The Role of Learning Networks in Building Capabilities in Small and Medium Sized Firms

The paper investigates the contribution of learning networks to the capability building process of small firms. It relies on the concept of absorptive capacity and the recent advances in its understanding, specifically the distinction between a potential absorptive capacity and a realised absorptive capacity. The paper calls for differentiating between the de facto absorptive capacity, which is taken by firms usually without the consent of the other party and the de jure absorptive capacity which is taking place in the context of ‘rightful’ arrangements between different firms such as strategic alliances, clusters or learning networks. Relying on the qualitative investigation of two fully-fledged learning networks in Ireland, the paper identifies the factors which can have an impact on the de jure absorptive capacity at least in small firms. The individual in the interface between the firm and the network, the degree of alignment with the network resources allocation process, the participation to network ground activities and the ‘no fear to fail’ culture in the organisation of the receiving firm have proved to be critical in regulating the de jure absorptive capacity. The paper calls for a better understanding of the de jure absorptive capacity, which can have profound implications for both organisational behaviour and policy-making.