Learning Capability and the Performance of Small and Medium Enterprises in Developing Economies: The Role of Absorptive Capacity

  • YAKUBU SALISU Yobe State University, Damaturu, Nigeria
  • Sani Mohammed, Mr Department of Business Administration, Federal Polytechnic Damaturu, Yobe State, Nigeria
Keywords: Learning capability, Absorptive capacity, SMEs performance


How to develop and enhance the effectiveness of external flow of knowledge and information to improve invention and performance of small and medium enterprises (SMEs) has becomes crucial to both researchers and managers. This study was designed to purposely examine empirically the influence of the absorptive capacity on the relationship of organizational learning capability and SMEs performance. A total of 206 valid questionnaires obtained from personal administration of the survey instrument on SMEs manager in Kano state Nigeria. Partial Least Square Structural Equation Model (PLS-SEM). The result of the study indicates that learning capability significantly and positively relates to SMEs firms performance, equally learning capability positively relates with absorptive capacity. The study further established significant positive relationship between absorptive capacity and SMEs performance. Similarly, absorptive capacity mediates the relationship between learning capability and SMEs performance. The study conclude that experimentation, risk taking, external interaction, dialogue and participatory decision making influences SMEs knowledge acquisition, assimilation, transformation and application for better performance.


Albort-Morant, G., Leal-Rodríguez, A. L., & De Marchi, V. (2018). Absorptive capacity and relationship learning mechanisms as complementary drivers of green innovation performance. Journal of Knowledge Management, 22(2), 432–452. https://doi.org/10.1108/JKM-07-2017-0310
Ajonbadi, H. A. (2015). Technology Drive to Small and Medium Enterprises ( SMEs ) Growth in Nigeria. In 5th Conference of Directors of Entreprenurship Development Centres (pp. 1–15). Ilorin.
Alegre, J., & Chiva, R. (2008). Emotional intelligence and job satisfaction: The role of organizational learning capability. Personnel Review, 37(6), 680–701.
Alegre, J., & Chiva, R. (2009). Organizational Learning Capability and Job Satisfaction: An Empirical Assessment in the Ceramic Tile Industry. British Journal of Management, 20, 323–340. https://doi.org/10.1111/j.1467-8551.2008.00586.x
Alegre, J., & Chiva, R. (2013). Linking Entrepreneurial Orientation and Firm Performance: The Role of Organizational Learning Capability and Innovation Performance. Journal of Small Business Management, 51(4), 491–507. https://doi.org/10.1111/jsbm.12005
Aljanabi, A. R. A. (2018). The mediating role of absorptive capacity on the relationship between entrepreneurial orientation and technological innovation capabilities. International Journal of Entrepreneurial Behavior & Research, 24(4), 818–841. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Aminu, I. M. (2015). Mediating Role of Access To Finance and Moderating Role of Business Environment on the Relationship Between Strategic Orientation Attributes and Performance of Small and Medium Enterprises in Nigeria. Universti Utara Malaysia.
Andersén, J. (2012). Protective capacity and absorptive capacity: Managing the balance between retention and creation of knowledge-based resources. The Learning Organization, 19(5), 440–452. https://doi.org/http://dx.doi.org/10.1108/TLO-05-2013-0024
Andersén, J. (2015). The absorptive capacity of family firms: How familiness affects potential and realized absorptive capacity. Journal of Family Business Management, 5(1), 73–89. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Aribi, A., & Dupouët, O. (2015). The role of organizational and social capital in the firm’s absorptive capacity. Journal of Knowledge Management, 19(5), 987–1006. https://doi.org/10.1108/JKM-05-2015-0169
Awang, A. H., Hussain, M. Y., & Malek, J. A. (2013). Knowledge transfer and the role of local absorptive capability at science and technology parks. Learning Organization, 20(4–5), 291–307. https://doi.org/10.1108/TLO-12-2011-0059
Bhatnagar, J. (2006). Measuring organizational learning capability in Indian managers and establishing firm performance linkage. The Learning Organization, 13(5), 416–433. https://doi.org/http://dx.doi.org/10.1108/TLO-05-2013-0024
Calantone, R. J., Cavusgil, S. T., & Zhao, Y. (2002). Learning orientation, firm innovation capability, and firm performance. Industrial Marketing Management, 31(6), 515–524. https://doi.org/10.1016/S0019-8501(01)00203-6
Camps, J., Alegre, J., & Torres, F. (2011). Towards a methodology to assess organizational learning capability: A study among faculty members. International Journal of Manpower, 32(5/6), 687–703. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Chaudhary, S., & Batra, S. (2018a). Absorptive capacity and small family firm performance: exploring the mediation processes. Journal of Knowledge Management, 22(6), 1201–1216. https://doi.org/10.1108/JKM-01-2017-0047
Chaudhary, S., & Batra, S. (2018b). Proposing a sequential operationalization of absorptive capacity. Measuring Business Excellence, 22(1), 64–74. https://doi.org/10.1108/MBE-04-2017-0014
Chin, W. W. (1998). Commentary: Issues and opinion on structural equation modeling. MIS Quarterly, 22(1), 1–16. https://doi.org/Editorial
Chiva, R., Alegre, J., & Lapiedra, R. (2007). Measuring organisational learning capability among the workforce. International Journal of Manpower, 28(3/4), 224–242. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Clements, M. D. (2010). Building learning capability: Enhancing the learning talent chain by connecting environments. Development and Learning in Organizations: An International Journal, 24(1), 7–9. https://doi.org/10.1108/14777281011010442
Cohen, J. (1988). Statistical power analysis for the behavioral sciences (2nd ed.).
