Background: There is a talent mismatch in Sweden. Companies are limited by a labour shortage, especially in the digital sector, and available talent has a low rate of hiring. Therefore, this study is focused on understanding the underlying reasons for this talent mismatch understanding it from an absorptive capacity process of knowledge and diversity in the digital sector. This research structure approaches this study by investigating the attraction, recruitment, development, and retention of talent in companies through an absorptive capacity lens.

Aim: Broadening the understanding of why there is a mismatch between available talent and firms in Sweden.

Methodology: A qualitative study method was done for the data collection and data analysis. Two clusters were created to explore the research process divided into companies and students. A proposed model was utilised to analyse the data and provide the results that confirmed different factors of the absorptive capacity process and the influence of diversity that serve to identify new findings. The thesis demonstrates that the absorptive capacity process can positively or negatively affect the influence of diversity in organisations. The factors that lead to these different outcomes are described in the various phases portrayed by the proposed model. However, the absorptive capacity process describes how people, in general, are retained in organisations and how the sense of belonging to the organisations is fundamental for a positive absorptive capacity process that leads to talent retention.

Findings: Diversity related mechanisms that influence a match or mismatch between available talent and organisations.

Keywords: Absorptive capacity process · Diversity · Employee life cycle · Knowledge integration· Science Parks