Contemporary Management Practice Applying the Dynamic Absorptive Capacity Measurement Model (PM4AC) for Improved Business Sustainability

Abstract

The Colombian industrial sector faces various problems, such as contributing to the development of business and innovation capacities to overcome the difficulties associated with poverty, low competitiveness and low complexity. A key challenge is to develop mechanisms that allow companies to adapt to a globalized competitive environment. In this regard, projects and their management represent an opportunity for greater flexibility. This work presents a model developed to quantify dynamic absorption, understood as the ability to identify the value of new external knowledge, absorb it as internal knowledge and apply it to serve business purposes. The measured indicator is adapted to a dynamic organization environment and provides a project with the ability to interact with and monitor variables. For modeling, variables observed across 148 small and medium-sized enterprises (SMEs), belonging to Colombian organizations, were collected using questionnaires and structural equation modeling (SEM) to determine analysis dimensions, and subsets of dynamic absorptive capacity as latent variables from this information. The dynamic absorptive capacity measurement model (PM4AC) describes a normalized fit index (NFI), comparative fit index (CFI) and RMSEA of 0.935, 0.986 and 0.042, correspondingly. The contribution of this model is designed to improve and make available a new framework of business sustainability leadership, using the PM4AC tool. Finally, the objective of this study is to provide a model developed to quantify the dynamic absorption capacity for SMES. Furthermore, as most of the research involves technology firms, we seek to better understand the business sustainability in SMEs.