Article

Influence of Intellectual Capital in the Organizational Innovation

Abstract and Figures

corporate bodies or institutions have used the knowledge management structure, thereby utilising the system approach in knowledge management systems (KMS) to better achieve their aim and objectives. This reflects an improvement and performance of business processes, because KMS is the discipline of enabling indi viduals, teams, and entire organisations to collectively and systematically create and share an atmosphere of learning, applying the knowledge of growth in organisational innovation. The present study aimed at investigating the impact of dime nsions of intellectual capital (human, structural, of customers) upon organisational innovation in the companies of the study field. Consequently, the research has launched the hypothesis which confirmed that there is an impact for an intellectual capital in organisational innovation. However, to accomplis h the objectives of this study, 60 sampling forms were sent to companies, and the acceptance was impressive. 52 per cent were acknowledged, and this confirmed a good response from the companies. Furthermore, comparisons were made with experimental testing and the results were analysed. The results indicated that structural and human capital have an influence upon organisational innovation, while the rest of th e components have no moral effect. Therefore, the study has rejected the main hypothesis for research. In addition, the study has suggested an important set of recommendations that will give greater attention to customer capital, for purposeful builds of humans’ capabilities and the expansion of relations between customers should be adhered to. This is because for the companies there was a weakness in public relations with their suppliers, clients, and partners
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Abstract—corporate bodies or institutions have used the
knowledge management structure, thereby utilising the system
approach in knowledge management systems (KMS) to better
achieve their aim and objectives. This reflects an improvement
and performance of business processes, because KMS is the
discipline of enabling individuals, teams, and entire
organisations to collectively and systematically create and share
an atmosphere of learning, applying the knowledge of growth in
organisational innovation. The present study aimed at
investigating the impact of dimensions of intellectual capital
(human, structural, of customers) upon organisational
innovation in the companies of the study field. Consequently,
the research has launched the hypothesis which confirmed that
there is an impact for an intellectual capital in organisational
innovation. However, to accomplish the objectives of this study,
60 sampling forms were sent to companies, and the acceptance
was impressive. 52 per cent were acknowledged, and this
confirmed a good response from the companies. Furthermore,
comparisons were made with experimental testing and the
results were analysed. The results indicated that structural and
human capital have an influence upon organisational
innovation, while the rest of the components have no moral
effect. Therefore, the study has rejected the main hypothesis for
research. In addition, the study has suggested an important set
of recommendations that will give greater attention to customer
capital, for purposeful builds of humans’ capabilities and the
expansion of relations between customers should be adhered to.
This is because for the companies there was a weakness in
public relations with their suppliers, clients, and partners.
Index Terms—Intellectual capital, knowledge systems,
organizational innovation.
I. INTRODUCTION
Many organisations have realized the important fact that
their real value is not reflected in their materialistic capital,
but in their intellectual capital. This view has required of the
manufacturing companies the complete transformation from
present structures, perceptions and approaches in
management and organisational ambiance. One of the
approaches processing this transformation possible is the
acquired intellectual capital.
Accordingly, this research gives a primary conceptual
model for KM, intellectual capital and their role in creating
organisational capital. This view is based on the premise
which considers that the intellectual capital is nowadays a
strategic element in industrial enterprises. [1] has considered
intellectual capital as the most strategic source for the
Manuscript received February 1, 2012; revised March 19, 2012.
Mohammed A. Ahmed AL-DUJAILI is with the School of Mechanical,
Aerospace and Civil Engineering/University of Manchester, M13 9PL, UK,
(e-mail: mhammedaldujaili@yahoo.co.uk ).
companies. Consequently, this paper has discussed some
issues that are displayed in the framework).
II. INTELLECTUAL CAPITAL
The collective knowledge of employees in the companies
can be used to produce wealth. This is because intellectual
capital offers significant resources and it can be considered
non-material wealth in a broader perspective, determining its
scope and components [2]. Therefore, Stewart has defined
intellectual capital as a package from useful knowledge [3],
while Reid sees that the intellectual capital is knowledge
group, information, skills and experiences which hold the
economic value and enable growth achievement, when
applied in the industrial projects [4]. Also, Drucker has
highlighted six master factors which could help companies
enhance their knowledge productivity; task, autonomy,
continuing innovation, continuing learning, quality and
worker assets [5]. That means, intellectual capital research
can cater to changes in realisation or behaviour of individuals,
which is essential for learning and enhancement. However,
according to Plessis, the following factors are very important
in the KM: “(1) initiate action based on knowledge; (2)
support business strategy implementation; (3) become an
intelligent enterprise; (4) increase competitive advantage; (5)
create an innovative culture and environment; (6) entrench
collaboration as a work practice; and (7) ultimately improve
work efficiency” [6], as shown in Fig. 1.
