Does intellectual capital allow improving innovation performance? A quantitative analysis in the SME context
| DOI | https://doi.org/10.1108/JIC-05-2016-0056 |
| Date | 10 April 2017 |
| Pages | 400-418 |
| Published date | 10 April 2017 |
| Author | Lara Agostini,Anna Nosella,Roberto Filippini |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & Finance,Accounting/accountancy,Behavioural accounting |
Does intellectual capital allow
improving innovation
performance? A quantitative
analysis in the SME context
Lara Agostini, Anna Nosella and Roberto Filippini
Department of Management and Engineering,
University of Padua, Vicenza, Italy
Abstract
Purpose –The purpose of this paper is to investigate the association between the strength of intellectual
capital (IC) and small- and medium-sized enterprise (SME) innovation performance.
Design/methodology/approach –Primary data of 150 SMEs belonging to manufacturing medium-high
tech industries were collected through a survey. The methodology consists of a confirmatory factor analysis
and a cluster analysis, complemented by a t-test, to assess whether there is a significant difference in terms of
innovation performance of SMEs characterized by a different strength of IC.
Findings –Overall, the findings show that SMEs of the sample can be divided into two groups characterized
by a different strength of IC, and those SMEs disclosing a higher strength of IC, in terms of human
capital, innovation capital and relational capital, exhibit a significantly higher radical and incremental
innovation performance.
Practical implications –The present study provi des SME entrepreneurs a nd managers with an
empirical evidence that possessing strong IC in its three dimensions seems to help SMEs reinforce their
ability to generate both radical and incremental innovation. This calls that SME entrepreneurs and
managers need to ident ify and effectively manage IC in order to st rengthen and effectively leverage th eir
investments on IC.
Originality/value –This study is particularly relevant because, instead of focusing on single categories of
IC as previous studies mainly do, it adopts an overarching perspective of the dimensions of IC and their
impact on both radical and incremental innovation performance. Moreover, it focuses on the SME context
which has been less investigated than large firms within the domain of IC.
Keywords Innovation, Human capital, Structural capital, Intellectual capital,
Small to medium sized enterprises, Relationship capital
Paper type Research paper
1. Introduction
The business model that dominates today’s economy is based on the use of intangible
resources, whose value for the firm in many cases is much greater than the value of its
tangible assets (Cohen and Kaimenakis, 2007).
More particularly,intellectual capital(IC) is recognized as an increasingly importantsource
of value creation (Curado et al., 2011; Schiuma et al., 2012) and authors (e.g. Yitmen, 2011)
agree that thefirm’s organizational capabilityto innovate is related to its IC. IC can be defined
as the combination of the human, organizational and relational resources and activitiesof an
organization; thus including the knowledge, skills, experiences and abilities of the
employees, the organizational routines, procedures, systems, databases of the company,
and all resourceslinked to the external relationshipsof the enterprise, such as with customers,
suppliers, R&D partners, etc. (María Díez et al., 2010).
Although the literature has expanded on this topic, the field of IC has always been
dominated by large firms, and little has been done in exploring IC in small- and medium-sized
Journal of Intellectual Capital
Vol. 18 No. 2, 2017
pp. 400-418
© Emerald PublishingLimited
1469-1930
DOI 10.1108/JIC-05-2016-0056
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
Funding for this research was provided by the Research Project of the University of Padova, 2014
(code: prot. CPDA140710).
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JIC
18,2
enterprise (SME). However, recently, some studies have shown a positive impact of certain IC
categories on economic performance (e.g. Ya-Hui, 2013), while a few others report a positive
relationship among IC, competitiveness, and innovation performance in specific industries, such
as construction (e.g. Yitmen, 2011). Beyond that, there is a group of authors (e.g. Steenkamp and
Kashyap, 2010), who support the view that competitive advantage and innovation capabilities
are usually based on IC for SMEs also.
Within this context, this paper aims to contribute to the body of literature of IC in the
SME context by responding to the call for research investigating whether the components of
IC influence SMEs’performance and which specific performance dimensions are affected
(Wu et al., 2007; St-Pierre and Audet, 2011).
More specifically, the purpose of this paper is to analyze whether there is a significant
difference in terms of innovation performance between groups of SMEs reporting a different
strength of IC. Based on a survey data collected on a sample of Italian SMEs belonging to
the machinery industry, our results show that firms characterized by a higher strength of IC
exhibit significantly better performance in terms of both radical and incremental innovation,
which reveals interesting implications both for theory and practice.
The originality of this paper consists in adopting an overarching perspective on the
association between IC and both radical and incremental innovation performance. Moreover,
it focuses on the SME context that, as anticipated, has been less investigated than large
firms within the domain of IC.
The paper is organized as follows: first, a literature review of the topic is provided and
then, after describing the methodology, results are presented and discussed.
2. Literature review
Over the last decade, both academic research and managerial practice have shown a
growing interest in the field of IC. Within the domain of IC, authors (e.g. Yitmen, 2011)
generally agree that they can be distinguished into three main categories: human
capital, organizational capital, and relational capital. Human capital is defined as an
“organization’s combined human capability for solving business problems”(Bontis, 2001).
These assets are mobile, and they cannot be owned by organizations. Therefore,
human capital includes how effectively an organization uses its human resources as
measured by, for example, creativity, experience, and learning from each other (Bontis, 2001;
Seetharaman et al., 2004). Organizational capital, which consists of all the non-human
storehouses of knowledge in organizations, belongs to the organization itself. It can also be
defined as the value of “what remains in the company when employees go home for the
night”(Stewart, 1997; Roos et al., 1998; Bontis et al., 2000; Curado, 2008). Some authors
(e.g. Wang and Chang, 2005) distinguish between process capital and innovation capital:
the former represents the firm ability to formalize its activities and processes, the role and
responsibilities of employees, whereas the latter encompasses the set of technologies,
processes, and methods the firm owns (Cañibano et al., 2000). Recent research highlights
that innovation capital is the newest kind of capital which plays a pivotal role in a
drastically changing world such as the one that we inhabit today (Wu et al., 2010). For this
reason, and considering the specific focus on innovation performance of the present paper,
we focus on this aspect of organizational capital.
Finally, relational capital is made up of the relations with partners (customers, suppliers, etc.)
outside the firm, but also of any other relational resources, such as reputation, brand,
and loyalty (Sveiby, 1997; Bontis, 1999; Løwendahl, 2005). Hill and Jones (2001) note
that external actors often provide the organization with important resources and capabilities,
for example, customers provide income, suppliers provide raw materials, and distributors
provide sales channels.
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Improving
innovation
performance
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