Multidimensional View of Intellectual Capital

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1		Mostafa Abdulkareem Ali	--	1778	2023-03-10 08:26:27	\|
2	format correction	Dean Liu	-4 word(s)	1774	2023-03-13 01:59:11	\|

This entry is adapted from the peer-reviewed paper 10.3390/jrfm16030139

Examining the past state of the art in the intellectual capital sector for achieving high levels of innovation performance provided a multidimensional picture of intellectual capital, innovation performance, and dynamic capabilities.

intellectual capital innovation performance dynamic capabilities

1. Culture

Organisational culture was initially recognised by (Peters and Waterman 1982) as a precursor to success and greatness. As a result of studying the knowledge of the most successful organisations, they came to this conclusion. Therefore, (Henri 2006) stated that “The best companies have a very strong culture, so powerful that you can only stay if you buy into their conventions. Most employees in the best organisations can’t find a middle ground” (p. 11). A strong organisation culture is based on a set of fundamental beliefs, traditions, symbols, rituals, and unwritten norms to which all workers are expected to abide. Organisations that develop their identity by emphasising ideals, heroes, rituals, and cultural connections may also have a secret weapon lying dormant in their arsenals (Dombrowski et al. 2007).

In a study which set out to determine the organisational culture, (Stewart 1997) considered the employees’ capital as the resources of the organisational cultures and innovations. This capital can possibly be developed by considering the ideas and suggestions of the employees for the improvements of the business. The cultural factor determines the course of actions of an institution and foresees its progress (Kim and Chang 2019). According to (Berezinets et al. 2016), strong social networking being significant for the innovations can help to gain and maintain the flexibility, acting as the performance indicator. In brief, the supportive cultures are constructive due to their encouraging nature for the positive emotion that motivates the innovation performance (Berson et al. 2008).

2. Trust

The issue of organisational trust has been the primary focus of study in management studies in general, and in organisational behaviour studies in particular (Chow and Chan 2008). This is owing to the importance of the issue and its direct interaction with a wide variety of organisational factors that impact an organisation’s performance and development, as well as its capacity to fulfil its objectives successfully (Sadq et al. 2020). Thus, trust is defined as an individual’s belief in the organisation’s goals, choices, and policies, which reflects the individual’s contentment and commitment to the organisation (Cheng et al. 2020). Previous surveys suggested that an organisation could not function without trust among its employees, and managers cannot overlook the importance of trust in the business (Ashrafi et al. 2020). Thus, organisational trust is a critical component for the expansion of human property among organisations and lenders, organisations and producers, customers, and internal trustees (Ahmed et al. 2019).

Numerous definitions exist for trusting a person, products/services, or organisations (Chow and Chan 2008). These can subjectively be regarded as general shared views, implying the informant make-up of the personal generalisations (Asiaei and Jusoh 2015). Therefore, the trust factor was mainly based on simplistic/common generalisations and faiths. The existing literature reports seldom addressed the establishment of such empirical generalisations. Mutual relationships are the significant constituents to develop the emotional capacities in teamwork, thereby relating to improved trust and performance (Paliszkiewicz and Koohang 2013). In this context, (Gu et al. 2014) argued that trust and collaborative associations among group members could promote much better innovation performance. To summarize, trust is essential for inter-organisational collaboration and cooperation (Dumay et al. 2019).

3. Human Capital

Value in today’s world, and especially in the knowledge-based economy, is largely focused on the quality of human capital (Cuozzo et al. 2017). Moreover, Human capital has been suggested to be the most important factor in an organization’s value generation (Osorio et al. 2015). Human stocks such as skills, attributes, and competences have been the focus of previous research on human capital. Human capital may be thought of as the intangible assets that have dominated debates in the field of accounting for the better part of two decades. Intangible assets have presented several difficulties for governments, organisations, and regulatory agencies (Hammad Ahmad Khan et al. 2016). According to (Hsu and Wang 2012), employee equity, safety, relations, and wellbeing are all aspects of human capital that should be developed and nurtured. Human capital has been defined in several ways; for example, (Daou et al. 2014) it is all the knowledge, productivity, skills, values, expert networks, and professional teams that an organisation has.

In this context, (Massaro et al. 2015) stated that the human capital could be formed by the talents, competencies, experiences and skills of the internal members of an organisation. In addition, the human resources are crucial for the creation of human capital because the organisations do not create knowledge otherwise (Isanzu 2017). Thus, the organisations can increase their human capital by attracting individuals with high skills from the external labour market and via the internal development of the skills of their current members (Berezinets et al. 2016). However, (Palazzi et al. 2020) asserted that an organisation with a high human capital in terms of education or skills is likely to have better entrepreneurial judgment. It was inferred that as long as human capital continues developing, the employees can improve their job performance and eventually enhance the performance of the organisation (Massaro et al. 2015). Based on the aforementioned facts, it can be concluded that the human capital forms the heart of the intellectual capital.