Fig.1. The drivers for organisational learning and knowledge [7].
Accordingly, there were many views and propositions to
determine and give clear vision for the components of
intellectual capital. Sveiby believes that intellectual capital
consists of workers and efficiency of the internal structure of
the management, organisation and software, the organisation
culture (the external structure represented in the
benchmarking), and organisation culture and relationships
Influence of Intellectual Capital in the Organizational
Innovation
Mohammed Assi Ahmed AL-DUJAILI
International Journal of Innovation, Management and Technology, Vol. 3, No. 2, April 2012
128
with customers [8]. Devenport and Prusak have limited
intellectual capital by three sorts too: human capital,
intellectual property, and individual capital [9]. Stewart
identifies also three types of intellectual capital: human
capital, structural capital and customer capital [3]. At the
same time, Edvinsson says the main distinction is between
human capital and structural capital, which can then be
divided into organisational capital and customer capital [10].
As well, Edvinsson explains that the main differentiation is
between human capital and structural capital, which can then
be divided into organisational capital and customer capital
[10]. From the above we note the existence of a convergence
of views on the components of intellectual capital. Therefore,
the study will be based on three components (human capital,
structural capital, customer capital) as variables relied upon
in this research.
III. KNOWLEDGE MANAGEMENT SYSTEM
KM is nowadays the hottest topic. This is because
knowledge is actually “a fluid mix of framed experience,
values, contextual information, and expert insight that
provides a framework for evaluating and incorporating new
experience and information”. It “originates and is applied in
the minds of knowers” [11]. In other words, new knowledge
acquisition is indispensable in the development and
improvement of new skills in work. That is because ease of
understanding and effectiveness in learning by employees are
significant considerations for organisations in corporate
knowledge acquisition [12].
Furthermore, for many organizations, innovation is at
present a required and fundamental element of the firms’
sustainability in the marketplace. This is because it considers
significant and complex dimensions of learning in work due
to using a mix of rationale, the spontaneous processes
affecting practising communities [13], whereas according to
Liao, knowledge acquisition and creation are considered
internally in the companies as the first steps in acquiring
knowledge from the external environment to turn it into
effective action that can be applied or used within
organizations [14]. Consequently the companies must work
hard and quickly in disseminating knowledge practically in
all of its districts to create innovation among employees.
According to Puranam is believed that the organisational
learning process during knowledge acquisition is considered
as ‘grafting’, as its purpose is to acquire complex patterns of
information or knowledge [15]. This is because
knowledge-grafting through imitation is faster from
knowledge acquisition with experience, and therefore the
firms are lunged towards a grafting of the new capabilities at
the organisations’ current knowledge base in order to
develop the processes of the manufacturing, when human
resources contain knowledge offered by employees in
formats of capacity, commitment, motivation and loyalty,
additionally in form of advice or comments.
Consequently, some of the master components are
experience, technical expertise, and problem-solving
competence, innovation, education, attitude, and
entrepreneurial spirit [16]. At the present time, the companies
have considered that the combination process between
intellectual capital, knowledge management and
technologies collectively is a thrilling challenge to
leaderships. This allows creating institutions with the
possibilities of modern information [17]. This means viewing
the knowledge as roots to intellectual capital, which will
result in future benefits to the companies [18].
IV. ORGANIZATIONAL INNOVATION
Innovation nowadays is considered the fundamental
source of value creation in companies. Therefore, it has been
defined in many different concepts. One of these concepts is
defined as the creation of new knowledge and ideas to
develop new products and facilitate business operations
continually, with the aim of enhancing processes and internal
business structures to create market-driven products [19, 20].
In this sense, innovation is the principal mechanism of
competition for many companies, particularly in technology
and knowledge-based industries. Commonly, the innovation
practice can be understood as a complex activity in which
new knowledge is applied for commercial ends [21].
