How to Improve Innovation Capability? : The Role of Intellectual Capital and Organizational Motivation of Manufacturing Firms in Sri Lanka

V. Sivalogathasan

doi:10.4038/jbs.v3i2.6

Abstract

The intellectual capital creates a crucial factor for the achievement of the innovation of firm. Numerous studies have been documented that intellectual capital positively influences innovation capability, which is conceptualized as the degree to achieve its firm performance. However, there is a lack of studies examining the specific means through which organizational motivation influences innovation capability at firm level. Therefore, the purpose of this study is to exhibit the Intellectual capital effects on firm innovation capability by influence the organizational motivation. This study investigates the multidimensional and contingent gradual effect of intellectual capitals and organizational motivation on innovation capability. Manufacturing sectors have shown commendable progress over the past few decades in Sri Lankan. The structured questionnaires were administrated as a research instrument and random sampling technique was used to collect the data from 462 senior executives and senior managers from manufacturing firms in Sri Lanka. The study revealed that the intellectual capital have significant positive relationship on innovation capability with strong influence of organizational motivation. The intellectual capital mediated by organizational motivation that lies outside and inside of the firm have an indirect effect on innovation capability. The findings of this study will be useful for manufacturing industry to apply intellectual capital management and identify organizational motivation to create innovation in their organizations.

Highlights

The development of intellectual capital can be regarded as an accumulative process which creates incentives to be exploited by product innovations, and delivers the required complementary assets
Around 78% are come from 501-2000 employee size of firm
This finding highlights that when the manufacturing industry creates an organizational motivation culture and innovation-oriented culture, that will facilitates and better firm performance from better innovation

Summary

Introduction

The development of intellectual capital can be regarded as an accumulative process which creates incentives to be exploited by product innovations, and delivers the required complementary assets. The development of new products expands a firm's competence base, which in turn, enables further product innovations (Danneels, 2002). In contrast to incremental innovations or product enhancements, continuous new product developments permit the renewal of organizational resources and can contribute to the building up of dynamic capabilities (Teece 2007; Eisenhardt and Martin, 2000). Intellectual capital are considered to be the most important source of firm's innovativeness and heterogeneity of performance because of relatively high barriers to duplication. Approach while explaining how firms gain innovation capability and better performance in increasingly demanding environment emphasize dynamics and evolution of resources and capabilities. With a significant contribution of 30% to the GDP and 25% to the workforce, the industrial sector in Sri Lanka has become the prime force of value creation in the economic development of the country

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