Do Individual Employees' Learning Goal Orientation and Civic Virtue Matter? A Micro‐Foundations Perspective on Firm Absorptive Capacity

• Date: 01 October 2017
• Published date: 01 October 2017
• Author: Fiona K. Yao,Song Chang
• DOI: http://doi.org/10.1002/smj.2636

Strategic Management Journal

Strat. Mgmt. J.,38: 2041–2060 (2017)

Published online EarlyView 15 February 2017 in WileyOnline Library (wileyonlinelibrary.com) DOI: 10.1002/smj.2636

Received 18 November 2013;Final revisionreceived 26 December 2016

Do Individual Employees’ Learning Goal Orientation

and Civic Virtue Matter? A Micro-Foundations

Perspective on Firm Absorptive Capacity

Fiona K. Yao1*and Song Chang2

1Department of Business Administration, College of Business, University of Illinois

at Urbana-Champaign, Champaign, Illinois

2Department of Management, Hong Kong Baptist University, Kowloon Tong,

Hong Kong

Research summary:In this study, we build on the micro-foundationsperspective and investigate

how individual characteristics contribute to the development of rm absorptive capacity. In

particular, we assess how individual learning goal orientation affectsrm potential and realized

absorptive capacity. Furthermore, we study how individuals’ civic virtue acts as a micro-level

social integration mechanism that moderates the effect from rm realized absorptive capacity to

potential absorptive capacity. Using the multilevel structural equation modeling technique and

data from 871 core-knowledge employees nested in 139 high-technologyrms, we nd support to

our major hypotheses. Together, this study nds support for the micro-foundations’ perspective

and generates novel insights on how individual-level factors could be linked with rm-level

heterogeneity in absorptive capacity.

Managerial summary:We study how employees’ characteristics contribute to a rm’sabsorptive

capacity, that is, the ability of a rm to identify, assimilate, and exploit knowledge from

the environment. Because rms have increasingly tapped into external resources to foster

innovation over the past two decades, absorptive capacity is crucial to rm learning and success.

Using data from 871 core-knowledge employees in 139 high-technology rms, we nd that

individual employees’ learning goal orientation, the tendency to seek improvements in employees’

competence and to understand or master new things advances the development of a rm’s

potential and realized absorptive capacity. More important, individual employees’ civic virtue,

the discretionary involvement in company issues, serves as a social integration mechanism that

reduces the gap between rm potential and realized absorptive capacity. Copyright © 2017 John

Wiley & Sons, Ltd.

Introduction

Over the past two decades, rms have increas-

ingly tapped into external knowledge resources

Keywords: civic virtue; rm absorptive capacity; learning

goal orientation; micro-foundations

*Correspondence to: Fiona K. Yao, 350 Wohlers Hall, 1206

South Sixth Street, Champaign, IL 61820. E-mail: onayao@

illinois.edu

Copyright © 2017 John Wiley & Sons, Ltd.

to foster innovation (Chesbrough, 2003; Ireland,

Hitt, & Vaidyanath, 2002; Laursen & Salter,

2006; Zollo, Reuer, & Singh, 2002). For instance,

Procter & Gamble has discovered that the

“invent-it-ourselves” model has diminishing

returns; as a result, Procter & Gamble has changed

its innovation strategy from the traditional research

and development approach to the connect and

development approach so as to target for 50%

of the company’s innovation to be acquired from

external sources (Huston & Sakkab, 2006). A rm’s

2042 F. K. Yao and S. Chang

absorptive capacity (AC hereafter), dened as the

“ability of a rm to identify, assimilate, and exploit

knowledge from the environment” (Cohen &

Levinthal, 1989, p. 589), has thus become crucial

to the understanding of rm learning processes and

outcomes, such as innovations (Ahuja & Katila,

2001; Cohen & Levinthal, 1990; Tsai, 2001),

learning (Lane, Salk, & Lyles, 2001), mergers

and acquisitions (Barkema & Vermeulen, 1998;

Baum, Li, & Usher, 2000; Haleblian & Finkelstein,

1999), corporate restructuring behaviors (Bergh

& Lim, 2008), responsiveness (Liao, Welsch,

& Stoica, 2003), inter-rm as well as intra-rm

knowledge transfer (Minbaeva, Pedersen, Björk-

man, & Fey, 2014; Zhao & Anand, 2009), or

nancial performance (Wales, Parida, & Patel,

2013).

