Impact of Intellectual Capital on Organizational Performance of ICT SMEs in Penang, Malaysia
Abstract
Intellectual capital is a strategic asset for the growth and sustainability of SMEs. It contributes signifi cantly towards the national economy, generating employment and improving the well-being of the public. The main purpose of this research was to determine how six components of intellectual capital aff ect the organizational performance of ICT SMEs operating in Penang, Malaysia. The developed model was tested through SEM and it adequately explained the eff ect of intellectual capital on organizational performance. The results suggest that customer capital has a signifi cant positive infl uence on organizational performance of ICT SMEs while human capital, structural capital, social capital, technological capital and spiritual capital remained insignifi cant. Future studies may adopt a comparative approach to understand how intellectual capital aff ects organizational performance in emerging economies.Keywords: Intellectual capital, human capital, customer capital, structural capital, social capital, technological capital, spiritual capital, organizational performance, ICT SMEs, Penang.References
Abdullah, D. F., & Sofi an, S. (2012). The relationship between intellectual capital and corporate
performance. Procedia-Social and Behavioral Sciences, 40, 537-541.
Ahmad, N. H., & Seet, P. S. (2009). Dissecting behaviours associated with business failure: A
qualitative study of SME owners in Malaysia and Australia. Asian Social Science, 5(9), 98-
Akhtar, C. S., Ismail, K., Ndaliman, M. A., Hussain, J., & Haider, M. (2015). Can intellectual capital
of SMEs help in their sustainability eff orts. Journal of Management Research, 7(2), 82-97.
Alavi, M.; Leidner, D.E. (2001). Review: Knowledge management and knowledge
management systems: Conceptual foundations and research issues. MIS Quarterly, 25,
–136.
Andreeva, T., & Garanina, T. (2016). Do all elements of intellectual capital matter for
organizational performance? Evidence from Russian context. Journal of Intellectual
Capital, 17(2), 397-412.
Andrews, R. (2011). Exploring the impact of community and organizational social capital
on government performance: Evidence from England. Political Research Quarterly, 64(4),
-949.
Apostolou, D., Sakkas, N., & Mentzas, G. (1999). Knowledge networking in supply chains: a
case study in the wood/furniture sector. Information Knowledge Systems Management, 1(3,
, 267-281.
Becker, B., & Gerhart, B. (1996). The impact of human resource management on organizational
performance: Progress and prospects. Academy of Management Journal, 39(4), 779-801.
Beh, L. (2010). Development and distortion of Malaysian Public-Private Partnerships
Patronage, privatised profi ts and pitfalls. The Australian Journal of Public Administration,
(S1), S74–S84.
Benavides-Velasco, C. A., & Quintana-GarcÃa, C. (2005). Proceso y sistemas organizativos
para la gestión del conocimiento. El papel de la calidad total. BoletÃn ICE Económico:
Información Comercial Española, (2838), 37-52.
Berman, B. (2012). 3-D printing: The new industrial revolution. Business Horizons, 55(2), 155-
Bo ntis, N. (1999). Managing organisational knowledge by diagnosing intellectual capital:
framing and advancing the state of the fi eld. International Journal of Technology
Management, 18(5-8), 433-462.
Bo ntis, N., Chua Chong Keow, W., & Richardson, S. (2000). Intellectual capital and business
performance in Malaysian industries. Journal of Intellectual Capital, 1(1), 85-100.
B ueno, E., Salmador, M. P., RodrÃguez, Ó., & MartÃn De Castro, G. (2006). Internal logic of
intellectual capital: a biological approach. Journal of Intellectual Capital, 7(3), 394-405.
Cara, C., Ruiz, E., Oliva, J. M., Sáez, F., & Castro, E. (2008). Conversion of olive tree biomass into
fermentable sugars by dilute acid pretreatment and enzymatic saccharifi cation. Bioresource
Technology, 99(6), 1869-1876.
Carlsson, S.A (2004). Enhancing Knowledge Acquisition through the Use of ICT. In Decision
Support in an Uncertain and Complex World: The IFIP TC8/WG8.3 International Conference
; Merredith, R., Shanks, G., Arnott, D., Carlsson, S., Eds. Italy: Monash University.
