From external knowledge to competitive advantage: absorptive capacity, firm performance, and the mediating role of labour productivity

Successful companies depend on the development and integration of innovation and productivity. Incorporating theoretical insights based on the absorptive capacity of the firm, we examine the relationship among absorptive capacity, labour productivity, and firm performance. Based on a mediating model linking absorptive capacity to firm performance via labour productivity within an international context, we find that labour productivity plays a partial mediating role between absorptive capacity and firm performance. By highlighting the mediating influence, this research provides empirical evidence of how firms increase operational efficiency to enhance performance and build competitive advantage.