Recently, there has been a growing body of

research calling for the improved understanding

of the micro-antecedents or micro-foundations

of strategic management studies (e.g., Barney &

Felin, 2013; Felin & Foss, 2005, 2009; Foss, 2011;

Gavetti, 2005; Helfat & Peteraf, 2015; Teece,

2007). Coincidently, scholars in the area of AC

have made a call that the exploitation of the AC

concept has not reached its full potential (e.g.,

Lewin, Massini, & Peeters, 2011; Volberda, Foss,

& Lyles, 2010). In particular, although AC is

typically studied as a rm-level capacity, it has a

foundation rooted in the understanding of individ-

ual employees’ cognition, motivation, action, and

interactions (Volberda et al., 2010). For instance,

Volberda et al. (2010, p. 944) posited that “Thus

the understanding of AC as a dependent variable,

absent of a consideration of the level of individuals

and their action, may be inherently incomplete.”

And “Research on AC should explain the impact of

individuals on the AC process.”

Despite such conceptual calls, however, existing

literature remains largely silent on when and how

rm AC could emerge from important individuals’

characteristics such as cognitive motivation and

discretionary work behaviors. It might be because

Cohen and Levinthal’s (1990) research and most

of the subsequent empirical studies have suggested

that a rm’s AC is dependent on a rm’s prior

knowledge bases and is often a by-product of the

rm’s R&D efforts, and thus, the relative role of

micro-level antecedents (i.e., micro-foundations)

have been largely neglected. Following the call for

the micro-foundations of rm AC (e.g., Volberda

et al., 2010), in this study we focus on investigating

how rm AC evolves as a result of attributes of

individual employees. Specically, we study the

inuences of two individual-level characteristics

(i.e., individual learning goal orientation and civic

virtue) on rm AC.

The concept of learning goal orientation (LGO

hereafter) is dened as individuals’ disposition

in “seek[ing] to increase their competence, to

understand or master something new” (Dweck,

1986, p. 1040). LGO has proved to be an impor-

tant motivational force that leads to learning,

knowledge mastery, and creativity (e.g., Bell &

Kozlowski, 2002; Dweck, 1986; Gong, Huang,

& Farh, 2009; Hirst, Van Knippenberg, Chen, &

Sacramento, 2011; Hirst, Van Knippenberg,

& Zhou, 2009). The implication of LGO on

rm-level attributes, however, remains unknown

to date.

Civic virtue is dened as employees’ discre-

tionary behaviors that are characterized by “respon-

sible and constructive involvementin the issues and

governance of the organization” (Organ & Ryan,

1995, p. 782). This notion has been typically con-

ceptualized as one form of employees’ organiza-

tional citizenship behavior (Organ & Ryan, 1995)

and describes an employee’s “macro-level inter-

est in, or commitment to, the organization as a

whole” (Podsakoff, MacKenzie,Paine, & Bachrach,

2000, p. 525). Again, while civic virtue in par-

ticular and organizational citizenship behavior in

general has been well studied at the individual

level, scholars have extended these notions beyond

the individual-level of analysis and assessed their

rm-level implications (e.g., Podsakoff & MacKen-

zie, 1997). As we shall illustrate later, LGO and

civic virtue represent individual-level characteris-

tics that may have great potential to deepen our

knowledge on the micro-foundations of rm com-

petitive advantages.

In summary, while it has been clearly understood

that AC results from rm macro-level antecedents

such as investment in R&D (Cohen & Levinthal,

1990), the micro-foundations of AC have received

scant attention (cf. Volberda et al., 2010). Thus,

it is legitimate to ask if AC actually has roots in

individuals’ motivational and behavioral char-

acteristics such as LGO and civic virtue. And

if so, how could such characteristics emerge

into rm AC? Directing answers toward such

questions would result in a deeper understanding

of the micro-foundations of AC (Volberda et al.,

2010).

Copyright © 2017 John Wiley & Sons, Ltd. Strat. Mgmt. J.,38: 2041–2060 (2017)

DOI: 10.1002/smj