Accordingly, study of the relation between innovation and
intellectual capital should take into account the various types
of innovation to cover the gap. Where some authors have
classified the innovation as administrative and technical, this
type of innovation refers to the changes in organisational
structure and processes, such as authority, task-structuring,
personnel recruitment, resources allocation and rewards.
Technical innovation indicates the knowledge that links
methods, components, and techniques with processes to
create a product or service. Radical innovation is the main
change that represents a new technological pattern, and
requires more organisational capabilities and superior
profundity of knowledge. Finally, incremental innovation is
defined as slight technological changes in organisation to
create products or services. However, these authors have
considered these sorts of innovation as main reasons to a
survival and growth of companies [22, 23, 24, 25, 26, 27].
V. METHODOLOGY
A. Research Method
The study in the methodology has adopted the
questionnaire survey that was conducted in Iraqi
manufacturing companies. The industry is concentrated in
clusters in the Middle Euphrates region, especially in
Babylon, in two organised industrial zones, where there is
Automaker, which represents the only company to use an
assembly line for the vehicle production in Iraq. There was a
line to small oil refineries production. In addition, there was a
company in the textile industry that contains two plants for
the production of the miscellaneous fabrics.
Fig. 2 and 3 explain the theoretical research model and the
relationships among all the variables. The study model has
highlighted the influence of intellectual capital in the
organisational innovation through a diagnosis and
determines the relationship and the effect between the
components of intellectual capital and organisational
creativity for the companies of the study field.
International Journal of Innovation, Management and Technology, Vol. 3, No. 2, April 2012
129
Fig. 2. Research framework.
Fig. 3. A model of the relationships among the variables.
.
B. Significance of Research
Importance of research stems from the importance of the
variables that are discussed in the contemporary
administrative thought. This represents intellectual capital, a
resource from resources of the industrial companies and
reflects a feature of the companies and its value. The change
and rapid development in the environment in which they
compete requires of companies more creativity in the
industrial and technological aspects. Accordingly, for the
purpose of the adoption, of innovation there must be
exploitation by the companies of its internal resources,
including intangible resources, which are equal to three
quarters of the resources.
C. Data Collection and Samples
The data for this study was collected throughout the
manufacturing companies in a field survey. The names and
addresses of the companies were obtained from the Database
of the Iraq Ministry of Industry and Minerals. The survey was
made in January 2011. The respondents of the questionnaires
were managers of the production R and D department and
quality control, with 34 forms for two companies, i.e. 17
forms for each. The acceptance was 100% for the Textile
Industry, and 88% for the Automotive Industry Company.
This means that a total of 32 forms were sent and the
acceptance of 94% was a good percentage of response of the
sample in these companies to the questionnaire supplied. To
increase the valid survey response rate, the researcher has
used Skype software for a discussion with the respondents
for the purpose of explaining anything unclear to both
sampled companies. Also, the researcher explained the
objectives of the study and the questionnaire content, and
confirmed the names and job titles of the respondents prior to
questionnaire-mailing. The researcher was asked to return the
completed questionnaires within one month through mailing.
Tables I-IV explain sample characteristics in these
companies.
TABLE I: DISTRIBUTION OF THE SAMPLE ACCORDING TO SEX
Sex Frequency Percentage
Female 12
37.5%
Male 20 62.5%
Total 32 100%
TABLE II: DISTRIBUTION OF THE SAMPLE ACCORDING TO AGE
Age Frequency Percentage
20-25 6
19%
26-30 5 16%
31-35 8 25%
36-40 9 28%
41UP 4 21%
Total 32 100%
TABLE III: DISTRIBUTION OF THE SAMPLE ACCORDING TO ACADEMIC
QUALIFICATION
Age Frequency Percentage
PhD -
-
MSc 3 9%
Diploma 5 16%
BSc 18 56%
Institute 5 16%
Secondary 1 3%
Total 32 100%
TABLE IV: DISTRIBUTION OF THE SAMPLE ACCORDING TO CAREER YEARS
Age Frequency Percentage
Less than Two years - -
3-6 2 6%
7-10 5 16%
11-14 9 28%
15-18 10 31%
19UP 6 19%
Total 32 100%
VI. RESULTS AND DISCUSSION
The researcher has tabulated data for a sample study,
according to the variables of study that has been displayed in
the study model and a model of the relationships among the
variables, and the results in Tables 5-8 were as follows
according to Eq. 1,
NVnWnxWVxWV
WAC ........2211 +
+
= (1)
A. Human Capital
Table V highlighted the items that are related to human
capital, which is related to the companies’ staff in the study
field. Therefore, it has explained that the paragraph minimum
achieved in the third question, and the arithmetic average of
4.3 which is not quite different from what appeared in the
other averages. This question is related to the developing of a
high skill level in employees.