Chen, J., Zhu, Z., & Yuan Xie, H. (2004). Measuring intellectual capital: a new model and
empirical study. Journal of Intellectual Capital, 5(1), 195-212.
Ch ua, A. (2002). The infl uence of social interaction on knowledge creation. Journal of
Intellectual Capital, 3(4), 375-392.
Chu, R. K., & Choi, T. (2000). An importance-performance analysis of hotel selection factors
in the Hong Kong hotel industry: a comparison of business and leisure travellers. Tourism
management, 21(4), 363-377.
Da ou, A., Karuranga, E., & Su, Z. (2014). Towards a better understanding of intellectual capital
in Mexican SMEs. Journal of Intellectual Capital, 15(2), 316-332.
Da ud, S., & Yusoff , W. F. W. (2010). Knowledge management and fi rm performance in SMEs:
The role of social capital as a mediating variable. Asian Academy of Management Journal,
(2), 135 – 155.
Edv insson, L. (1997). Developing intellectual capital at Skandia. Long Range Planning, 30(3),
-373.
Evans, W. R., & Davis, W. D. (2005). High-performance work systems and organizational
performance: The mediating role of internal social structure. Journal of Management, 31(5),
-775.
FelÃcio, J. A., Couto, E., & Caiado, J. (2014). Human capital, social capital and organizational
performance. Management Decision, 52(2), 350-364.
Fer reira, A., & Franco, M. (2017). Strategic alliances, intellectual capital and organisational
performance in technology-based SMEs: is there really a connection? International
Journal of Business and Globalisation, 18(1), 130-151.
F-J ardón, C. M., & Martos, S. M. (2009). Intellectual capital and performance in wood
industries of Argentina. Journal of Intellectual Capital, 10(4), 600-616.
Florin, J., Lubatkin, M., & Schulze, W. (2003). A social capital model of high-growth
ventures. Academy of Management Journal, 46(3), 374-384.
Fox, A. K., Bacile, T. J., Nakhata, C., & Weible, A. (2018). Selfi e-marketing: exploring narcissism
and self-concept in visual user-generated content on social media. Journal of Consumer
Marketing, 35(1), 11-21.
GarcÃa-Muiña, F. E., Pelechano-Barahona, E., & Navas-López, J. E. (2008). La complejidad del
conocimiento y el sostenimiento de las ventajas competitivas. Cuadernos de EconomÃa y
Dirección de la Empresa, 37, 7-32.
GarcÃa-Sánchez, E.J., & BolÃvar-Ramos, M. T. (2017). The infl uence of top management support
for ICTs on organisational performance through knowledge acquisition, transfer, and
utilisation. Review of Managerial Science, 11(1), 19-51.
Gourio, F., & Rudanko, L. (2014). Customer capital. Review of Economic Studies, 81(3), 1102-
Green Jr., K. W., Inman, R. A., Birou, L. M., & Whitten, D. (2014). Total JIT (T-JIT) and its impact
on supply chain competency and organizational performance. International Journal of
Production Economics, 147, 125-135.
Guthrie, J. (2001). The management, measurement and the reporting of intellectual
capital. Journal of Intellectual Capital, 2(1), 27-41.
Hall, R. (1992), The strategic analysis of intangible resources. Strategic Management Journal,
(2), 135-44.
Harrison, S., & Sullivan Sr, P. H. (2000). Profi ting from intellectual capital: learning from
leading companies. Journal of Intellectual Capital, 1(1), 33-46.
Hitt, M.A., Bierman, L., Shimizu, K. & Kochhar, R. (2001). Direct and moderating eff ects of
human capital on strategy and performance in professional service fi rms: a resourcebased
perspective. Academy of Management Journal, 44(1), 13-28.
Hsu, Y. H. and Fang, W. (2009).Intellectual capital and new product development performance:
The mediating role of organizational learning capability. Technological Forecasting and
Social Change, 76(5), 664-677.
Ink inen, H. (2015). Review of empirical research on intellectual capital and fi rm performance.
Journal of Intellectual Capital, 16(3), 518-565.
Inkpen, A. C., & Tsang, E. W. (2005). Social capital, networks, and knowledge transfer. Academy
of Management Review, 30(1), 146-165.
