The relationship between intellectual capital and innovation capability / Azmi Joned

The primary aims of this research are to measure the level of innovation capability of the selected Malaysian public listed companies and to examine the relationship between intellectual capital and innovation capability of the firms. The unit of analysis was the managers of companies which comprised the assistant managers, managers, senior managers and general managers. The data collected were analysed using factor analysis and multiple regressions. The research posited twelve IC dimensions extracted from past literature i.e. human capital, structural capital, customer capital, organisational capital, social capital, relational capital, business capital, technological capital, intellectual property, infrastructure assets, process capital and renewal and development capital. The study revealed a substantial perceived level of IC residing in the firms. The Resource based view (RBV) postulates that IC is an important resource of the firms to sustain competitive advantage while the Knowledge based theory (KBT) argues that IC resources embedded with special characteristics and different types of knowledge capabilities are important for a firm to sustain competitive advantage and enhance its innovation capability. In addition, human capital was found to be the main dimension that is significantly and positively related to innovation capability. The study also revealed that structural capital, customer capital, organisational capital, technological capital, intellectual property, technological capital process capital, and renewal and development capital are also related to innovation capability. The empirical results provide strong evidence that Malaysian public listed companies which put greater emphasis on the intellectual capital (IC) can lead to better enhancement of innovation capability. Thus, the power of each IC dimension when combined together can lead to a more significant contribution to enhance innovation capability. The implication is that the ability of the management to develop and deploy IC resources is vital. Most importantly, a more substantial impact from intellectual capital on company innovation capability can be reaped. Nonetheless, to facilitate for intended interactions and outcomes, appropriate strategies to integrate and combine all the IC resources are crucial. Likewise, human capital is considered as apex dimensions of IC. Thus, managers should invest more in their human capital, as its interaction with other dimensions of IC can generate greater impact on innovation capability. They should continue to develop the skills and capability of the individuals in order to exploit their benefits. Nevertheless, the management should also continue to develop other dimensions of IC, as they are also contributors to company innovation capability. Finally, the main contribution of this study is that a broader set of IC dimensions were used to examine the relationship between IC and innovation capability from the Malaysian perspective. The research also managed to identify the perceived theoretical framework of IC definition from a Malaysian’s perspective, namely among the assistant managers, managers, seniors and general managers of selected Malaysian Public listed companies.