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Absorptive capacity has been acknowledged as a critical component for organisations to sustain, grow and compete in their markets. Many researchers have used the concept of absorptive capacity in their analysis at different levels: individual, organisation, industry and country. However, most of the studies focus on very large organisations with sophisticated structures and strong R&D orientation. Very few studies address the theory of absorptive capacity in the context of SME organisations. This paper presents part of the findings of research that investigated absorptive capacity in the context of Malaysian rural construction SMEs. The aim of this paper is to prescribe a model of absorptive capacity for rural construction SMEs. The model is based on validation drawn from five case studies of construction SMEs operating in the rural area in Malaysia. The developed model serves two functions: Firstly, to help rural construction SMEs to understand the issues and process related to absorptive capacity and the implementation, and use of, new technology; secondly, to provide a mechanism for policy makers to transfer new technology to rural contractors. This research contributes to the body of knowledge of absorptive capacity by highlighting issues related to absorptive capacity and implementation of new technology in the context of rural SMEs.
Keywords: Absorptive Capacity, Malaysia, Rural Construction, Small and medium sized enterprise (SME).
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