MNG3702
Assignment 2
Semester 1
Due 21 April 2026
, Question 1
Make a judgement with regards to the absorptive capacity of Tesla Inc. In your answer,
you need to define the concept absorptive capacity and then make a judgement with
regards to the absorptive capacity of the company based on the four dimensions that
determine the absorptive capacity of an organisation.
Definition of Absorptive Capacity
Absorptive capacity refers to an organisation’s ability to recognise valuable external
knowledge, acquire and understand it, combine it with existing internal knowledge, and
apply it commercially to enhance innovation and performance (Cohen & Levinthal,
1990; Zahra & George, 2002). Organisations with strong absorptive capacity are better
positioned to adapt to technological change and maintain competitive advantage in
dynamic industries.
Four Dimensions of Absorptive Capacity and Application to Tesla
Knowledge Acquisition Knowledge acquisition refers to the organisation’s ability to
identify and obtain useful knowledge from external sources such as competitors,
research institutions, suppliers, and technological developments.
Tesla demonstrates strong knowledge acquisition through strategic acquisitions,
partnerships, and recruitment of highly skilled employees. The acquisition of Maxwell
Technologies strengthened Tesla’s battery production capabilities and enabled the
company to improve battery energy density and efficiency. Tesla also collaborates with
technology firms and suppliers to obtain valuable research and industry insights, which
supports continuous innovation in electric vehicles and renewable energy solutions.
Knowledge Assimilation Knowledge assimilation refers to analysing, interpreting, and
understanding acquired knowledge so that it can be effectively integrated into
organisational systems and processes.
Tesla demonstrates strong assimilation through its extensive research and development
activities and advanced data analytics. Tesla collects real-time performance data from
Assignment 2
Semester 1
Due 21 April 2026
, Question 1
Make a judgement with regards to the absorptive capacity of Tesla Inc. In your answer,
you need to define the concept absorptive capacity and then make a judgement with
regards to the absorptive capacity of the company based on the four dimensions that
determine the absorptive capacity of an organisation.
Definition of Absorptive Capacity
Absorptive capacity refers to an organisation’s ability to recognise valuable external
knowledge, acquire and understand it, combine it with existing internal knowledge, and
apply it commercially to enhance innovation and performance (Cohen & Levinthal,
1990; Zahra & George, 2002). Organisations with strong absorptive capacity are better
positioned to adapt to technological change and maintain competitive advantage in
dynamic industries.
Four Dimensions of Absorptive Capacity and Application to Tesla
Knowledge Acquisition Knowledge acquisition refers to the organisation’s ability to
identify and obtain useful knowledge from external sources such as competitors,
research institutions, suppliers, and technological developments.
Tesla demonstrates strong knowledge acquisition through strategic acquisitions,
partnerships, and recruitment of highly skilled employees. The acquisition of Maxwell
Technologies strengthened Tesla’s battery production capabilities and enabled the
company to improve battery energy density and efficiency. Tesla also collaborates with
technology firms and suppliers to obtain valuable research and industry insights, which
supports continuous innovation in electric vehicles and renewable energy solutions.
Knowledge Assimilation Knowledge assimilation refers to analysing, interpreting, and
understanding acquired knowledge so that it can be effectively integrated into
organisational systems and processes.
Tesla demonstrates strong assimilation through its extensive research and development
activities and advanced data analytics. Tesla collects real-time performance data from
