Absorptive capacity in startups: Leveraging Edtech’s competitive advantages during the Covid-19 pandemic

Martins, Gisely J. T.; Freire, Patricia S.

doi:10.1590/1678-6971/eRAMR230257.en

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Resources and Entrepreneurial Development • RAM, Rev. Adm. Mackenzie 24 (4) • 2023 • https://doi.org/10.1590/1678-6971/eRAMR230257.en copy

Absorptive capacity in startups: Leveraging Edtech’s competitive advantages during the Covid-19 pandemic

Authorship SCIMAGO INSTITUTIONS RANKINGS

Abstract

Purpose:

This work investigated the contribution of the absorptive capacity of education startups (Edtechs) to the development of innovations and sustainable competitive advantages in the first year of social distancing during the Covid-19 pandemic.

Originality/value:

Although absorptive capacity is considered important for innovating and obtaining competitive advantages (Cohen & Levinthal, 1990; Zahra & George, 2002), it has been little investigated in the context of startups (Cajuela & Galina, 2020). In addition, considering the current business environment of growth in the use of technologies in education, especially the adoption of remote education (Ministério da Educação [MEC], 2020) during the Covid-19 pandemic, this study seeks to contribute to the understanding of the growth of Edtechs in this scenario.

Design/methodology/approach:

The research consisted of a qualitative approach, and data collection was conducted through semi-structured interviews using the Google Meet tool. The data were analyzed based on the thematic analysis by Braun and Clarke (2006, 2012), which enabled us to define codes, categories, and themes for analysis.

Findings:

The results showed the relationship between the absorptive capacity of startups, the innovations developed, and the competitive advantages acquired. Interorganizational relations with corporates and interactions with specialists and mentors also evidenced the development of absorptive capacities. In addition, the internal team and the organizational culture emerged as essential sources of absorptive capacities. Thus, as recommendations for future research, it is suggested to investigate these two constructs and their relationship with the startups’ absorptive capacity.

Keywords:
absorptive capacity; startup; competitive advantage; Edtech; Covid-19

Software
Contents	Tools	Platforms
1. Digital learning object (DLO)	4. Management support tool	11. Education management system (SIG \| SIS)
2. Educational game	4.1. Students capture tool	12. Classroom management system
3. Online course	5. Students evaluation tool	13. Virtual learning environment (VLE)
	6. Curriculum-generating tool	14. Educational platform
	7. Authoring tool	15. Adaptative educational platform
	8. Class support tool	16. Online contents-supply platform
	9. Collaboration tool	17. Digital repository
	10. Mentoring tool
Hardware		Services
18. Maker tool		20. Education technology services
19. Education hardware

Main findings	Authors
Startups participating in startup acceleration programs emphatically develop their potential absorptive capacity based on learnings from mentor networks and interactions with corporates.	Cajuela and Galina (2020)Cajuela, A. R., & Galina, S. V. R. (2020). Processes in interorganizational relationships to develop absorptive capacity in startups. Revista de Administração Contemporânea, 24(6), 550–566. https://doi.org/10.1590/1982-7849rac2020180329 https://doi.org/10.1590/1982-7849rac2020...
Realized absorptive capacity enables startups to innovate from interactions with corporates.	Cajuela and Galina (2020)Cajuela, A. R., & Galina, S. V. R. (2020). Processes in interorganizational relationships to develop absorptive capacity in startups. Revista de Administração Contemporânea, 24(6), 550–566. https://doi.org/10.1590/1982-7849rac2020180329 https://doi.org/10.1590/1982-7849rac2020...
In startups, sharing knowledge with corporates is critical for the development of their absorptive capacity.	Joshi (2018)Joshi, T. (2018). The dynamics of knowledge sharing in the biotechnology industry: An Indian perspective. Technology Innovation Management Review, 8(1), 5–15. http://doi.org/10.22215/timreview/1129 http://doi.org/10.22215/timreview/1129...
Facilitators of knowledge sharing between startups and corporates: teams with the same goals and participants from one or more organizations.	Joshi (2018)Joshi, T. (2018). The dynamics of knowledge sharing in the biotechnology industry: An Indian perspective. Technology Innovation Management Review, 8(1), 5–15. http://doi.org/10.22215/timreview/1129 http://doi.org/10.22215/timreview/1129...
Inhibitors of knowledge sharing between startups and corporates: teams made up of participants from different hierarchical levels, tight deadlines, and concomitant participation of the startup in various partnerships.	Joshi (2018)Joshi, T. (2018). The dynamics of knowledge sharing in the biotechnology industry: An Indian perspective. Technology Innovation Management Review, 8(1), 5–15. http://doi.org/10.22215/timreview/1129 http://doi.org/10.22215/timreview/1129...
When startups and corporates have characteristics in common, this contributes to startup learning and innovation.	Perez et al. (2013)Perez, L., Whitelock, J., & Florin, J. (2013). Learning about customers: Managing B2B alliances between small technology startups and industry leaders. European Journal of Marketing, 47(3–4), 431–462.
Due to their accelerated growth, startups with up to 5 years of operation tend to offer more job openings than larger organizations.	Toole et al. (2015)Toole, A. A., Czarnitzki, D., & Rammer, C. (2015). University research alliances, absorptive capacity, and the contribution of startups to employment growth (Discussion Paper No. 14–094). Centre for European Economic Research. https://doi.org/10.2139/ssrn.2530419 https://doi.org/10.2139/ssrn.2530419...
The higher the startups’ absorptive capacity at their early stage, the greater the access to venture capital investment, which enhances their performance.	Jeong et al. (2020)Jeong, J., Kim, J., Son, H., & Nam, D. (2020). The role of venture capital investment in startups’ sustainable growth and performance: Focusing on absorptive capacity and venture capitalists’ reputation. Sustainability, 12(8), 3447. https://doi.org/10.3390/su12083447 https://doi.org/10.3390/su12083447...
Crises, such as that caused by the Covid-19 pandemic, reduce opportunities for interorganizational learning between startups and other organizations.	Haneberg (2021)Haneberg, D. H. (2021). Interorganizational learning between knowledge-based entrepreneurial ventures responding to Covid-19. The Learning Organization, 28(2), 137–152. https://doi.org/10.1108/TLO-05-2020-0101 https://doi.org/10.1108/TLO-05-2020-0101...

