The term `absorptive capacity' (Cohen and Levinthal, 1990), which describes the ability to assimilate new knowledge and skills, has been widely adopted in the study of collaborative links between is used to examine the process by which participation in a Teaching Company Scheme (now know as TCS) helped develop managerial capabilities in a small manufacturing cnmopany over a two-year period. RSL is a family-owned business which has been in existence for forty years, has approximately 70 employees, and manufactures office supply equipment. It is concluded that improving absorptive capacity requires the introduction of new organisational routines which help codify tacit knowledge. Within RSL, such changes helped increase turnover by almost 25% during the two years the TCS programme was in operation.
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