USING MULTIPLE GROUP STRUCTURAL MODEL FOR TESTING DIFFERENCES IN ABSORPTIVE AND INNOVATIVE CAPABILITIES BETWEEN LARGE AND MEDIUM SIZED FIRMS

• Main Author: Anita Talaja
• Format: Article
• Language: English
• Published: Croatian Operational Research Society 2012-12-01
• Series: Croatian Operational Research Review
• Subjects: strategic management; structural equation modeling; sultiple group models; absorptive capability; innovative capability; firm size
• Online Access: http://hrcak.srce.hr/index.php?show=clanak&id_clanak_jezik=142566

In the proposed model, absorptive and innovative capabilities of the firm determine firm’s performance level. Absorptive capability construct consists of four latent variables: knowledge acquisition, assimilation, transformation and exploitation. Innovative capability consists of five manifest variables: developing new products or services, developing new methods of production, risktaking by key executives, market innovativeness and innovative strategic orientation. Absorptive capability and innovative capability both have direct influence on firm’s performance. Also, the interdependence of absorptive capability and innovative capability is assumed. For testing construct validity and theoretical relationships among variables structural equation omdeling is used. Model is assessed using absolute and incremental fit indices. Multiple group modeling is used to determine whether or not the grouping variable, in this case firm size, has any influence on the structural equation model for the observed variables.