Absorptive Capacity and Organisational Performance: An Empirical Study of a Public Organisation in Delta State, Nigeria

Abstract

Studies on a relationship between absorptive capacity and organisational performance has not been fully exhausted, as organisations operate in an environment marked by high changes and complexities. Absorptive capacity enables organisations to integrate, transform, and use external knowledge with the goal of improving the way they perform in dynamic and complex environments. Furthermore, the concept of organisational performance is multifaceted, and the managerial focus on each element may account for variations in performance across different organisations. Building on these arguments, the study aimed to examine the absorptive capacity's direct and indirect relationship with organisational performance, specifically employee adaptive performance and innovation performance. The study also put into perspective the mediating role of strategic flexibility, a construct that defines how well organisations align external knowledge with internal resources and capabilities to achieve desired outcomes. The study adopted the cross-sectional survey of 123 mid-level employees randomly selected from the Delta State Ministry of Health using a well-structured questionnaire. This ministry operates in highly dynamic and volatile environments where adaptation is necessary to respond to the numerous health challenges and threats affecting the overall wellbeing of society. The study analysed the data collected from February to March 2024 with the partial least squares method. It found that absorptive capacity has a significant and positive direct and indirect relationship with organisational performance, which includes employee performance and innovation performance. Strategic flexibility facilitated this indirect relationship, exerting a greater influence on the organisational performance proxies. The study concluded that strategic flexibility can partially explain the relationship between absorptive capacity and organisational performance.