Absorptive capacity is frequently an outcome of a firm’s cumulatively path-dependent R&D investments. However, the query how absorptive capacity transforms R&D investment into firm innovation, in the context of autonomous R&D climate remains unclear. Using 165 firms in the Taiwan’s information and communication technology industry, the results indicate that absorptive capacity partially mediates the relationship between R&D investment and firm innovation. Absorptive capacity accounts for 36% effects of R&D investment on firm innovation. The result also shows a negative moderating effect of R&D autonomy on the relationship between absorptive capacity and firm innovation.