Role of absorptive capacity in ambidexterity (exploration and exploitatopn) improvement

One important factor influencing business success is the number of innovations introduced to market. Innovations can be exploitative or exploitative. While exploitative innovations improve efficiency in short term, explorative innovations improve flexibility and help firms to face changing environment in long term. Since the potential and realized absorptive capacity could have different effects on explorative and exploitative innovations, this research aims to investigate the relationships between ambidexterity and absorptive capacity in order to explain the inter-relationships of their sub-constructs. This is an applied research which uses a survey based descriptive correlational method. It also uses Structural Equation modelling to analyze data. To this end, a random sampling procedure was used to collect data from a sample of 90 defense firms (also called industries in Iran defense sector). The results showed that the realized absorptive capacity is an antecedent for exploration and exploitation. Furthermore, while potential absorptive capacity positively moderates the relationship between realized absorptive capacity and explorative innovation, it negatively moderates the relationship between former and exploitative innovation.