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Absorptive capacity of Malaysian SME construction organisations

Kamal, Ernawati Mustafa and Lou, Eric CW and Yusof, Nor’Aini and Osmadi, Atasya (2021) Absorptive capacity of Malaysian SME construction organisations. Architectural Engineering and Design Management. ISSN 1745-2007

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Abstract

Absorptive capacity has been acknowledged as a critical component for organisations to sustain, compete and excel in the marketplace. With the current volatile environment, there is increased demand for new knowledge, skills and implementation of new technologies. Every organisation must have the ability to be able to absorb and leverage from new technologies. This research aims to identify the absorptive capacity of Malaysian small- and medium-sized enterprise (SME) construction organisations. The research design adapted was based on qualitative approach. Twelve semi-structured interviews were conducted with SMEs operating in six different states in Malaysia. Data were analysed using NVivo 12 Pro software and thematic approach was used to categorise the data. This research found 29 main indicators of how construction SMEs developed their absorptive capacity and 10 factors influenced their absorptive capacity. Owners and employees with higher education background and with more industry experience tend to be more receptive to absorb new knowledge. In addition, human resource departments and formal office communications were found to have positive impacts on SMEs’ absorptive capacity. Suppliers and manufacturers were also identified as important external factors. This research provides clear indicators of how SME construction organisations can develop their absorptive capacity and further improve their productivity. It also provides indication for Construction Industry Development Board on how they can assist the SME construction organisations to absorb and apply new technology in construction processes.

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