to evolve decision-making and develop suitable processes linked to absorptive capacity considering sustainability challenges and uncertain market conditions. Social implications The study presents a comprehensive view of absorptive capacity considering societal stakeholder’s knowledge in addition to technological and market knowledge. Originality/value There are hardly any research articles which link absorptive capacity, dynamic capability and sustainability strategies.