The digital era is characterized by dynamic technological evolution, and rapid knowledge diffusion entwined by extreme social changes. The challenges facing companies in this era raise questions regarding the role of absorptive capacity within the organization's strategy. With persistent environmental changes, can investments in building absorptive capacity capabilities pay off and help the organization achieve a sustainable competitive advantage? This important question adds controversy to a concept surrounded already by conceptual and empirical polemics which have not yet been fully resolved. The dominant framing by Cohen & Levinthal (1990) has been challenged by scholars who offered ways to reconceptualize it (Lane, Koka, and Pathak, 2006; Todorova and Durisin, 2007; Zahra and George, 2002) and delineate it from other concepts (e.g., organizational learning (Sun & Anderson, 2010; Vera, Crossan, and Apaydin, 2012), learning orientation, ambidexterity, and other dynamic capabilities. However, these conceptualizations have been based on a different industrial setting that differs from the emerging digital environment. Therefore, in this PDW we will revisit the utility of absorptive capacity in the digital era; identify conceptually conflicting assumptions; and offer new pathways revitalizing the concept of absorptive capacity and how it can help organizations’ strategy in the new environment. Together, the panel and the audience can creatively generate future directions for scholars who are interested in further exploring and developing this field.