Cohen, W. M., & Levinthal, D. A. (1990). Absorptive capacity : A new perspective on learning and innovation. Administrative Science Quarterly, 35(3), 128–152. https://doi.org/10.1177/0149206310369939
Costa, J. C. N. da, Camargo, S. M., Toaldo, A. M. M., & Didonet, S. R. (2018). The role of marketing capabilities, absorptive capacity, and innovation performance. Marketing Intelligence & Planning, 36(4), 410–424. https://doi.org/10.1108/02634501011078138
Daspit, J. J., & Staci M. Zavattaro. (2014). Integrating innovation and absorptive capacity into the place branding process: A capability-based perspective. Journal of Place Management and Development, 7(3), 206–224.
Deng, P. (2010). Absorptive capacity and a failed cross‐border M&A. Management Research Review, 33(7), 673–682. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Elbaz, A. M., Agag, G. M., & Alkathiri, N. A. (2018). How ability, motivation and opportunity influence travel agents performance: the moderating role of absorptive capacity. Journal of Knowledge Management, 22(1), 119–141. https://doi.org/10.1108/JKM-07-2017-0308
Escrig, E. D., Broch, F. F. M., Gómez, R. C., & Alcamí, R. L. (2016). How does altruistic leader behavior foster radical innovation? The mediating effect of organizational cearning capability. Leadership & Organization Development Journal, 37(8), 1056–1082.
Goh, S. C. (2003). Improving organizational learning capability: Lessons from two case studies. The Learning Organization, 10(4), 216–227. https://doi.org/10.1108/09696470310476981
Goh, S. C., Elliott, C., & Quon, T. K. (2012). The relationship between learning capability and organizational performance: A meta- analytic examination. The Learning Organization, 19(2), 92–108. https://doi.org/http://dx.doi.org/10.1108/TLO-05-2013-0024
Gray, C. (2006). Absorptive capacity, knowledge management and innovation in entrepreneurial small firms. International Journal of Entrepreneurial Behavior & Research, 12(6), 345–360. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Hailekiros, G. S., & Renyong, H. (2016). The effect of organizational learning capability on firm performance : Mediated by technological innovation capability. European Journal of Business Management, 8(30), 87–95.
Hair, J. F., Ringle, C. M., & Sarstedt, M. (2013). Partial least squares structural equation modeling: Rigorous applications, better results and higher acceptance. Long Range Planning, 46(1–2), 1–12. https://doi.org/10.1016/j.lrp.2013.01.001
Hair, J. F., Tomas, H. G. M., Ringle, C. M., & Sarstedt, M. (2017). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM). SAGE.
Hakala, H., & Kohtamäki, M. (2011). Configurations of entrepreneurial- customer- and technology orientation: differences in learning and performance of software companies. International Journal of Entrepreneurial Behaviour & Research, 17(1), 64–81. https://doi.org/10.1108/13552551111107516
Ho, T. C. F., Hazlina Ahmad, N., & Thurasamy, R. (2013). Learn and thou shall thrive: advancing a model of workplace familism and organizational learning capability in small and medium enterprise (SMEs) manufacturers in Malaysia. Business Strategy Series, 14(5/6), 151–159. https://doi.org/10.1108/BSS-08-2012-0045
Hooi, L. W., & Ngui, K. S. (2014). Enhancing organizational performance of malaysian SMEs: The role of HRM and organizational learning capability. International Journal of Manpowe, 35(7), 973–995.
