This paper studies how absorptive capacity at country and at firm level affects international technology transfer in the 25 transition economies using data from the Business Environment and Enterprise Performance Survey. We use firm specific measure of access to foreign technology (foreign ownership, supplying MNEs and exporting) and measures of absorptive capacity (investment in R&D, provision of formal training and workforce education) which are closely related to the concept of absorptive capacity, less prone to measurement error and more informative from a policy perspective than productivity gap measures frequently used in previous studies. It also examines the impact of both firm and country level absorptive capacity on technology transfer. Our main results suggest that access to foreign technology and absorptive capacity are associated with higher productivity, but, contrary to our hypothesis, there is no evidence of an interaction effect between absorptive capacity at country or firm level and access to foreign technology. We also find evidence that firms that have high levels of absorptive capacity, especially in terms of workforce education, are significantly more likely to be foreign-owned, to supply MNEs and to export.