The Relationship Between Intellectual Capital, Innovation and Competitive Advantage

Abstract

The main purpose of this study is to evince the influence of intellectual capital (IC), on innovation by constructing the relationship based on the three components of (IC) namely human, organizational and relational capital. The shift of the traditional tangible assets' -land, facility, work force, physical and financial capital-role considered as genuine capital, towards more subtle forms of capital creates a crucial factor for the achievement of the competitive advantage and successful firm performance through the mediating role of innovation. Amid in this research agenda three partial gaps have been explored: First previous works have almost exclusively focused on the co-alignment between IC and innovation as compelled to deliver competitive advantage and firm performance. Although a robust IC-innovation relationship appears to be plausible in the literature, a little empirical evidence has so far been offered to support this relationship. In doing so this study investigates the three forms of IC in the context of their impact to innovation. Second, while the relationship between innovation and firm performance has been theoretically inspected, the relationship has not been analyzed empirically along with the innovation's influence on competitive advantage. Third, the paper investigates the multidimensional and contingent gradual effect of IC on competitive advantage and firm performance through the conjunctive role of innovation. Hence this study develops a platform through which IC will shape innovation, and progressively firm performance and competitive advantage.