International Journal of Innovation, Management and Technology, Vol. 3, No. 2, April 2012
130
TABLE V: FREQUENCY DISTRIBUTION AND RELATIVE FOR ANSWERS OF
STUDY SAMPLES ON HUMAN CAPITAL
Agreed
Mostly
agreed
N
either
agree nor
disagree
Mostly
disagree
Disagree
Average %
Item F R
% F R F R F R FR
% % %
%
The company
relies on
employees
with
experience
and skill in
job.
20 63 8 25 3 9 1 3 - - 4.5
The company
has
employees
with great
confidence in
the business
performance
and without
hesitation.
20 63 9 28 3 9 - - - - 4.5
The
employees
have a level of
high-skill
developed.
19 59 7 22 4 13 2 6 - - 4.3
The job
vacancies in
company
dictate a staff
of experience
and highly
skilled.
22 69 8 25 2 6 - - - - 4.5
Emphasises
the company's
ongoing
promotion of
qualified
personnel and
does not allow
upgrade of
those who
have weak
performance.
21 66 7 22 5 16 1 3 - - 4.7
The company
is struggling
to provide
workers with
practical skills
from thorough
intensive
training
programs.
23 72 7 22 - - 2 6 - - 4.6
B. Structural Capital
Table VI indicates that the highest average was in
paragraphs 2 and 3, where the average for both items was 4.8.
This indicates that the company is concerned with the
intellectual rights to develop the quality of its products and
stimulate employees to continue in creating innovative ideas.
Also, it indicates these ideas are employed in the company
for excellence in work. A low average has been achieved in
the first paragraph, which confirms that there is not support
by the company to patents, where there has been an average
value of 3.2.
C. Customer Capital
Table VII shows the results of the sample answers about
the customer capital, where the lowest average was found for
the fifth question. The question checks whether the efforts
are directed by the company to engage customers in its
operations; average value was 3.6. The highest average has
been achieved in the first question, which confirms that the
company operates at full capacity in order to satisfy
customers. Also, with question six, which emphasizes that
the company is struggling to gain potential for new customers,
the average was 4.7, which was a good result.
TABLE VI: FREQUENCY DISTRIBUTION AND RELATIVE FOR ANSWERS OF
STUDY SAMPLES ON STRUCTURAL CAPITAL
Agreed
Mostly
agreed
N
either
agree nor
disagree
Mostly
disagree
Disagree
Average %
Item F R FRF R F R F R
% % % % %
The firm
supports the
patents and
carries out
operations.
5 16 1 3 4 13 10 31 12 37 2.3
Firm buys
the
copyright
of its
employees.
17 53 6 19 7 22 1 3 1 3 4.2
The
processes
of assessing
the quality
of the
firm’s
products
are good.
20 63 8 25 3 9 1 3 - - 4.5
The firm is
interested
with
trademark
and gives it
special
attention
due to its
importance
to the
company
and the
customer.
16 50 4 13 2 6 3 9 7 22 3.6
The firm's
information
system
works very
well
because it
allows
transfer of
the required
information
from all
over the
company.
19 59 4 13 6 19 - - 3 9 4.1
The
regulations
and
regulatory
procedures
in the firm
are
supporting
innovation.
18 56 8 25 1 3 - - 5 16 3.6
International Journal of Innovation, Management and Technology, Vol. 3, No. 2, April 2012
131
TABLE VII: FREQUENCY DISTRIBUTION AND RELATIVE FOR ANSWERS OF
STUDY SAMPLES ON CUSTOMER CAPITAL
Agreed
Mostly
agreed
N
either agree
nor disagree
Mostly
disagree
Disagree
Average %
Item F
R
% F R
% FR
% F R
%
F R
%
The firm
operates at
full capacity
to satisfy
customers.
24 75 6 18 2 6 - - - - 4.7
The firm is
conducting
dialogue
with
customers to
identify their
needs and
desires.