Edtech	City/state	Educational segment(s) of Edtech operations	Kind(s) of technology(ies)	Startup stage	Length of time in operation
A	Santo André/SP	Preschool education; elementary and secondary education; higher education	Educational platform	Scale-up	8 years
B	Chapecó/SC	Higher education	Educational technology services	Traction	5 years
C	Florianópolis/SC	Elementary and secondary education	Student evaluation tool; educational platform	Scale-up	4 years
D	Florianópolis/SC	Corporate education	Educational technology services	Validation	1.5 year
E	Rio de Janeiro/RJ	Corporate education	Online course; educational platform; online content supply platform	Scale-up	9 years
F	Florianópolis/SC	Free courses	Online course; online content supply platform	Traction	1.5 year
G	São Paulo/SP	Elementary and secondary education	Educational platform; online content supply platform	Traction	3 years

Edtech	Informer	Position	Has previous experience in startups?	Interview duration
A	1	Co-founder/CEO	No	22 minutes
B	2	Co-founder/CEO	No	19 minutes
C	3	Co-founder/COO	No	53 minutes
D	4	Co-founder/project manager	No	24 minutes
E	5	Co-founder/CEO	Yes	35 minutes
F	6	Co-founder/CEO	Yes	24 minutes
G	7	Co-founder	Yes	33 minutes

