The complex Intellectual Capital Characteristic of an Innovative Firm

Innovation is considered the key element to ensure sustainable growth and competitive advantages. The innovation performance of an organization determines not only the current value but the capability and strength for the future. Researches have shown a correlation between intellectual capital and innovation performance. In a knowledge economy, intellectual capital adds more value to an organization than tangible assets. It is defined as attributes of an organization and knowledge that can be converted into future value. Organization has unique and complex intellectual capital characteristic, making it difficult to be imitated. Merely increase intellectual capital cannot guarantee better innovation performance. It is important to identify the complexity of intellectual capital and the relationship among knowledge flow, intellectual capital and innovation performance. The objective of this paper is (1) to perform a study on intellectual capital and innovation performance with an innovative firm; (2) to demonstrate the complex intellectual capital characteristic and its relation to knowledge flow and innovation performance; and (3) to propose the use of complexity theory to be the method for future research. A survey was conducted with an R&D firm in Hong Kong. Partial Least Square analysis identified the intellectual capital measurements and the major factors contributing to innovation performance of the organization. It was observed that the R&D firm gained their innovation performance through human capital not directly but via structural and more importantly relational capital. The factors contributed to innovation performance in a non-linear nature and had interdependencies among themselves. In addition, a complex relationship between knowledge creation and knowledge sharing was observed with their impact to innovation performance. These findings prove that complexity study is appropriate and should be used for future research in intellectual capital and innovation, leveraging the existing quantitative and statistical studies.