4. Structural Capital

For the purposes of this article, “structural capital” will be taken to mean the “systems and configurations of an organisation that enable to build up greater productivity of the personnel,” as described by (Slaðana Cabrilo and Dahms 2018). In addition, The infrastructure assets and the codified information (such records, databases, and intellectual property rights) that shape up the framework of the organisation for future sustenance are both included in the structural capital (Buenechea-Elberdin 2017). This research basically linked the ideas of network characteristics and standardised information dissemination inside an organisation to the concept of structural capital (Khalique et al. 2018). However, as pointed out by (Kaya and Erkut 2017) structural capital is the means to add efficiency to human capital in order to accomplish organisational performance since it owns intellectual property, which is crucial to the growth of any organisation.

In effect, structural capital equips human capital with means to pursue novel possibilities (Chowdhury et al. 2018). The expression of human capital in an organization’s operations is facilitated by its unique culture, which in turn is largely due to its structural capital (Hammad Ahmad Khan et al. 2016). When an organization’s employees have access to a centralised database of useful information, called the “knowledge directory,” their talents can grow to their full potential (Turner et al. 2013). Information flows that underpin established structures and processes, as stated by (Vladu et al. 2017). They are expected to adhere to predetermined standards. As a result, there is a build-up of knowledge that is fundamental to structural capital but which must be used in a predetermined fashion by (Budiarti 2017). Yet again, structural capital provides an environment that enables the organisations to create and leverage knowledge (Benevene et al. 2017). Conversely, an organisation with a strong structural capital has a supportive culture that encourages its employees to try to learn new knowledge, thereby moving many steps ahead towards improved performance (Xu and Wang 2018).

5. Relational Capital

The ability of an organisation to maintain a positive affiliation/union network with its partners is referred to as its “relational capital” (Bogdan et al. 2017). Another definition of relational capital is the intangible assets based on the formation, maintenance, and promotion of high-quality connections with any firm, people, or group that affects the organization (Hsu and Wang 2012). Such capital arises when workers share their insights and experiences with one another inside an organization (Elsetouhi et al. 2015), fuelling a cycle of ongoing adaptation and development (Lamond et al. 2010). Based on the aforementioned facts, (Sladjana Cabrilo et al. 2018) draw on this background to define relational capital as the integration of all the relationships within an organisation, which can include internal relations between management and employees and between employees, as well as external relations with stakeholders such as customers, suppliers, and research and development bodies, as well as the government.

In the healthcare and pharmaceutical industries, relational capital is most valuable when it is used to successfully implement and manage programmers that ensure patients make a full recovery (Lardo et al. 2017). What this means is that the medical centre will lose relational capital when patients become dissatisfied with the therapy and abandon it owing to its length and the unpleasantness of its side effects. It is possible that the resources that might be used through the connections under evaluation have quite different features of relational capital (Černe and Etinger 2017). Improvements in the organization’s relational capital reflect the calibre of its members and the depth of communication between them (Bontis et al. 2018). Multiple relational capital studies have concluded that companies benefit from actively engaging their most loyal consumers (Al-Jinini et al. 2019). These considerations led to the study’s hypothesis that relational capital has a beneficial effect on innovation performance.

6. Social Capital

The term “social capital” is used to describe a resource that helps keep communities safe while also giving businesses more say in their operations (Allameh 2018). Another definition of social capital offered by (Nahapiet and Ghoshal 1998) that “it is the sum of the real and potential resources inherent within, available via, and derived from the network of relationships owned by an individual or social unit” (p. 13). Additionally, the term “social capital” is used to describe the aggregate of real and potential assets linked to the set of interpersonal ties represented by a given social unit (Salicru and Perryer 2007). According to a number of studies, social capital is crucial to any business’s ability to thrive in today’s cutthroat marketplace (Bolino et al. 2002; Shipilov and Danis 2006). Knowledge sharing, competitive advantage enhancement, organisational performance enhancement, value generation, and general organisational growth are all aided by a healthy dose of social capital (Ibrahim 2019; Stacchezzini et al. 2019). A variety of models have been created to describe the organisational idea of social capital and its many facets (Manes Rossi et al. 2016).

Researchers have shown that an organization’s social capital grows when members share tacit and explicit information with one another through a variety of internal networks, leading to increased innovation and competitive advantage (Nevado et al. 2018). In order to build norms and values inside an organisation that promote healthy interactions, encourage the extension of connections, and increase partnerships among employees, it is essential to invest heavily in the development of the organization’s social capital (Christensen and Kowalczyk 2017). Several studies have found that firms with high levels of social capital have higher rates of innovation (Asiaei et al. 2020). To facilitate communication and cooperation among employees and with external communities and enterprises, social capital is essential (García Lirios 2020).

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