Fortune favors the prepared firm

@article{Cohen1994FortuneFT,
  title={Fortune favors the prepared firm},
  author={Wesley M. Cohen and Daniel A. Levinthal},
  journal={Management Science},
  year={1994},
  volume={40},
  pages={227-251}
}
A critical factor in industrial competitiveness is the ability of firms to exploit new technological developments. We term this ability a firm's absorptive capacity and argue that such a capability not only enables a firm to exploit new extramural knowledge, but to predict more accurately the nature of future technological advances. We develop a stylized model in which we focus exclusively on firms' decisions to invest in their absorptive capacities. We first examine a monopolist's investment… Expand