title: Absorptive capacity, technological innovation, and product life cycle: a system dynamics model.
abstract: BACKGROUND
  While past research has recognized the importance of the dynamic nature of absorptive capacity, there is limited knowledge on how to generate a fair and comprehensive analytical framework. Based on interviews with 24 Chinese firms, this study develops a system-dynamics model that incorporates an important feedback loop among absorptive capacity, technological innovation, and product life cycle (PLC).
  
  
  RESULTS
  The simulation results reveal that (1) PLC affects the dynamic process of absorptive capacity; (2) the absorptive capacity of a firm peaks in the growth stage of PLC, and (3) the market demand at different PLC stages is the main driving force in firms' technological innovations. This study also explores a sensitivity simulation using the variables of (1) time spent in founding an external knowledge network, (2) research and development period, and (3) knowledge diversity. The sensitivity simulation results show that the changes of these three variables have a greater impact on absorptive capacity and technological innovation during growth and maturity stages than in the introduction and declining stages of PLC.
  
  
  CONCLUSIONS
  We provide suggestions on how firms can adjust management policies to improve their absorptive capacity and technological innovation performance during different PLC stages.
authors.affiliation: School of Management, Harbin Institute of Technology, 92 West Dazhi Street, Nan Gang District, Harbin, 150001 China.
authors.forename: Bo
authors.initials: B
authors.lastname: Zou
authors.affiliation: School of Management, Harbin Institute of Technology, 92 West Dazhi Street, Nan Gang District, Harbin, 150001 China.
authors.forename: Feng
authors.initials: F
authors.lastname: Guo
authors.affiliation: School of Management, Harbin Institute of Technology, 92 West Dazhi Street, Nan Gang District, Harbin, 150001 China.
authors.forename: Jinyu
authors.initials: J
authors.lastname: Guo
keywords: Absorptive capacity; Product life cycle; System dynamics; Technological innovation