Huan, H., Yongyuan, M., Sheng, Z., & Qinchao, D. (2017). Characteristics of knowledge, people engaged in knowledge transfer and knowledge stickiness: evidence from Chinese R&D team. Journal of Knowledge Management, 21(6), 1559–1579. https://doi.org/10.1108/JKM-02-2017-0054
Jung‐Erceg, P., Pandza, K., Armbruster, H., & Dreher, C. (2007). Absorptive capacity in European manufacturing: A Delphi study. Industrial Management & Data Systems, 107(1), 37–51. https://doi.org/10.1108/eb057530
Kamal, E. M., & Flanagan, R. (2012). Understanding absorptive capacity in Malaysian small and medium sized (SME) construction companies. Journal of Engineering, Design and Technology, 10(2), 180–198. https://doi.org/10.1108/EL-01-2014-0022
Kim, C., Zhan, W., & Krishna Erramilli, M. (2011). Resources and performance of international joint ventures: the moderating role of absorptive capacity. Journal of Asia Business Studies, 5(2), 145–160. https://doi.org/10.1108/15587891111152311
Lam, V. M. Y., Poon, G. K. K., & Chin, K. S. (2006). The link between organizational learning capability and quality culture for total quality management: A case study in vocational education. Asian Journal on Quality, 7(1), 195–205. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Lau, A. K. W., & Lo, W. (2015). Regional innovation system, absorptive capacity and innovation performance: An empirical study. Technological Forecasting and Social Change, 92, 99–114. https://doi.org/10.1016/j.techfore.2014.11.005
Lev, S., Fiegenbaum, A., & Shoham, A. (2009). Managing absorptive capacity stocks to improve performance: Empirical evidence from the turbulent environment of Israeli hospitals. European Management Journal, 27(1), 13–25. https://doi.org/10.1016/j.emj.2008.04.001
Liao, K., Tu, Q., & Marsillac, E. (2010). The role of modularity and integration in enhancing manufacturing performance: An absorptive capacity perspective. Journal of Manufacturing Technology Management, 21(7), 9818–838. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Limpibunterng, T., & Johri, L. M. (2009). Complementary role of organizational learning capability in new service development (NSD) process. The Learning Organization, 16(4), 326–348. https://doi.org/http://dx.doi.org/10.1108/TLO-05-2013-0024
Lin, C., Tan, B., & Chang, S. (2002). The critical factors for technology absorptive capacity. Industrial Management and Data Systems, 102(5–6), 300–308. https://doi.org/10.1108/02635570210431993
Lowik, S., Kraaijenbrink, J., & Groen, A. (2017). Antecedents and effects of individual absorptive capacity: A micro-foundational perspective on open innovation. Journal of Knowledge Management, 21(6). https://doi.org/10.1108/JKM-09-2016-0410
Manley, K., & Chen, L. (2015). Collaborative learning model of infrastructure construction: A capability perspective. Construction Innovation, 15(3), 355–377. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Mariano, S., & Walter, C. (2015). The construct of absorptive capacity in knowledge management and intellectual capital research: Content and text analyses. Journal of Knowledge Management, 19(2), 372–400. https://doi.org/10.1108/JKM-08-2014-0342
Miguélez, E., & Moreno, R. (2015). Knowledge flows and the absorptive capacity of regions. Research Policy, 44(4), 833–848. https://doi.org/10.1016/j.respol.2015.01.016
Moon, H., & Lee, C. (2015). Strategic learning capability: Through the lens of environmental jolts. European Journal of Training and Development, 39(7), 628–640. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Nandi, M. L., & Vakkayil, J. (2018). Absorptive capacity and ERP assimilation: The influence of company ownership. Business Process Management Journal, 24(3), 695–715. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Ojo, A. O., Raman, M., & Chong, C. W. (2017). Microlevel antecedents of absorptive capacity in joint project engineering teams. Management Research Review, 40(9), 990–1006. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Oluwatobi, S. O. (2015). Innovation-driven economic development model: A way to enable competitiveness in Nigeria. Advances in Sustainability and Environmental Justice, 17, 197–218. https://doi.org/10.1108/S2051-503020150000017017
Peansupap, V., & Walker, D. H. T. (2009). Exploratory factors influencing design practice learning within a Thai context. Engineering, Construction and Architectural Management, 16(3), 238–253. https://doi.org/http://dx.doi.org/10.1108/09699981111098711 Downloaded
Peris-Ortiz, M., Devece-Carañana, C. A., & Navarro-Garcia, A. (2018). Organizational learning capability and open innovation. Management Decision, 28(5), 577–609. https://doi.org/10.1108/JFM-03-2013-0017
Pilar Jerez Gómez, J. J., Lorente, C., & Cabrera, R. V. (2004). Training practices and organisational learning capability: Relationship and implications. Journal of European Industrial Training, 28(2/3/4), 234–256. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Prieto, I. M., & Revilla, E. (2006). Learning capability and business performance: A non-financial and financial assessment. The Learning Organization, 13(2), 166–185. https://doi.org/http://dx.doi.org/10.1108/TLO-05-2013-0024
Rafique, M., Hameed, S., & Agha, M. H. (2018). Commonality, conflict, and absorptive capacity: Clarifying middle manager roles in the pharmaceutical industry. Management Decision, 56(9), 1904–1916.
