Skip to main content
SpringerLink
Log in

How does intellectual capital spur innovation in economy? A cross-country survey

  • Published:
International Entrepreneurship and Management Journal Aims and scope Submit manuscript

Abstract

This study explores the impact of intellectual capital on innovation using a cross-sectional sample of 132 countries: 50 high-income and 82 low-income countries, during the period 2015–2020. Our research provides empirical evidence of the significant impact of intellectual capital on innovation. Analysis of the entire sample revealed that higher levels of knowledge enable the creation of new products and services to meet clients’ diversified requirements. However, different results were obtained when we analyzed the two subgroups of high- and low-income countries. We found that the impact in which the level of intellectual capital spurs the increase of innovation is 2.8 times higher in low-income countries than in high-income ones. However, the development process in low-income countries is based on technology transfer rather than on technological development. Additionally, our results for the high-income countries suggest a shallow impact of intellectual capital on innovation. The robustness checks performed consolidate our results. This study could have significant implications for policy-makers, who must acknowledge the vital role of intellectual capital in innovation.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Achim, M. V., & Borlea, N. S. (2013). Corporate governance and business performance. In Modern approaches in the new economy. Lap Lambert.

    Google Scholar 

  • Agostini, L., Nosella, A., & Filippini, R. (2017). Does intellectual capital allow improving innovation performance? Quantitative analysis in the SME context. Journal of Intellectual Capital, 18(2), 400–418.

    Article  Google Scholar 

  • Ali, B. J., & Anwar, G. (2021). Intellectual capital: A modern model to measure the value creation in a business. International Journal of Engineering, Business and Management, 5(2), 31–43. https://doi.org/10.22161/ijebm.5.2.4

    Article  Google Scholar 

  • Aljuboori, Z. M., Singh, H., Haddad, H., Al-Ramahi, N. M., & Ali, M. A. (2021). Intellectual capital and firm performance correlation: The mediation role of innovation capability in Malaysian manufacturing SMEs perspective. Sustainability, 14, 154.

    Article  Google Scholar 

  • Amarakoon, U., Weerawardena, J., Verreynne, M.L., &Teicher, J., (2019). Entrepreneurial behavior: A new perspective on the role of the HR professional.

    Google Scholar 

  • Andreeva, T., Garanina, T., Saenz, J., Aramburu, N., & Kianto, A. (2021). Does country environment matter in the relationship between intellectual capital and innovation performance? Journal of Business Research, 136, 263–273.

    Article  Google Scholar 

  • Ardito, L., Messeni, P. A., Dezi, L., & Castellano, S. (2020). The influence of inbound open innovation on ambidexterity performance: Does it pay to source knowledge from supply chain stakeholders? Journal of Business Research, 119, 321–329.

    Article  Google Scholar 

  • Asensio-López, D., Cabeza-García, L., & González-Álvarez, N. (2019). Corporate governance and innovation: A theoretical review. European Journal of Management and Business Economics, 28(3), 266–284.

    Article  Google Scholar 

  • Asiaei, K., Barani, O., Bontis, N., & Arabahmadi, M. (2020). Unpacking the black box: How intrapreneurship intervenes in the intellectual capital-performance relationship? Journal of Intellectual Capital, 21(6), 809–834.

    Article  Google Scholar 

  • Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99–120.

    Article  Google Scholar 

  • Barrena-Martinez, J., Cricelli, L., Ferrandiz, E., Greco, M., & Grimaldi, M. (2020). Joint forces: Towards an integration of intellectual capital theory and the open innovation paradigm. Journal of World Business, 51, 700–712.

    Google Scholar 

  • Bayraktaroglu, A. E., Calisir, F., & Baskak, M. (2019). Intellectual capital and firm performance: An extended VAIC model. Journal of Intellectual Capital, 2019(20), 406–425.

    Article  Google Scholar 

  • Bontis, N. (1998). Intellectual capital: An exploratory study that develops measures and models. Management Decision, 36(2), 63–76.

    Article  Google Scholar 

  • Bontis, N., Ciambotti, M., Palazzi, F., & Sgro, F. (2018). Intellectual capital and financial performance in social cooperative enterprises. Journal of Intellectual Capital, 19(4), 712–731.

    Article  Google Scholar 

  • Boter, H., & Holmquist, C. (1996). Industry characteristics and internationalization processes in small firms. Journal of Business Venturing, 11(6), 471–487.

