Absorptive capacity, appropriability depth and new product development in Taiwanese service firms

Absorptive capacity and appropriability depth are two concepts based on a firm’s capabilities that leverage external knowledge to facilitate new product development performance. This study analyzes the joint effects of absorptive capacity and depth of appropriability regime forms on a firm’s new product development. Specifically, we distinguished absorptive capacity between the potential and realized absorptive capacities and appropriability depth as formal and strategic forms. To test our research hypotheses, we analyzed empirical evidence from 311 Taiwanese service firms. The results reveal that the potential and realized absorptive capacities have significant effects that help explain a firm’s new product development. Additionally, there are moderating effects of absorptive capacity on new product development performance. The formal appropriability depth exerts a positive effect on the relationship between the realized absorptive capacity and a firm’s new product development. The strategic appropriability depth positively moderates the influence of the potential absorptive capacity on a firm’s new product development. Finally, the study concludes that complementary nature of absorptive capacity and appropriability strength plays a critical role in contributing to new product development.