Ismail, M. (2005). Pharmacokinetics of cefepime administered by iv and im routes to
ewes. Journal of Veterinary Pharmacology and Therapeutics, 28(6), 499-503.
Joanes, D. N., & Gill, C. A. (1998). Comparing measures of sample skewness and kurtosis. Journal
of the Royal Statistical Society: Series D (The Statistician), 47(1), 183-189.
Johnson, W. H. (1999). An integrative taxonomy of intellectual capital: measuring the stock
and fl ow of intellectual capital components in the fi rm. International Journal of Technology
Management, 18(5), 562-575.
Kambil, A., Friesen, G. B., & Sundaram, A. (1999). Co-creation: A new source of value. Outlook
Magazine, 3(2), 23-29.
Karp, T. (2003). Is intellectual capitalism the future wealth of organisations?. Foresight, 5(4),
-27.
Kha lique, M., Bontis, N., Shaari, J., & Hassan M. I. A. (2015). Intellectual capital in small and
medium enterprises in Pakistan. Journal of Intellectual Capital, 16(1), 224-238.
Kha lique, M., & Mansor, S. A. (2016). Intellectual capital in Malaysian hotel industry: a case
study of Malacca. International Journal of Business Performance Management, 17(1), 103-
Kha lique, M., & Pablos, P. (2015). Intellectual capital and performance of electrical and
electronics SMEs in Malaysia. International Journal of Learning and Intellectual Capital,
(3), 251-269.
Kha lique, M., Shaari, J., & Isa, A. (2014). Determining the infl uence of intellectual capital on
the organisational performance of banking sector in Kelantan, Malaysia. International
Journal of Learning and Intellectual Capital, 11(4), 306-319.
Kha lique, M., Shaari, J., Abdul, J., & Isa, A. (2011). Intellectual capital and its major components.
International Journal of Current Research, 3(6), 398-401.
Krejcie, R. V., & Morgan, D. W. (1970). Determining sample size for research activities. Educational
and Psychological Measurement, 30(3), 607-610.
Leana, C. R., & Pil, F. K. (2006). Social capital and organizational performance: Evidence from
urban public schools. Organization Science, 17(3), 353-366.
Leech, N. L., Barrett, K. C., & Morgan, G. A. (2014). IBM SPSS for Intermediate Statistics: Use and
Interpretation. New York: Routledge.
Lus sier, R. N., & Halabi, C. E. (2010). A three country comparison of the business success
versus failure prediction model. Journal of Small Business Management, 48(3), 360-377.
Muh ammad, K., & Bontis, N. (2015). Intellectual capital in small and medium enterprises in
Pakistan. Journal of Intellectual Capital, 16(1), 224-238.
Mus teen, M., Ahsan, M., & Park, T. (2017). SMEs, intellectual capital, and off shoring of service
activities: An empirical investigation. Management International Review, 57(4), 603-630.
Nakhata, C. (2018). The relationships between human capital, entrepreneurial competencies and
career success of SME entrepreneurs in Thailand. AU Journal of Management, 5(1), 17-26.
Neubert, M. J., Bradley, S. W., Ardianti, R., & Simiyu, E. M. (2017). The role of spiritual capital
in innovation and performance: Evidence from developing economies. Entrepreneurship
Theory and Practice, 41(4), 621-640.
Nga h, R., & Ibrahim, A. R. (2009). The relationship of intellectual capital, innovation and
organizational performance: A preliminary study in Malaysian SMEs. International Journal
of Management Innovation Systems, 1(1), 617-715.
Ordóñez de Pablos, P. (2003). Intellectual capital reporting in Spain: a comparative
view. Journal of Intellectual Capital, 4(1), 61-81.
Ozkan, N., Cakan, S., & Kayacan, M. (2017). Intellectual capital and fi nancial performance: A
study of the Turkish Banking Sector. Borsa Istanbul Review, 17(3), 190-198.
Pena, I. (2002). Intellectual capital and business start-up success. Journal of Intellectual
Capital, 3(2), 180-198.
Petty, R., & Guthrie, J. (2000). Intellectual capital literature review: measurement, reporting
and management. Journal of Intellectual Capital, 1(2), 155-176.