    Article  Google Scholar 

  • Budiarso, N. S. (2019). Intellectual Capital in Public Sector. Journal Accountability, 8(1), 42–50.

    Article  Google Scholar 

  • Bunduchi, R., Smart, U. A., Mitra, C. C., & Cooper, S. (2022). Legitimacy and innovation in social enterprises. International Small Business Journal: Researching Entrepreneurship, 41(4), 349–370.

    Google Scholar 

  • Cabrilo, S., & Dahms, S. (2020). The role of multidimensional intellectual capital and organizational learning practices in innovation performance. European Management Review, 17, 835–855.

    Article  Google Scholar 

  • Canare, T. (2018). The effect of ease of doing business on firm creation. Annals of Economics and Finance, 19-2, 555–584.

    Google Scholar 

  • Cao, Y., Xiong, S., & Hu, H. (2016). A study of the relationship between intellectual capital and innovation performance based on the life cycle of enterprises. Science Resource Management, 37, 69–78.

    Google Scholar 

  • Chan, Y.-Y., Hughes, M., & Hotho, S. (2011). Internal and external antecedents of SMEs’ innovation ambidexterity outcomes. Management Decisions, 49(10), 1658–1676.

    Article  Google Scholar 

  • Chaston, I. (2013). Independent financial advisors: Open innovation and business performance. The Service Industries Journal, 33, 636–651.

    Article  Google Scholar 

  • Choong, K. K. (2008). Intellectual capital: Definitions, categorization and reporting models. Journal of Intellectual Capital, 9(4), 609–638.

    Article  Google Scholar 

  • CIMA (Chartered Institute of Management Accountants). (2019). Retrieved 12/12/2022, from https://www.aicpa-cima.com/home

  • Clausen, T. H., Demircioglu, M. A., Alsos, G. A., & I. (2020). Intensity of innovation in public sector organizations: The role of push and pull factors. Public Administration, 98(1), 159–176.

    Article  Google Scholar 

  • Cui, H., Dai, L., & Zhang, Y. (2021). Organization capital and corporate innovation: Evidence from China. Finance Research Letters, 43, 101956.

    Article  Google Scholar 

  • Cuozzo, B., Dumay, J., Palmaccio, M., & Lombardi, R. (2017). Intellectual Capital disclosure: a Structured Literature Review. Journal of Intellectual Capital, 18(1), 9–28.

    Article  Google Scholar 

  • Danviboon, P. (2018). Critically assess the resource-based, industry-based and institution-based perspectives, and examine their relevance in relation to internationalization strategies undertaken by multi-National Enterprises (MNEs), Alliance Manchester Business school. The University of Manchester. https://doi.org/10.13140/RG.2.2.26263.21923

    Book  Google Scholar 

  • Demircioglu, M. A., & Audretsch, D. B. (2017). Conditions for innovation in public sector organizations. Resources Policy, 46, 1681–1691.

    Article  Google Scholar 

  • Diefenbach, T. (2006). Intangible resources: A categorical system of knowledge and other intangible assets. Journal of Intellectual Capital, 7(3), 406–420.

    Article  Google Scholar 

  • Dutta, S., Lanvin, B., León, L., & Wunsch-Vincent, S. (2021). Global Innovation Index 2021: Tracking innovation through the COVID-19 crisis (14th ed., p. 226). WIPO.

    Google Scholar 

  • Edvinsson, L. (1997). Developing intellectual Capital at Skandia. Long Range Planning, 30(3), 320–331.

    Article  Google Scholar 

  • Edvinsson, L., & Malone, M. S. (1997). Intellectual capital: Realizing your Company’s true value by finding its hidden brainpower. Harper Collins Publishers.

    Google Scholar 

  • Farzaneh, M., Wilden, R., Afshari, L., & Mehralian, G. (2022). Dynamic capabilities and innovation ambidexterity: The roles of intellectual capital and innovation orientation. Journal of Business Research, 148, 47–59.

    Article  Google Scholar 

  • Fu, X., & Shi, L. (2022). Direction of innovation in developing countries and its driving forces. World Intellectual Property Organization.

    Google Scholar 

  • Furman, J. L., Porter, M. E., & Stern, S. (2002). The determinants of national innovative capacity. Research Policy, 31(6), 899–933.

