Absorptive capacity

Okay kiddo, let's talk about "absorptive capacity". Have you ever tried to soak up a spill with a sponge or a towel? You know how the sponge or towel can hold and absorb some of the spilled liquid until it's full and can't absorb any more? Well, businesses and organizations have something similar called "absorptive capacity".

Absorptive capacity is the ability of a company or organization to learn new things, take in new knowledge, and use it to improve their performance. It's like their "sponge" for new ideas and information. Just like a sponge can soak up more or less water depending on its size and how much it's used, an organization's absorptive capacity can vary depending on factors like its size, resources, and culture.

When a business or organization has high absorptive capacity, it can quickly and effectively learn from new technologies, innovations, or processes and apply them to its own work. This helps the company stay competitive and better serve its customers or clients. On the other hand, if an organization has low absorptive capacity, it might struggle to adapt to changes in its industry or the wider world, and could fall behind its competitors.

So, just like you need a sponge or towel to clean up spills, businesses and organizations need a good absorptive capacity to learn and grow.