Key drivers of innovation trajectories and catch-up in latecomer firms: absorptive capacity and opportunity capture

This paper investigates why some latecomer firms with substantial absorptive capacity fail during catch-up phases. It aims to clarify the performance effects of their incremental versus radical innovation trajectories propelled by potential and realized absorptive capacities and the interplay with opportunity capture. The empirical investigation was conducted with a sample of 166 manufacturing firms in Guangdong Province, China. The results indicate that both potential and realized absorptive capacities and opportunity capture are more effective in enhancing the performance of incremental innovations than those of radical innovations. However, a high level of opportunity capture can diminish the beneficial impacts of absorptive capacity on radical innovation performance to a greater extent. These findings enrich extant literature on latecomer firms’ catch-up strategies by combining the theoretical lens of absorptive capacity and opportunity capture. It offers implications for managers and policymakers, guiding strategy and policy formulation for firm catch-up endeavors.