COMPLETE
26 - DUE
[
, Question 1 Make a judgement with regards to the
absorptive capacity of Tesla Inc. In your answer, you need
to define the concept absorptive capacityAbsorptive capacity
refers to a firm’s ability to recognize the value of new external
knowledge, assimilate it, and apply it commercially to achieve innovation
and competitive advantage (a concept commonly associated with Cohen
and Levinthal). It is usually discussed in four related dimensions:
acquisition, assimilation, transformation, and exploitation of knowledge.
Judgement on the absorptive capacity of Tesla Inc.
Overall, Tesla Inc. demonstrates a high level of absorptive capacity,
particularly in technology-intensive domains such as electric vehicles
(EVs), battery systems, software, and manufacturing processes.
First, in terms of knowledge acquisition, Tesla is strong. The company
actively sources external knowledge through hiring top engineering
talent, partnerships (e.g. with battery suppliers and AI chip designers),
acquisitions, and close monitoring of technological trends in energy
storage, automation, and artificial intelligence. Its openness to learning
from adjacent industries (software, semiconductors, energy) enhances this
capability.
Second, assimilation of knowledge at Tesla is facilitated by its highly
integrated organizational structure. Unlike traditional automakers, Tesla
develops hardware, software, and manufacturing systems largely in-
house. This vertical integration allows new knowledge to be rapidly
shared across teams, reducing silos and speeding up learning.
Third, Tesla excels at transformation, meaning it can combine new
external knowledge with existing internal capabilities. Examples include
integrating advances in battery chemistry into vehicle design, or applying
AI and data analytics to driving systems and manufacturing optimization.
Tesla’s iterative approach—continuous updates rather than long product
cycles—supports this recombination of knowledge.
Finally, exploitation of knowledge is one of Tesla’s strongest areas. The
company consistently converts technological insights into commercially
viable products and processes, such as improved battery efficiency, over-
the-air software updates, autonomous driving features, and cost-reducing
manufacturing innovations like giga-casting.
26 - DUE
[
, Question 1 Make a judgement with regards to the
absorptive capacity of Tesla Inc. In your answer, you need
to define the concept absorptive capacityAbsorptive capacity
refers to a firm’s ability to recognize the value of new external
knowledge, assimilate it, and apply it commercially to achieve innovation
and competitive advantage (a concept commonly associated with Cohen
and Levinthal). It is usually discussed in four related dimensions:
acquisition, assimilation, transformation, and exploitation of knowledge.
Judgement on the absorptive capacity of Tesla Inc.
Overall, Tesla Inc. demonstrates a high level of absorptive capacity,
particularly in technology-intensive domains such as electric vehicles
(EVs), battery systems, software, and manufacturing processes.
First, in terms of knowledge acquisition, Tesla is strong. The company
actively sources external knowledge through hiring top engineering
talent, partnerships (e.g. with battery suppliers and AI chip designers),
acquisitions, and close monitoring of technological trends in energy
storage, automation, and artificial intelligence. Its openness to learning
from adjacent industries (software, semiconductors, energy) enhances this
capability.
Second, assimilation of knowledge at Tesla is facilitated by its highly
integrated organizational structure. Unlike traditional automakers, Tesla
develops hardware, software, and manufacturing systems largely in-
house. This vertical integration allows new knowledge to be rapidly
shared across teams, reducing silos and speeding up learning.
Third, Tesla excels at transformation, meaning it can combine new
external knowledge with existing internal capabilities. Examples include
integrating advances in battery chemistry into vehicle design, or applying
AI and data analytics to driving systems and manufacturing optimization.
Tesla’s iterative approach—continuous updates rather than long product
cycles—supports this recombination of knowledge.
Finally, exploitation of knowledge is one of Tesla’s strongest areas. The
company consistently converts technological insights into commercially
viable products and processes, such as improved battery efficiency, over-
the-air software updates, autonomous driving features, and cost-reducing
manufacturing innovations like giga-casting.
