The impact of intellectual capital on innovation generation and adoption
| Published date | 10 October 2016 |
| Date | 10 October 2016 |
| Pages | 675-695 |
| DOI | https://doi.org/10.1108/JIC-04-2016-0047 |
| Author | Mir Dost,Yuosre F. Badir,Zeeshan Ali,Adeel Tariq |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & Finance,Accounting/accountancy,Behavioural accounting |
The impact of intellectual
capital on innovation
generation and adoption
Mir Dost, Yuosre F. Badir, Zeeshan Ali and Adeel Tariq
School of Management, Asian Institute of Technology, Pathumthani, Thailand
Abstract
Purpose –The purposeof this paper is to measure the separateand interrelated effects of threeaspects
of intellectual capital (human, social and organizational capital)on innovation generation and adoption.
Design/methodology/approach –Data were collected from 318 respondents’of chemical firms.
This study used multiple regression analysis to analyze the influence of human, organizational and
social capital on innovation generation and adoption.
Findings –Results suggest that organizational capital exerts significantly positive impact on
innovation adoption. In the same vein, social capital exerts significantly positive impact on both
innovation generation and adoption. Moreover, interaction of social capital further strengthens the
influence of organizational capital on innovation adoption. Contrary to hypotheses, human capital does
not exert significant influence on innovation generation. However, interaction of social capital further
strengthens the impact of human capital on innovation generation.
Practical implications –Findings offer implications for modern managers to utilize the knowledge
that resides in firm’s different locations. It also enhances managerial ability to identify and apply these
knowledge resources to expedite innovation generation and adoption.
Originality/value –Innovation generation and adoption plays a critical role in firm’s acquiring
success and competitive advantage, yet the influence of intellectual capital on innovation generation
and adoption mostly remains as unexplained puzzle. This study contributes to knowledge-innovation
literature by examining the missing link between different types of knowledge and innovation
generation and adoption. It also helps to comprehend the enabling factors through which firms
capitalize upon, and obtain, a sustainable competitive advantage.
Keywords Social capital, Innovation adoption, Intellectual capital, Human capital,
Organizational capital, Innovation generation
Paper type Research paper
Introduction
Innovation is an important determinant of organizational success and a firm’s ability to
sustain a competitive advantage (Rhee et al., 2010). In this context, knowledge is a more
critical resource than other traditional resources, such as fixed or hard assets, when it
comes to achieving a competitive advantage (Quinn et al., 2005; Carmona-Lavado et al.,
2010). This is why research on innovation is shifting towards a focus on the roles that
knowledge, or intellectual capital, can play as critical antecedents to innovation
(Subramaniam and Youndt, 2005).
Intellectual capital describes the intangible assets of an organization (Bueno et al., 2004;
Bontis et al., 2005a; Petty and Guthrie, 2000), that helps organizations to achieve
sustainable success (Youndt et al., 2004; Subramaniam and Youndt, 2005), corporate
performance (Firer and Mitchell Williams, 2003; Riahi-Belkaoui, 2003; Wei Kiong Ting and
Hooi Lean, 2009; Clarke et al., 2011). This research considers three aspects of intellectual
capital –human capital; social capital; and organizational capital (Davenport and Prusak,
1998; Nahapiet and Ghoshal, 1998; Schultz, 1961; Subramaniam and Venkatraman, 2001).
Each one has distinct characteristics. For example, human capital refers to individuals in a
Journal of Intellectual Capital
Vol. 17 No. 4, 2016
pp. 675-695
©Emerald Group Publis hing Limited
1469-1930
DOI 10.1108/JIC-04-2016-0047
The current issue and full text archive of this journal is available on Emerald Insight at:
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675
Intellectual
capital
firm who apply their knowledge, skills and capabilities to act in new ways
(Coleman, 1988). Social capital is an outcome of the interaction and collaboration among
individuals who share their ideas (Wright et al., 2001; Subramaniam and Youndt, 2005;
Carmona-Lavado et al., 2010). Organizational capital indicates the experience and tacit
knowledge of an organization that exists in the form of manuals, structures and databases
of an organization (Subramaniam and Youndt, 2005; Youndt et al.,2004).
Although the construct of intellectualcapital has been labeled as the driving factor of
the firm’s successand competitiveness, yet literature falls short to measure the impact of
different aspects of intellectual capital (Bontis et al., 2005b) on innovation. According to
Subramaniam and Youndt (2005), the impact of intellectual capital on innovation is
accepted in a broad manner, but still there is a need of an in-depth exploration of this
impact. For instance,innovation management research concentrates on different degrees
(incremental vs radical), types (productvs process) and sources (generation vs adoption).
Each degree, type, or source has different antecedents (Murat Ar and Baki, 2011), and
each leads to distinct outcomes (Subramaniam and Youndt, 2005; Atuahene-Gima and
Murray, 2007). Consequently, studies on innovation have not produced consistent
outcomes and our knowledge is limited regarding the antecedents of innovation and its
consistent outcomes (Damanpour and Daniel Wischnevsky, 2006). In order to minimize
this knowledge gap, recently Pérez-Luno et al. (2014), propose conducting of further
research by measuring the separate impact of the aspects of intellectual capital on
generation and adoption of innovation. Responding their call, this research investigates
the separate andinterrelated impact of the aspectsof intellectual capital –humancapital,
social capital and organizational capital.
Organizationscan generate and adopt innovation (Pérez-Luño et al., 2011; Damanpour
and Daniel Wischnevsky, 2006). Generationof innovation refers to changesmade into the
existing products, processes, services or technology which are new to the market and
generating firm whereas adoption of innovation refers to the changes only new to the
adopting organization (Dewar and Dutton, 1986; Pérez-Luño et al.,2011).Eachtypeof
innovation has distinct outcomes for the organization. For example, the generation of
innovation can lead to more market competitiveness by scanning new opportunities in
the market or by taking advantage of existing marketopportunities (Drucker, 1984). The
adoption of innovation can help firms to overcome performance gaps and deficiencies,
and it can also help the firm exploit new opportunities (Premkumar and Potter, 1995).
It is critical to understand the separate and interrelated impact of the aspects of
intellectual capital –human capital, social capital and organizational capital –on
generation and adoption of innovation for the following reasons: first, it is important to
comprehend the differences between innovation and the generation and adoption of
innovation in particular, and how different types of knowledge –human, social and
organizational –affect the ways in which a firm decides to generate their own and/or
adopt the innovations of the others. Second, the generation and adoption of innovation
might be the reasons behind a firm’s competitive advantage; therefore, a better
understanding of the impact of different types of knowledge on generation and
adoption of innovation will lead to a greater understanding of the enabling factors
through which firms capitalize upon, and obtain, a sustainable competitive advantage.
Literature review
Human capital
Among the elements of intellectual capital, human capital is the most fundamental
(Bontis et al., 2005a). It refers to the economic value of the skills, experience and
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