Explain absorptive capacity of environment with example.

Question :Explain absorptive capacity of environment with example.

The correct answer is -Absorptive capacity is a term used to describe an organization’s ability to identify, assimilate, and use new information. It refers to the ability of an organization to learn from its environment and adapt its behavior accordingly.

An example of absorptive capacity can be seen in the pharmaceutical industry. This industry requires continuous innovation to create new drugs and treatments. The industry is constantly evolving due to advancements in science, technology, and regulations. Companies that have a high absorptive capacity can quickly learn about new technologies and regulations and integrate them into their operations to gain a competitive advantage.

For instance, a pharmaceutical company with a high absorptive capacity would be able to quickly identify promising research findings or novel techniques for drug development and apply this new knowledge to create better medicines. Such a company may also be able to adapt to changes in government regulations, such as requirements for clinical trials, and find new ways to streamline their operations while still maintaining regulatory compliance.

Overall, absorptive capacity plays a crucial role in an organization’s ability to learn and adapt in response to changes in its environment, ultimately contributing to its success and survival.