MNG3702
Assignment 2
Semester 1
Due 21 April 2026
, Question 1
Make a judgement with regards to the absorptive capacity of Tesla Inc.
Definition of absorptive capacity Absorptive capacity is defined as an organisation’s
ability to recognise the value of new external knowledge, acquire it, assimilate it into
existing knowledge structures, transform it, and apply it effectively to achieve
competitive advantage (Cohen and Levinthal, 1990). This capability enables
organisations to learn continuously and innovate sustainably.
Judgement of Tesla Inc.’s absorptive capacity based on the four dimensions
Acquisition Acquisition refers to the organisation’s ability to identify, source, and obtain
relevant external knowledge. Tesla demonstrates strong acquisition capabilities by
actively monitoring global developments in electric vehicle technology, battery
innovation, artificial intelligence, and renewable energy. The company acquires
knowledge through strategic partnerships, acquisitions, open innovation practices, and
learning from competitors and suppliers.
Assimilation Assimilation is the ability to analyse, interpret, and understand acquired
knowledge. Tesla shows strong assimilation through its highly skilled engineering and
software teams that rapidly interpret new technological insights. This is evident in
Tesla’s ability to convert external knowledge into internal technical expertise, particularly
in autonomous driving systems and battery management technologies.
Transformation Transformation involves combining newly acquired knowledge with
existing organisational knowledge. Tesla excels at transformation by integrating
software development, artificial intelligence, and automotive engineering into a single
operational system. The company’s ability to merge digital capabilities with
manufacturing processes highlights its strength in transforming knowledge across
functional boundaries.
Exploitation Exploitation refers to the application of transformed knowledge to create
commercial value. Tesla effectively exploits knowledge by translating innovation into
market ready products such as electric vehicles, energy storage solutions, and solar
Assignment 2
Semester 1
Due 21 April 2026
, Question 1
Make a judgement with regards to the absorptive capacity of Tesla Inc.
Definition of absorptive capacity Absorptive capacity is defined as an organisation’s
ability to recognise the value of new external knowledge, acquire it, assimilate it into
existing knowledge structures, transform it, and apply it effectively to achieve
competitive advantage (Cohen and Levinthal, 1990). This capability enables
organisations to learn continuously and innovate sustainably.
Judgement of Tesla Inc.’s absorptive capacity based on the four dimensions
Acquisition Acquisition refers to the organisation’s ability to identify, source, and obtain
relevant external knowledge. Tesla demonstrates strong acquisition capabilities by
actively monitoring global developments in electric vehicle technology, battery
innovation, artificial intelligence, and renewable energy. The company acquires
knowledge through strategic partnerships, acquisitions, open innovation practices, and
learning from competitors and suppliers.
Assimilation Assimilation is the ability to analyse, interpret, and understand acquired
knowledge. Tesla shows strong assimilation through its highly skilled engineering and
software teams that rapidly interpret new technological insights. This is evident in
Tesla’s ability to convert external knowledge into internal technical expertise, particularly
in autonomous driving systems and battery management technologies.
Transformation Transformation involves combining newly acquired knowledge with
existing organisational knowledge. Tesla excels at transformation by integrating
software development, artificial intelligence, and automotive engineering into a single
operational system. The company’s ability to merge digital capabilities with
manufacturing processes highlights its strength in transforming knowledge across
functional boundaries.
Exploitation Exploitation refers to the application of transformed knowledge to create
commercial value. Tesla effectively exploits knowledge by translating innovation into
market ready products such as electric vehicles, energy storage solutions, and solar