21 66 5 16 4 12 2 6 - - 4.4
The firm is
working on
the
exchange of
information
that
contributes
to opening
new
horizons for
cooperation
with
customers.
17 53 8 25 4 13 3 9 - - 4.2
The firm
seeks to
reduce the
solution of
problems
with
customers.
19 59 7 22 1 3 3 9 2 6 4.2
The firm is
seeking the
participation
of customers
in its
operations
and
transactions.
12 38 9 28 3 9 2 6 6 19 3.6
The firm is
struggling to
gain
potential for
new
customers.
22 69 5 16 2 6 3 9 - - 4.4
D. Organisational Innovation
Table VIII explains that the highest average value
achieved in the sixth question confirms that the companies
have used computer systems in the administrative processes,
and the ninth question confirms that the company uses
practical methods to improve the design and
computer-assisted processes (automation).
The average value for both questions was 4.6. This result
indicates that the company is using the process methods in
the design of production processes. The lowest average was
achieved in the third question, which confirms that the
companies are holding down the amendments on the
composition of raw materials within the labour and the
average value was 3.9.
TABLE VIII: FREQUENCY DISTRIBUTION AND RELATIVE FOR ANSWERS OF
STUDY SAMPLES ON ORGANIZATIONAL INNOVATION
Agreed
Mostly
agreed
N
either
agree nor
disagree
Mostly
disagree
Disagree
Average %
Item F
R
% F R
% F R
% FR
%FR
%
The firm
enhances and
develops its
products based
on existing
skills and
experiences.
21 65 5 16 6 19 - - - - 4.5
The firm is
continually
modifying the
performance of
production
processes.
16 50 8 25 6 19 2 6 - - 4.2
The firm is
holding down
the
amendments on
the composition
of raw materials
within the
labour.
14 44 6 18 4 13 3 9 5 16 3.7
The firm is
designing new
production
processes.
13 41 12 38 5 16 2 6 - - 4.1
The production
processes are
enhanced by the
capabilities and
expertise
available in the
firm.
10 31 14 44 6 19 - - 2 6 3.9
The firm is
using computer
systems in the
administrative
processes.
23 72 6 19 3 9 - - - - 4.6
The firm has
introduced a
modern
information
system to help
complete the
processes.
21 66 5 16 - - 3 9 3 9 4.2
The firm aims
by improving
processes to
increase
productivity
and efficiency.
22 69 3 9 1 3 - - 6 19 4.1
The firm uses
practical
methods to
improve the
design and
computer-assist
ed processes
(auto-mation)
24 75 3 9 5 16 - - - - 4.6
The firm’s
created outputs
are consistent
with the needs
of customers.
16 50 10 31 6 19 - - - - 4.3
However, in order to verify the analysis of morale by
International Journal of Innovation, Management and Technology, Vol. 3, No. 2, April 2012
132
assumptions underlying the research, the study has used other
statistical methods to test hypotheses of morale between the
independent variable and dependent variables. Accordingly,
the study launched components in analysis of intellectual
capital that were adopted in this study, and represented in
organisational innovation (human capital, structural, and
customer).The study has used the following equations to
account of regression coefficient and Adjusted R2
respectively in Tables 9-12, and as follows;
R= xyoand
xx
yyxx
i
ii 1
ˆˆ
)(
))((
2
1
βββ
=
=
(2)
e
t
tot
err df
df
SS
SS
pn n
RR =
= 1
1
1
)1(1 2
2 (3)
T-test. n
x
t/
δ
μο
=
(4)
=
2
2
12 21
pnRSS
pP RSSRSS
TestF
(5)
Table IX highlights the test results of correlation and
regression, a coefficient between the intellectual capital and
organisational innovation. Test results showed that there is a
positive correlation between intellectual capital and
organisational innovation. Where the value of the correlation
coefficient is equal to 0.47, this explains that there is no
significant relationship between the two variables.
Additionally, Table IX shows value (t), calculated as equal to
1.75, and it is less than the tabular value (1.88), with a degree
of confidence of 95%. This confirms that the intellectual
capital with these three variables has no effect on
organisational innovation in these companies. Also, test
result (f) supports previous analysis, when the calculated
value of 2.66 is less than the tabular value (5.12); the degree
of confidence is 95% and the degree of freedom 1.9. This
indicates that the hypothesis is not statistically acceptable, as
the table shows the value of the coefficient of determination
(R2) is equal to 0.32, this being a very weak figure.
