DEVELOPING A TOOL FOR MEASURING KNOWLEDGE ABSORPTIVE CAPACITY AND ASSESSING ITS EFFECT ON INNOVATION PERFORMANCE OF IRANIAN PHARMACEUTICAL COMPANIES

Now a day’s establishing and sustaining competitive advantage depends on the effective development of Knowledge Absorptive Capacity (KAC) and innovations. This study evaluated the role of prior technical experiences in developing firm’s absorptive capacity and the contribution of this type of capacity to the firm’s innovation performance. In this study we designed a questionnaire to assess firms’ KAC and innovation performance. First, the validity and reliability of the questionnaire were assessed. The data were collected from owners/managing directors or research and development managers of 20 Iranian pharmaceutical and biopharmaceutical companies. The following variables were measured: industrial and technical experiences of owners/managing directors and the members of research and development teams, KAC, innovation performance indices and control variables. The questionnaire had appropriate validity and reliability. The findings indicated that the breadth and the depth of the owner’s/managing director’s industrial experiences properly reflected KAC of a pharmaceutical company. In turn, the present research showed that the absorptive capacity of a firm could affect its innovation performance. Organizational strategic regeneration and innovation depends on two critical sources: learning at the organizational and individual levels. KAC plays a critical role in pharmaceutical company’s innovation outputs.