Regional Specialization as a Driver of Potential and Realized Absorptive Capacity and Business Innovation

Abstract This research aims to study the influence of regional agglomeration on business innovation and the effect of absorptive capacity as a mediating variable in this relationship. The investigation has been developed using a sample of 197 firms of the energy sector, from which were obtained primary data that was analyzed using the PLS-SEM technique. The findings evidence that the degree of agglomeration of a region positively influences business innovation, while the acquisition and assimilation of new knowledge do not impact it directly but rather through its transformation and successful application by firms. In this respect, knowledge absorption competences can drive the innovation outcomes exhibited by firms situated in specialized regions. Thus, it is concluded that companies operating in specialized environments should strive to boost their knowledge absorption capabilities to maximize the benefits of their location. In this regard, managers and policymakers must be aware of the importance of fostering the agglomeration of energy enterprises and the development of their internal absorptive capacity, both potential and realized, which drives the existence of specialized knowledge and its effective leverage to promote business innovation, promoting the creation of hubs of concentrated expertise and enhancing regional competitiveness.