TABLE IX: RESULTS OF CORRELATION AND REGRESSION COEFFICIENT
BETWEEN THE INTELLECTUAL CAPITAL AND ORGANIZATIONAL CREATIVITY
D.F
R
R2
T Test
Tab. Cal.
F Test
Tab. Cal.
1.9 0.47 0.32 1.88 1.75 5.12 2.66
At the same time, the study has highlighted the results of
testing the relationship between human capital and
organizational innovation. Test results showed a positive
relationship between the two variables, where the value of
the correlation coefficient was 65%, showing a significant
correlation positive between the two variables as shown in
Table X, also indicating the value of (t) calculated as 2.12,
which is less than the tabulated value of 1.88, and shows
degree of confidence of 95%. This indicates that human
capital has an effect on organizational innovation, as inferred
during test (f), when the calculated value was 5.87. It was
greater than the tabular value of 5.12, with degree of freedom
of 1.9. This indicates acceptance of the relationship
statistically, showing in Table X that the value of the
coefficient of determination R2 = 0.38, which explains a high
explanatory ability.
TABLE X: RESULTS OF TESTING THE RELATIONSHIP BETWEEN HUMAN
CAPITAL AND ORGANIZATIONAL INNOVATION
D.F
R
R2
T Test
Tab. Cal.
F Test
Tab. Cal.
1.9 0.65
0.38 1.88 2.12 5.12 5.87
This study also set out to assess the correlation association
and regression between structural capital and organisational
innovation through Table XI. The results have shown that
there is a positive relationship between the two variables.
Where the value of the correlation coefficient was 87%, this
indicates a strong relationship and morale between the two
variables. Table XI also illustrates the value of (t) calculated
as 5.76, greater than tabular value of 1.88, the degree of
confidence being 95%. This confirms that the variable
structural capital has impact on the organisational innovation.
This conclusion is drawn by testing (f), where the calculated
value was 5.72, larger than the tabular value of 5.12, with a
degree of confidence of 95%, and the degree of freedom of
1.9. The findings are indicating that the association is
statistically accepted, and Table XI shows that the value of
the coefficient of determination R2 = 0.65. This means that
the determination value can be explained as acceptable.
TABLE XI: ASSESSING THE CORRELATION AS OCIALATION AND
REGRESSION BETWEEN STRUCTURAL CAPITAL AND ORGANISATIONAL
INNOVATION
D.F
R
R2
T Test
Tab. Cal.
F Test
Tab. Cal.
1.9 0.87 0.65 1.88 5.76 5.12 5.72
However, further statistical tests revealed results from
testing the relationship between the customer’s capital and
organisational innovation in Table XII. Here the results have
shown the correlation coefficient with regression between the
two variables, and the correlation value was 0.21. These
results indicate significant positive correlation between
customer capital and organisational innovation, as it appears
that the test value (t) was calculated as 0.37, which is less
than the value tabular of 1.88, and a degree of confidence of
95%.
These results confirm that the customer capital has
influence in organisational innovation. This inference was
confirmed by use of test (f), when the calculated value of 0.
19 is less than the tabular value of 5.12 with a degree of
confidence of 95% and the degree of freedom of 1.9. This
means that the results are demonstrating an acceptance
statistically between the two variables. Table XII also shows
that the value of the coefficient of determination R2 = (0.011).
This value highlights a good explanatory ability for the
relationship between two variables.
International Journal of Innovation, Management and Technology, Vol. 3, No. 2, April 2012
133
TABLE XII: RESULTS OF TESTING THE RELATIONSHIP BETWEEN CUSTOMER
CAPITAL AND ORGANISATIONAL INNOVATION
D.F
R
R2
T Test
Tab. Cal.
F Test
Tab. Cal.
1.9 0.21
0.011 1.88 0.37 5.12 0.19
VII. CONCLUSION
For the time being, most of the industrial organisations are
focusing on the intellectual capital because of its important
role in creating and sharing an atmosphere of learning, and
applying knowledge of growth in organisational innovation.
The innovation is viewed as a major source of competitive
advantage and is perceived to be a prerequisite for
organisational success and survival. Accordingly, the study
has started from this view, but it has found there are not
relevant studies exploring the relationship between
intellectual capital and organisational innovation.
