Improving Absorptive Capacity Through Social Media Networks for Firms' Innovativeness

firm's innovativeness come mainly from its ability to recombine knowledge acquired through external collaborative networks. Firms are increasingly employing social media to manage relationships with consumers so as to improve their own absorptive capacity and to generate new and innovative products and services. Absorptive capacity and social media become keys for the creation of a competitive advantage of a firm. The use of social media platforms can provide a wealth of information about individuals and their networks, which can be utilized for various business purposes. It allows people to create online communities and share user-created content (UCC). Within this context the active connections among people - "the trust, mutual understanding, shared values and behaviours that bind the members of human networks and communities and make cooperative action possible" (Cohen and Levinthal, 1990) - allow companies to generate innovations. More specifically, my aim is to investigate how firms give meaning to the information they collect and accumulate through these information technologies that enables them to interact with customers, suppliers, partners among others in order to absorb external knowledge, and to improve firm's innovative performance of a firm. Having analysed the data extracted by Amy and Poston (2013) on 217 global companies in diverse set of industries such as high tech and electronics, food and beverage, consumer durables, among others through the application of Partial Least Square Path Modelling with IBM SPSS software, I demonstrated the crucial role of social media in enhancing absorptive capacity.