Codes	Categories	Themes	Theory
Revenues	Increase	Growth	A great number of job openings in startups with up to five years of operation (Toole et al., 2015Toole, A. A., Czarnitzki, D., & Rammer, C. (2015). University research alliances, absorptive capacity, and the contribution of startups to employment growth (Discussion Paper No. 14–094). Centre for European Economic Research. https://doi.org/10.2139/ssrn.2530419 https://doi.org/10.2139/ssrn.2530419... ).
Clients
Sales
Employees
Search for clients	Pandemic
Gaps in educational systems
Scalability
Digital
Face-to-face competitors disappeared
Budget reduced
Multinational corporate	Acquisition (mergers & acquisitions – M&A)	Interorganizational relations	Potential absorptive capacity developed by interactions with mentors and corporates (Joshi, 2018Joshi, T. (2018). The dynamics of knowledge sharing in the biotechnology industry: An Indian perspective. Technology Innovation Management Review, 8(1), 5–15. http://doi.org/10.22215/timreview/1129 http://doi.org/10.22215/timreview/1129... ; Cajuela & Galina, 2020Cajuela, A. R., & Galina, S. V. R. (2020). Processes in interorganizational relationships to develop absorptive capacity in startups. Revista de Administração Contemporânea, 24(6), 550–566. https://doi.org/10.1590/1982-7849rac2020180329 https://doi.org/10.1590/1982-7849rac2020... ).
Networking	Startup support programs
Mentorships
Learnings
MVP validation
National and multinational corporates
Joint development
Integration of complicated systems	Partnerships
Experts	Partnerships
National corporates	Clients
Getting closer to clients	Clients	Competitive advantages	Realized absorptive capacity (Zahra & George, 2002Zahra, S. A., & George, G. (2002). Absorptive capacity: A review, reconcep-tualization, and extension. The Academy of Management Review, 27(2), 185–203. https://doi.org/10.2307/4134351 https://doi.org/10.2307/4134351... ).
Collaboration with clients
Support/assistance to clients
Online content (webinars/lives)
Connection with corporates throughout the country
Valuation as a result of the pandemic	Clients	Competitive advantages	Realized absorptive capacity (Zahra & George, 2002Zahra, S. A., & George, G. (2002). Absorptive capacity: A review, reconcep-tualization, and extension. The Academy of Management Review, 27(2), 185–203. https://doi.org/10.2307/4134351 https://doi.org/10.2307/4134351... ).
Awareness of client needs	Clients
Scenario analysis	Strategy
Reduction of the distance between competitors	Strategy
Adaptability	Work model
Agility
Autonomy
Home office culture
Processes
Routines
Validation
Platform stability	Product
New functionalities
Differentials
Assistance from expert friends	Experts	Acquisition of new knowledge	Potential absorptive capacity (Zahra & George, 2002Zahra, S. A., & George, G. (2002). Absorptive capacity: A review, reconcep-tualization, and extension. The Academy of Management Review, 27(2), 185–203. https://doi.org/10.2307/4134351 https://doi.org/10.2307/4134351... ).
Market references	Experts
Online courses	Online contents
Online contents	Online contents
Mentorship	Startup support programs
Events
Lectures/conferences
Networking with ecosystem
Internal sources	Internal sources
Co-creation of functionalities	Clients	Implementation of new knowledge	Realized absorptive capacity (Zahra & George, 2002Zahra, S. A., & George, G. (2002). Absorptive capacity: A review, reconcep-tualization, and extension. The Academy of Management Review, 27(2), 185–203. https://doi.org/10.2307/4134351 https://doi.org/10.2307/4134351... ).
Validation	Clients
Expertise	Experts
Trial and error	Trial and error
Co-creation of new functionalities with clients	Incremental	Development of innovations	Startup’s realized absorptive capacity generates innovations through interaction with corporates (Cajuela & Galina, 2020Cajuela, A. R., & Galina, S. V. R. (2020). Processes in interorganizational relationships to develop absorptive capacity in startups. Revista de Administração Contemporânea, 24(6), 550–566. https://doi.org/10.1590/1982-7849rac2020180329 https://doi.org/10.1590/1982-7849rac2020... ).
Integration development with clients
Process improvements
Adaptation to distance learning
Co-creation of new products with experts	Radical
New products
Co-creation of new services with corporate
Anticipating future global trends	Management model	Absorptive capacity	Absorptive capacity, innovation, and an increase in competitive advantages are interrelated (Cohen & Levinthal, 1990Cohen, W. M., & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35(1), 128–152. https://doi.org/10.2307/2393553 https://doi.org/10.2307/2393553... ). Innovation increases the startup’s absorptive capacity (Cajuela & Galina, 2020Cajuela, A. R., & Galina, S. V. R. (2020). Processes in interorganizational relationships to develop absorptive capacity in startups. Revista de Administração Contemporânea, 24(6), 550–566. https://doi.org/10.1590/1982-7849rac2020180329 https://doi.org/10.1590/1982-7849rac2020... ). Staff learnings contribute to the development of startup capacities (Savarese et al., 2016Savarese, M. F., Orsi, L., & Belussi, F. (2016). New venture high growth in high-tech environments. European Planning Studies, 24(11), 1937–1958. https://doi.org/10.1080/09654313.2016.1232700 https://doi.org/10.1080/09654313.2016.12... ; Cajuela & Galina, 2020Cajuela, A. R., & Galina, S. V. R. (2020). Processes in interorganizational relationships to develop absorptive capacity in startups. Revista de Administração Contemporânea, 24(6), 550–566. https://doi.org/10.1590/1982-7849rac2020180329 https://doi.org/10.1590/1982-7849rac2020... ). Great absorptive capacity at the initial stage increases access to venture capital, which improves performance (Jeong et al., 2020Jeong, J., Kim, J., Son, H., & Nam, D. (2020). The role of venture capital investment in startups’ sustainable growth and performance: Focusing on absorptive capacity and venture capitalists’ reputation. Sustainability, 12(8), 3447. https://doi.org/10.3390/su12083447 https://doi.org/10.3390/su12083447... ).
Process improvement
Agility
Adaptability
Evolutive capacity
Transparent communication
Clear metrics
Resilience
Flexibility
Caution
Planning
Learning culture	Organizational culture
Tolerance to error
Open mind
Learning from staff	Staff
Focus
Workforce
Client-centered	Clients

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[1] Correspondence concerning this article should be addressed to Gisely J. T. Martins, Campus Universitário Reitor João David Ferreira Lima, Santa Catarina, Florianópolis, Trindade, Brasil, ZIP code 88040-900. Email: giselytm@gmail.com