Rauch, A., Frese, M., & Utsch, A. (2005). Eff ects of Human Capital and Long–Term Human
Resources Development and Utilization on Employment Growth of Small–Scale
Businesses: A Causal Analysis. Entrepreneurship Theory and Practice, 29(6), 681-698.
Ross, J. (1998). Exploring the concept of intellectual capital (IC). Long Range Planning, 31(1),
-153.
Saifuddeen, S. M., Rahman, N. N. A., Isa, N. M., & Baharuddin, A. (2014). Maqasid al-Shariah
as a complementary framework to conventional bioethics. Science and Engineering
Ethics, 20(2), 317-327.
Selei m, A., Ashour, A., & Bontis, N. (2004). Intellectual capital in Egyptian software fi rms. The
Learning Organization, 11(4/5), 332-346.
Seren ko, A., & Bontis, N. (2013). Global ranking of knowledge management and intellectual
capital academic journals: 2013 update. Journal of Knowledge Management, 17(2), 307-
Shara bati, A.-A. A., Naji-Jawad, S., & Bontis, N. (2010). Intellectual capital and business
performance in the pharmaceutical sector of Jordan. Management Decision, 48(1), 105-
Smith, G. V., & Parr, R. L. (2000). Valuation of Intellectual Property and Intangible Assets. New
York: Wiley Online Library.
Stewart, T., & Ruckdeschel, C. (1998). Intellectual capital: The new wealth of
organizations. Performance Improvement, 37(7), 56-59.
Subramaniam, M., & Youndt, M. A. (2005). The infl uence of intellectual capital on the types
of innovative capabilities. Academy of Management Journal, 48(3), 450-463.
Sullivan, P. H. (2000). Value Driven Intellectual Capital: How to Convert Intangible Corporate
Assets into Market Value. New York: John Wiley & Sons, Inc.
Taleb i, K., Rezazadeh, A., & Najmabadi, A. D. (2015). SME alliance performance: The impacts
of alliance entrepreneurship, entrepreneurial orientation, and intellectual capital.
International Journal of Entrepreneurship and Small Business, 24(2), 187-207.
Tastan, S., & Davoudi, S. M. M. (2015). A research on the relevance of intellectual capital and
employee job performance as measured with distinct constructs of in-role and extra-role
behaviors. Indian Journal of Science and Technology, 8(S7), 724-734.
Tovstiga, G. & Tulugurova, E. (2007) Intellectual capital practices and performance in Russian
enterprises. Journal of Intellectual Capital, 8(4), 695–707.
Tripat hy, T., Gil-Alana, L. A., & Sahoo, D. (2015). The eff ect of intellectual capital on fi rms’
fi nancial performance: an empirical investigation in India. International Journal of
Learning and Intellectual Capital, 12(4), 342-371.
Usoff , C. A., Thibodeau, J. C., & Burnaby, P. (2002). The importance of intellectual capital and
its eff ect on performance measurement systems. Managerial Auditing Journal, 17(1/2),
-15.
Walsh, S. T., & Linton, J. D. (2011). The strategy-technology fi rm fi t audit: a guide to opportunity
assessment and selection. Technological Forecasting and Social Change, 78(2), 199-216.
Yang, C. C., & Lin, C. Y. Y. (2009). Does intellectual capital mediate the relationship between
HRM and organizational performance? Perspective of a healthcare industry in Taiwan. The
International Journal of Human Resource Management, 20(9), 1965-1984.
Youndt , M. A. (1998). Human resource management systems, intellectual capital, and
organizational performance. Unpublished Ph. D. dissertation, the Mary Jean and Frank. P
Smeal College of Business Administration, Pennsylvania State University, USA.
Zeller, G. P., McFarland, K. S., Adams, T., Alton, A., Avvakumov, S., De Barbaro, L., & Brau,
J. (2002). Precise determination of electroweak parameters in neutrino-nucleon
scattering. Physical Review Letters, 88(9), 91-802.
Downloads
Published
Issue
Section
License
- Copyright of all the submissions to the Market Forces will remain to the contributors.
- Anyone is allowed to distribute, remix, tweak, and build upon his/her work, even commercially, as long as it is credited/cited to the original contributors of the Market Forces.