Therefore this study has focused on this research gap. In
conclusion, the present study was designed to determine the
effect of three types of intellectual capital, i.e. human capital,
structural capital, and customer capital, on organisational
innovation. Additionally, the study has considered the
growth rate of the automotive industry and textile industry as
a moderator to explore whether the positive relationships
between intellectual capital and organisational innovation are
stronger or not when the growth rate of the industry is higher.
Consequently, this study has investigated and tested
hypotheses with a questionnaire survey conducted in an Iraqi
automotive industry and a textile industry. The aim of this
study was to find out the impact of intellectual capital on
organisational innovation at the Iraqi automotive industry
and textile industry.
One of the main inferences of this study is that there were
two of the three types of cultural capital (structural and
human capital) that had obvious positive relationships with
organisational innovation, whereas the relationship between
customer capital and organisational innovation did not have a
moral effect on organisational innovation.
Therefore, the study has suggested an important set of
recommendations that will give greater attention to customer
capital, for the purposeful building of humans’ capabilities.
The expansion of relations between customers should be
adhered to. This is said because there was weakness in public
relations in the companies with their suppliers, clients, and
partners. On the other hand, in this investigation the study
was assessed for these variables and has accounted their
mean values respectively, as a reference for directors in Iraqi
companies to evaluate their intellectual capital for the
purpose of a diagnosis and assessment of strength points and
the weakness in their intellectual capital. This is because it
considers significant factors to create innovation, which it
helps to create with new products development, as well as
aiding customers’ satisfaction and retaining it, which leads to
the reduction of operating costs.
ACKNOWLEDGMENT
The author hereby acknowledges support from his sponsor,
in the Ministry of Higher Education and Scientific Research
of Iraq. Also, this research has been supported by the Iraqi
organisations, through the manufacturing firms. Therefore,
the author wishes to acknowledge those companies’ support,
and their contribution during the development of ideas and
concepts suggested in this research.
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Mr. Mohammed Assi Ahmed AL-DUJAILI is
currently a PhD candidate at School of Mechanical,
Aerospace and Civil Engineering, University of
Manchester, United Kingdom, undertaking a
research in the area of knowledge systems, decision
support systems and organizational performance.
Mr. AL-DUJAILI is Professional in Quality Control
and Six Sigma. As well, Mr. AL-DUJAILI has many
papers are published in different Journals about knowledge systems and
quality control in journal of mechanics engineering and automation at USA,
and journal of Total Quality Management and Business Excellence at UK.
Mr. AL-DUJAILI is now reviewer in Journal of mechanics engineering and
automation. Additionally, Mr. AL-DUJAILI has many conference papers
have published at Italy, Malaysia and Egypt. Mr. AL-DUJAILI also has
Book authorship about Quality Control systems in production and service
organizations, AL-Yazori publishing House / ISBN: 978-9957-12-196-9,
2010, Jordan.
International Journal of Innovation, Management and Technology, Vol. 3, No. 2, April 2012
135
... Although existing scholars have explained the association between organization capital and firm innovation (Al-Dujaili, 2012;Allameh, Abbasi, & Shokrani, 2010;Ghorbani, Mofaredi, & Bashiriyan, 2012) their research have produced mixed result. Amiri, Jandaghi, and Ramezan (2011) found that capital of organization is clearly connected to increment innovation, and also to the radical innovation, in the contrary, Kontic and Cabrilo (2009) finished by mentioning the innovation development process/product, as well as, research and development were not perceived as crucial impelling factors in organization capital. ...
... Additionally early investigations have recorded the effect of organization capital on firm innovativeness (Al-Dujaili, 2012;Kamukama, Ahiauzu, & Ntayi, 2010) while other scholars have explained the association between organization capital and firm performance (Khalique, Nassir Shaari, Isa, & Ageel, 2011;Mosavi, Nekoueizadeh, & Ghaedi, 2012) the link between firm innovativeness, organization capital and firm performance are rare in literature. Thus, the study examined the importance of firm innovation, and its influence on the effect of organization capital and firm performance. ...
... The study results are consistent with other studies that also found a positive correlation between intellectual capital and job performance (Sharabati, et al., 2013;Wanjala;Al-Dujaili, 2012& Ahangar, 2011. ...
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