Ramachandran, I. (2018). Triggering absorptive capacity in organizations: CEO succession as a knowledge enabler. Journal of Knowledge Management, 22(8), 1844–1864. https://doi.org/10.1108/JKM-03-2018-0192
Rezaei-Zadeh, M., & Darwish, T. K. (2016). Antecedents of absorptive capacity: A new model for developing learning processes. The Learning Organization, 23(1), 77–91. https://doi.org/http://dx.doi.org/10.1108/TLO-05-2013-0024
Roberts, N., Galluch, P. S., Dinger, M., & Grover, V. (2012). Absorptive capacity and information systems research: Review, synthesis, and directions for future research. MIS Quarterly, 36(2), 625–648. https://doi.org/10.2307/3250951
Saeedi, M. R., Dadfar, H., & Brege, S. (2014). The impact of inward international licensing on absorptive capacity of SMEs. International Journal of Quality and Service Sciences, 6(2/3), 164–180. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Salas-Vallina, A., López-Cabrales, Á., Alegre, J., & Fernández, R. (2017). On the road to happiness at work (HAW): Transformational leadership and organizational learning capability as drivers of HAW in a healthcare context. Personnel Review, 46(2), 314–338. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Salisu, B. (2018). The Moderating Role of Infrastructure Facility on the Relationship between Organizational Capability and Performance. Universiti Utara Malaysia.
Siachou, E., & Gkorezis, P. (2014). Do empowered employees absorb knowledge?: An empirical investigation of the effects of psychological empowerment dimensions on absorptive capacity. Management Research Review, 37(2), 130–150. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Sinkula, J. M., Baker, W. E., & Noordewier, T. (1997). A framework for market-based organizational learning : Linking value , knowledge and behavior. Journal of the Academy of Marketing Science, 25(4), 305–318.
SMEDAN, & NBS. (2013). SMEDAN and National Bureau of Statistics Collaborative Survey : Selected Findings. Retrieved from http://www.smedan.gov.ng/images/SMEDAN 2013 ANNUAL REPORT.pdf
Taherparvar, N., Esmaeilpour, R., & Dostar, M. (2014). Customer knowledge management, innovation capability and business performance: A case study of the banking industry. Journal of Knowledge Management, 18(3), 591–610. https://doi.org/10.1108/JKM-11-2013-0446
Tian, A. W., & Soo, C. (2018). Enriching individual absorptive capacity. Personnel Review, 47(5), 1116–1132. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Tohidi, H., Seyedaliakbar, S. M., & Mandegari, M. (2012). Organizational learning measurement and the effect on firm innovation. Journal of Enterprise Information Management, 25(3), 219–245. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Verma, P., Singh, B., & Rao, M. K. (2014). Developing innovation capability : The role of organizational learning culture and task motivation. Global Journal of Finance and Management, 6(6), 575–582.
Visser, M. (2016). Organizational learning capability and battlefield performance: The British army in world war II. International Journal of Organizational Analysis, 24(4), 573–590. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
Wang, L., Li, J., & Huang, S. (2018). The asymmetric effects of local and global network ties on firms’ innovation performance. Journal of Business and Industrial Marketing, 33(3), 377–389. https://doi.org/10.1108/JBIM-10-2016-0252
Wang, Y., & Byrd, T. A. (2017). Business analytics-enabled decision-making effectiveness through knowledge absorptive capacity in health care. Journal of Knowledge Management, 21(3), 517–539. https://doi.org/10.1108/JKM-08-2015-0301
Whitehead, K. K., Zacharia, Z. G., & Prater, E. L. (2016). Absorptive capacity versus distributive capability: The asymmetry of knowledge transfer. International Journal of Operations & Production Management, 36(10), 1308–1332. https://doi.org/=
Zahra, S. A., & George, G. (2002). Absoprtive Capacity: A review, Reconceptulisation, and extension. Academy of Management Review, 17(2), 185–203. https://doi.org/10.2514/1.J054260
Zhang, M., Zhao, X., Lyles, M. A., & Guo, H. (2015). Absorptive capacity and mass customization capability. International Journal of Operations & Production Management, 35(9), 1275–1294. https://doi.org/http://dx.doi.org/10.1108/MRR-09-2015-0216
How to Cite
SALISU, Y., & Mohammed, S. (2019). Learning Capability and the Performance of Small and Medium Enterprises in Developing Economies: The Role of Absorptive Capacity. Journal of Economic Info, 6(1), 49-55. https://doi.org/10.31580/jei.v6i1.468