Resolving conflicting results of intellectual capital’s influence on innovative capability

Abstract

Previous studies have shown conflicting results of intellectual capital’s influence on innovative capability. The conflicting results impede not only theoretical development but also managers’ investment decisions on innovation. This study indicates that divergent knowledge (positive effect), reluctantly sharing knowledge, self-justification (for prior period decision), and sunk cost fallacy (negative effects) explain the human capital conflicting results; inertial (positive effect) and overinvestment (negative effect) explain the organizational capital conflicting results. This study further argues that a firm’s dynamic capability help itself sense (entirely new and partially new) opportunities, seize the strategic-fit opportunities and utilize intellectual capital to transform/enhance its innovative capabilities. Dynamic capability reflects aggregated results of above positive and negative effects and thus resolves the intellectual capital conflicting results. Furthermore, this study argued the social capital facilitate the influences of human capital and organizational capital on innovative capability via opportunities and trust. This study expects following possible findings to contribute theoretical development and managerial implications: (1) when human capital is insufficient, greater human capital increases incremental innovative capability but decreases radical innovative capability. However, to 2 increase radical innovative capability, sufficient human capital is required. (2) Firms incline to overinvest organizational capital in incremental innovative capability; however, dynamic update of organizational capital is a key to increase incremental innovative capability. (3) Dynamic capability mediates the relationship between intellectual capital and innovative capability. Dynamic capability explains the influence of organizational learning on innovative capability from a resource-based perspective. (4) Social capital moderates the relationship between human capital/organizational capital and radical/incremental innovative capability. (5) dynamic capability discloses the mechanism/process of intellectual capital’s influence on innovative capability; human capital and organizational capital, per se, are actors/predictors for increasing innovative capability. Social capital provides opportunities and trust to facilitate (moderate) human capital and organizational capital to increase innovative capability; together with human capital and organizational capital, social capital influences innovative capability through dynamic capability.