Intellectual Capital Development and its Effect on Technical Innovation in Banks Operating in Jordan

Abstract

The purpose of this study is to investigate the effect of intellectual capital development on the ability of banks operating in Jordan to undertake technical innovation. Employing a questionnaire-based survey, twenty banks out of twenty six participated, and 163 out of 200 ISSN 1941-899X 2014 www.macrothink.org/jmr 212 questionnaires were returned and were valid for analysis, thus resulting in a response rate of 81.5%. Exploratory Factor Analysis (EFA) results show that intellectual capital consists of two main dimensions: Human Capital, and Structural Capital comprising items originally developed to reflect organisational capital and relational capital. Also, product/service and process innovation items converged to form one construct named Technical Innovation. Multiple regression analysis findings show a significant and positive effect of the aforementioned intellectual capital dimensions on technical innovation. More specifically, structural capital was proved to have a stronger effect on technical innovation compared with human capital. These findings highlight the need for organisations intent on enhancing their technical innovative capabilities to not merely focus on attracting and recruiting highly skilled and competent human resources, but rather, they are advised to develop mechanisms designed to capture and translate the knowledge and expertise of organisational members and stakeholders so that these become internalized in the organisation's processes and routines. Journal of Management Research

Intellectual capital, entrepreneurial orientation, and technical innovation in small and medium‐sized enterprises

“…The findings provided important empirical evidence supporting the contention that developing new products/services and processes (i.e., TI) is significantly enhanced through investing in the development and accumulation of knowledge-based assets (i.e., IC;Chen et al, 2007;Wu et al, 2008;Delgado, 2011;Karchegani, Sofian, & Amin, 2013;Al-Khalil et al, 2014;Han & Li, 2015;Dost et al, 2016;Engelman et al, 2017;Molodchik & Jardon, 2017). These results also provide an important theoretical and empirical contribution that adds to TI, EO, and IC literatures, particularly in the context of developing and emerging "knowledge-based" economies.…”

“…Second, Process Innovation refers to the development of the organization's production and/or service delivery processes, as well as constantly improving or modifying its work processes and technologies. Accordingly, three items (PROCI1‐PROCI3) were developed to measure this dimension by referring to Al‐Khalil et al (), Ndubisi and Agarwal (), Han and Li (), and Al‐Sa'di et al ().…”

“…Furthermore, and in light of the emergence of the "knowledgebased economy" and its emphasis upon investing in knowledgebased assets, many scholars and businesses developed a corresponding interest in the concepts of IC and knowledge management. As a result, a number of prior studies have focused on developing theoretical models that address how to effectively manage TI through IC, as well as examining how various components of IC facilitate the right conditions for product and process innovation to develop (e.g., Al-Khalil et al, 2014;Danish et al, 2016;Dost et al, 2016;Engelman et al, 2017;Han & Li, 2015;Martín-de-Castro et al, 2011;Rhee et al, 2010;Seleim & Khalil, 2011;Subramaniam & Youndt, 2005).…”

“…As has already been mentioned that there has been a considerable amount of academic research examining the direct effect of IC on TI, the extant literature has shown a clear interconnectedness between both constructs in numerous industries (e.g., Subramaniam & Youndt, ; Wu, Chang, & Chen, ; Marvel & Lumpkin, ; Schiuma & Lerro, ; Rhee et al, ; Martín‐de‐Castro et al, ; Seleim & Khalil, ; Al‐Khalil, Dahiyat, & Al‐Dalahmeh, ; Dost et al, ; Danish et al, ; Engelman et al, ; Molodchik & Jardon, ; Mitrega, Forkmann, Zaefarian, & Henneberg, ). However, this research program has generally not explored the existence of other factors exerting a potentially mediating effect upon the relationship between IC dimensions and TI.…”

“…Second, Process Innovation refers to the development of the organization's production and/or service delivery processes, as well as constantly improving or modifying its work processes and technologies. Accordingly, three items (PROCI1-PROCI3) were developed to measure this dimension by referring toAl-Khalil et al (2014),Ndubisi and Agarwal (2014),Han and Li (2015), and Al-Sa'di et al(2017).EO has been referred to as a behavior and a trend that is aimed at focusing on exploiting, identifying, seizing, and creating opportunities through capitalizing on enhanced knowledge and experience(Dess & Lumpkin, 2005;Simsek & Heavey, 2011). EO consists of five main dimensions.…”