For manufacturing small and medium-sized enterprises (SMEs) with limited resources, absorptive capacity plays an important role for successful new product development in response to changes in the environment and creating great added value. This paper examines previous studies and case studies, and proposes hypotheses about the factors that promote manufacturing SMEs to increase their absorptive capacity, seize market needs, recognize opportunities, and create new product concepts. The contents

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... of the hypothesis are as follows. That is, (1) to disseminate information on products and technologies of the firm, (2) to acquire both needs knowledge and seeds knowledge from the outside as a result of disseminating information, (3) to have alertness, (4) to have an information sharing mechanism, and (5) experience in new product development improves absorptive capacity. Consequently, the improved absorptive capacity promotes opportunity recognition and new product concept creation, and ultimately achieves a competitive advantage.