 The purpose of this research was to explore how cognitive proximity affects the innovative performance of firms. It also looked at the mediating role of potential and realized absorptive capacity in this relationship. An empirical analysis was conducted using PLSSEM, which showed that cognitive proximity had both a direct and indirect impact on innovative performance. Cognitive proximity enabled firms to understand and establish positive relationships with other companies, which helped them to be more innovative. However, firms needed to have high levels of absorptive capacity to fully benefit from these relationships. This research suggests that firms should focus on developing their absorptive capacity if they want to maximize the benefits of cognitive proximity. This article was authored by Eduardo Sanchez Garcia, Javier Martinez-Falco, Bartolome Marcela Jara, and others.