Intellectual capital and service quality within the mobile telecommunications sector of Egypt
| DOI | https://doi.org/10.1108/JIC-07-2019-0180 |
| Pages | 1185-1208 |
| Published date | 04 July 2020 |
| Date | 04 July 2020 |
| Author | Abd-Elrahman Hassanein Abd-Elrahman,Azza Abd-Elqader El-Borsaly,Eglal Abd-Elmoneim Hafez,Sally Ali Hassan |
| Subject Matter | Accounting & Finance,Behavioural accounting,Knowledge management,Organizational structure/dynamics,HR & organizational behaviour |
Intellectual capital and service
quality within the mobile
telecommunications sector
of Egypt
Abd-Elrahman Hassanein Abd-Elrahman
Faculty of Commerce, Ain Shams University, Cairo, Egypt, and
Azza Abd-Elqader El-Borsaly, Eglal Abd-Elmoneim Hafez and
Sally Ali Hassan
Faculty of Commerce, Department of Business Administration,
Ain Shams University, Cairo, Egypt
Abstract
Purpose –The purpose of this paper is to empirically investigate the relationship between intellectual capital
(IC) (i.e. human capital, structural capital, relational capital) and service quality (SQ) within the Egyptian mobile
telecommunications setting.
Design/methodology/approach –A valid research instrument was utilized to conduct a survey of 384top-
middle- and supervisory level managers from three Egyptian mobile telecommunications companies.
Findings –Hypotheses related to the relationship of human, structural and relational capital and their
influence on SQ were tested. Results show that Egyptian mobile telecommunications companies have mostly
emphasized the use of structural capital to boost their SQ.
Research limitations/implications –This is an empirical research applied in the Egyptian
telecommunications setting. Its relationships need further investigation in other settings and countries.
Also, the traditional limitations of across-sectional study apply with respect to the attribution of causality and
the time lag effects.
Practical implications –The optimal procedure for the Egyptian mobile telecommunications companies is
to focus their efforts on managing all three components of IC in order to improve their SQ and performance.
Originality/value –This is one of the very few researches to study the relationship between intellectual
capital and service quality and the first to investigate these relationships in the Arab Region withinthe mobile
telecommunications setting.
Keywords Intellectual capital, Service quality, Telecommunications, Egyptian mobile telecommunications
companies, Egypt
Paper type Research paper
Introduction
The pattern of global economic growth has fundamentally changed since the 1970s with the
rapid development of high technology, especially in communication, computer and biology
engineering. Knowledge thereupon has taken the place of monetary capital, land, and
material capital as the most important capital, especially in the competitive high-tech realm
(Chen et al., 2004). “In contrast to tangible resources which tend to depreciate when they are
used, knowledge grows when used and depreciates when not used”(Sveiby, 1997, p. 23).
Nowadays, the value creation of an organization is extensively the result of its intangible
resources and knowledge capabilities, i.e. IC (Stewart, 1997). Edvinsson and Malone (1997)
assumed that the corporate value generated by intellectual assets obviouslyoutweigh that of
the tangibles,and the World Bank (2005)reported that 77% of the totalglobal wealth stem from
intangibles.There is a widespread recognition that IC, facingintense globalized competition,is
a criticalforce that drives economic growth(Sharabati et al., 2010).Lynch et al. (2009) suggested
a general framework of strategy that distinguishes three main fields that every organization
IC and SQ in
mobile tele-
communications
1185
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1469-1930.htm
Received 27 July 2019
Revised 25 November 2019
25 January 2020
31 March 2020
Accepted 22 May 2020
Journal of Intellectual Capital
Vol. 21 No. 6, 2020
pp. 1185-1208
© Emerald Publishing Limited
1469-1930
DOI 10.1108/JIC-07-2019-0180
has to manage in order to succeed: the firm’s internal resources; the external environment
within whichthe firm operates; and the firm’sability to add value to whatit does. IC theory fits
well within this general framework of strategy, and it is clear that the three strategy
management areasare fully covered by the IC key components. Human capitaland structural
capital represent in practice the firm’s internal resources; relational capital represents the
environment, and last but not least, the interactions of human capital, structural capital and
relational capitalrepresent the ability to generate economic value.
Although IC may be a source of competitive advantage, generally speaking, most
organizations do not understand its nature and value (Sharabati et al., 2010). Nevertheless,
many research studies have addressed the issue of the relevance of IC and how it can
contribute to improve business performance and create value for organizations (Alrowwad
et al., 2020;Molodchik et al., 2019;Bontis et al., 2018;Andreeva and Garanina, 2016;Inkinen,
2015). The exploitation of knowledge resources is increasingly found out to be the source of a
company’s cumulative growth (Gonz
alez-Loureiro and Dorrego, 2012) and sustainable ability
to compete and succeed in the modern knowledge economy (Kamukama et al., 2011;
Stewart, 1997).
Moreover, some research studies have assumed that IC has a positive impact on a
company’s innovation capability and innovation performance (Delgado-Verde et al., 2011). At
the same time, Castro et al. (2013) stated that the creative, skilful and experienced employees,
together with the company’s customer networks, lead to a high number of product
innovations. Actually, a huge conceptual and empirical literature has argued that there is a
positive relationship between IC and different aspects of organizational performance (e.g.
Ling, 2013;Bollen et al., 2005).
SQ is considered a critical element of organizational performance and a leading indicator
of organizational effectiveness (Abd-Elrahman, 2012;Zeithaml et al., 1996;Berry et al., 1989).
However, very few research studies examined the effect of IC on SQ (Longoni and Luzzini,
2016;Kamukama, 2013). The primary stimulus behind this research stems from the evidence
that firm success is substantially determined by the ability to focus on and satisfy customers’
needs and meet their requirements and expectations. Within this perspective, IC has been
identified as being essential for generating value, improving SQ and achieving competitive
advantage (Kamukama, 2013;Kamukama et al., 2011). According to Messo and Smith (2000),
sustained competitive advantage and superior SQ pertain to strategic assets (IC), which are
internally controlled and strategic to the firm. These are, therefore, resources and capabilities
that are valuable, rare, costly to imitate, and nonsubstitutable, which help firms to provide
services that are above customers’expectations.
The aim of this research is to investigate the impact of IC elements on SQ, in order to see if
this link can explain IC activity within the Egyptian mobile telecommunications setting. It is
considered the first research in the Arab Region that tries to measure these constructs and
investigate their relationship in this very important setting. Accordingly, this research is an
addition to the IC-SQ literature that tries to examine the aspects of this relationship in a very
important sector of mobile telecommunications.
Literature review
Intellectual capital
The main concepts and definitions of IC have been broadly studied by researchers and
scholars. The first large wave of IC research started in the late 1990s with several authors’
contributions. As a result, IC was defined asthe set of all the competences and knowledge that
can form the sustained competitive advantage of a company (Stewart, 1997). This implies that
IC comprises intellectual property, intellectual material, customer relationships, experience,
knowledge, information and core techniques that can be used to make a company rich
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