Intellectual capital-based innovation planning: empirical studies using wiNK model
| Published date | 11 July 2016 |
| Pages | 553-569 |
| DOI | https://doi.org/10.1108/JIC-12-2015-0116 |
| Date | 11 July 2016 |
| Author | Irene Y.H. Fan,Rongbin W.B. Lee |
| Subject Matter | Information & knowledge management,Knowledge management |
Intellectual capital-based
innovation planning: empirical
studies using wiNK model
Irene Y.H. Fan
IKI-SEA, Bangkok University, Bangkok, Thailand, and
Rongbin W.B. Lee
Department of Industrial and Systems Engineering,
Knowledge Management and Innovation Research Center,
The Hong Kong Polytechnic University, Hung Hom, Hong Kong
Abstract
Purpose –Innovation is essential for business growth that cannot be created by financial investment
alone but with intellectual capital (IC). IC management is critical for the organization, yet many firms
do not have proper strategies. The purpose of this paper is to present an effective planning model that
enables organizations to raise their innovation capability through strategic IC management.
Design/methodology/approach –Two R&D groups in an information and communication
technology organization are examined with an IC-based complex system model (wiNK model).
The model includes a descriptive part that determines the current IC state of the group and a
prescriptive part that identifies the IC strategies for optimal innovation performance.
Findings –This paper demonstrated that the wiNK model is an easy-to-use prescriptive tool using IC
to optimize innovation performance.
Research limitations/implications –The IC state of an organization is dynamic and changing.
Regular IC examinations are necessary to track its changes.
Practical implications –This IC-based model can be applied individually without benchmarking
with other organizations. The IC location map can be documented as an organization DNA profile for
the organization. The tracking of the continuous and dynamic changes is beneficial to the organization
and its stakeholders. It can be served as both planning and evaluation tools.
Originality/value –This study offers a systemic approach to the interdisciplinary study of
organizational behavior and innovation with a pioneering use of an IC framework. It contributes to the
field of innovation management with a new attempt of its kind to integrate management research and
mathematical simulation model.
Keywords Innovation, Intellectual capital, Complexity theory
Paper type Research paper
1. Introduction
Innovation has beenidentified as the driving force for valuecreation (Schumpeter, 1976)
and future survival of an organization (Terziovski, 2007). Peter Drucker (1985, p. 25)
defined Innovation as “the specific instrument of entrepreneurship […] the act that
endows resources with a new capacity to create wealth.”There is a growing awareness
that competitive advantage and sustainability is directly linked to the learning and
innovation capabilities of organizations. As distinguished from invention, innovation is
systemic. Developing systemic innovation capability is the key element of growth in
enterprises. Firms and organizations compete on the underlying capabilities that make
the products and services sustainable. Innovation can be brought about in an
organization and be embedded in the business process, management philosophy and
culture of the organization, as an asset that an organization can cultivate and manage.
Journal of Intellectual Capital
Vol. 17 No. 3, 2016
pp. 553-569
©Emerald Group Publis hing Limited
1469-1930
DOI 10.1108/JIC-12-2015-0116
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
553
Intellectual
capital-based
innovation
planning
Innovations cannot be created by financial investment alone but leverage on
intangible assets (Lev, 2001), also known as the intellectual capital (IC). IC has long been
recognized as a source of innovation. A systemic view of the fundamental impacting
factors interactingtogether in a complex, dynamic world is essentialbut lacking. Studies
on the relationship between IC stocks and flows are scarce (Al-Laham et al.,2011;
Andreous and Bontis, 2007; Vargas and Lloria, 2014). Stocks of IC refers to the
intangibles thatare listed and recorded in a company, andthe flow relates to the sharing
and diffusion of knowledge and know-how amongthe stakeholders. Investigation of the
link between IC and innovation capability lead to the firm performance is a challenge
demands more empirical research (Wu and Sivalogathasan, 2013).Research in analyzing
the relationship between the IC in a complex manner is absent. Therefore, it is necessary
to identify the critical factors and their interacting relationship in order to provide a
comprehensive understanding of the overall contribution to innovation.
Calabrese et al. (2013) pointed out that IC management is a fundamental factor for
organizational competitive advantage, yet many firms fail to balance IC investments.
Balancing does not mean even distribution of financial or resources allocation in
various aspects of IC. It requires knowledge of the current IC status of the organization,
and intelligence to strategize an IC development plan so that the combination of IC
characteristics of the organization will benefit innovation performance and hence
company competitiveness. IC is a complex representation of the organizational DNA
(Neilson and Fernandes, 2008; Govindarajan and Trimble, 2005). The combination and
interaction of different genes (described as elements in human capital (HC), structural
capital (SC), and relational capital (RC)) form a unique characteristic for each
organization. Such nature of the firm can be called intellectual capital complexity (ICC)
(Dumay and Cuganesan, 2011; Fan and Lee, 2012). Since each firm has different
characters, the best way to achieve innovation performance leveraging their ICC can be
very different. Methods that work for a company may not benefit most to another
one. Best practices and benchmarking that commonly used in management field
assume orderly condition and static climate.
Innovation, however, happens at the “edge of chaos”in the domain of complexity.
The firm and its environment change dynamically. Calabrese et al. (2013) proposed a
benchmarking method that compares a target company with the average of the IC
configurationof best practices belonging to the same industry.We applaud their effort in
promoting IC management planning whichis addressed as the third stage of IC research
(Guthrie et al., 2012;Mouritsen, 2006; Cuganesan and Dumay,2009). However, as Dumay
(2012, p. 4) pointed out that “managers should attempt to better understand the possible
causal relationships between their people, processes and stakeholders (HC, SC, and RC)
rather than adopting someone else’s mousetrap.”It is crucial to understand the unique
characteristics of the target company to plan a strategy that fit. The dynamic and
complex nature of IC and innovation should be taken into consideration.
In this paper, the wiNK model is applied to two R&D groups in an information and
communication technology (ICT) organization for the IC investigation as well as
innovation planning. Section 2 describes the complexity of IC and prior research in this
area. In Section 3, a brief description of the IC planning method and wiNK model are
presented. It is shown that even within same organization different groups exhibit
different ICC characteristics; hence require different strategy planning for IC
development for innovation. The empirical studies of two groups of an R&D
organization and the findings are reported in Section 4. Finally, the management
implication, limitation and future development of the model are discussed in Section 5.
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JIC
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