Utilizing and adaptation of the absorptive capacity concept in a virtual enterprise context

The author is involved in a multi-year programme to establish a number of large-scale manufacturing SME collaboration projects. It was anticipated that some web-based tools used previously by larger firms could be adapted, but limits in the capabilities of the participant firms and the emergence of a different business model led to a change in approach. Participants had quite diverse internal ICT capabilities that might be used for bidding collaboratively for manufacturing contracts, or for operating as an extended enterprise. Some way of mapping the functional project needs and comparing these with participant capabilities was needed. In this paper an adaptation of the notion of absorptive capacity where both a firm's resource base and its knowledge base are considered is used as a framework to better understand participant requirements. This was subsequently used in building a web-based virtual enterprise support system that utilized simple, lowest cost system components.