External Technology Integration for New Business Creation: An Absorptive Capacity View

Yan Xiao

This paper empirically examines the impact of the absorptive capacity of the established company on the creation of its new business by acquiring technology from an external source. There are multiple challenges in new business creation by external technology integration: First, firms must be able to manage differently the technology integration in a new business field and that in existing business. Second, firms must be able to manage and deploy their absorptive capacity to effectively assimilate the external technology inside. This paper develops a theoretical underpinning on the absorptive capacity theory and wide range of technology integration literature. Field interviews were conducted to evaluate the validity of the theoretical underpinning. The result suggests that established firms must handle the simultaneous management of 1. business proposals by individuals with absorptive capacity, 2. business start-up from neither-complete-seeds push and nor-needs pull, and 3. personal connection with outside sources.