    Article  Google Scholar 

  • Grojer, J. E. (2001). Intangibles and accounting classifications: In search of a classification strategy. Accounting, Organizations and Society, 26(7/8), 695–713.

    Article  Google Scholar 

  • He, J., & Tian, X. (2018). Finance and corporate innovation: A survey. Asia-Pacific Journal of Financial Studies, 47, 165–212.

    Article  Google Scholar 

  • Hormiga, E., & García-Almeida, D. J. (2016). Accumulated knowledge, and innovation as antecedents of reputation in new ventures. Journal of Journal of Small Business and Enterprise Development, 23(2), 428–452.

    Google Scholar 

  • Jaworski, B. J., & Kohli, A. K. (1993). Market orientation: Antecedents and consequences. Journal of Marketing, 57(3), 53–70.

    Article  Google Scholar 

  • Kafouros, M., & Alieyev, M. (2015). Institutions and foreign subsidiary growth in transition economies: The role of intangible assets and capabilities. Journal of Management Studies, 53(4), 580–607.

    Article  Google Scholar 

  • Kamprath, M., & Mietzner, D. (2015). The impact of sectoral changes on individual competences: A reflective scenario-based approach in the creative industries. Technological Forecasting and Social Change, 95, 252–275.

    Article  Google Scholar 

  • Kedia, B. L., & Mukherjee, D. (2009). Understanding offshoring: A research framework based on disintegration, location and externalization advantages. Journal of World Business, 44, 250–261.

    Article  Google Scholar 

  • Khanin, S., Derhaliuk, M., Stavroyany, S., Kudlasevych, S., & Didkivska, L. (2022). Paradigm of the transformation of potential-forming space under the impact of intellectual-innovation determinants. International Journal of Computer Science and Network Security, 22(1), 340–346.

    Google Scholar 

  • Kianto, A., Saens, J., & Aramburu, N. (2017). Knowledge-based human resource management practices, intellectual capital and innovation. Journal of Business Research, 81, 11–20.

    Article  Google Scholar 

  • Kwan, L. Y. Y., & Chiu, C. Y. (2015). Country variations in different innovation outputs: The interactive effect of institutional support and human capital. Journal of Organizational Behaviour, 36, 1050–1070.

  • Lahiri, S., Kedia, B. L., & Mukherjee, D. (2012). The impact of management capability on the resource–performance linkage: Examining Indian outsourcing providers. Journal of World Business, 47, 145–155.

    Article  Google Scholar 

  • Loopez-Zapata, E., & Ramírez-Gómez, A. D. J. (2021). Intellectual capital, organizational culture and ambidexterity in Colombian firms. Journal of Intellectual Capital, 24(2), 375–398.

    Article  Google Scholar 

  • Lu, Y., Tsang, E. W. K., & Peng, M. W. (2008). Knowledge management and innovation strategy in the Asia Pacific: Toward an institution-based view. Asia Pacific Journal of Management, 25, 361–374.

    Article  Google Scholar 

  • Martinidis, G., Komninos, N., Dyjakon, A., Minta, S., & Hejna, M. (2021). How intellectual capital predicts innovation output in EU regions: Implications for sustainable development. Sustainability, 13, 14036.

    Article  Google Scholar 

  • Masso, J., Roolaht, T., & Varblane, U. (2013). Foreign direct investment and innovation in Estonia. Baltic Journal of Management, 8(2), 231–248.

    Article  Google Scholar 

  • McDowell, W. C., Peake, W. O., Coder, L., & Harris, M. L. (2018). Building small firm performance through intellectual capital development: Exploring innovation as the “black box”. Journal of Business Research, 88, 321–327.

    Article  Google Scholar 

  • McMillan, J. (2007). Market institutions. In L. Blume & S. Durlauf (Eds.), The new Palgrave dictionary of economics (2nd ed.). Palgrave.

    Google Scholar 

  • Miranda, R. L., dos Santos, L. F., Gomes, G., & dos Santos Parisotto, I. R. (2021). Competitiveness influence on global innovation of nations: A cross-sectional analysis. Independent Journal of Management Production, 12(4), 964–978. https://doi.org/10.14807/ijmp.v12i4.1338

    Article  Google Scholar 

  • Murphy, M., Perrot, F., & Rivera-Santos, M. (2012). New perspectives on learning and innovation in cross-sector collaborations. Journal of Business Research, 65, 1700–1709.

    Article  Google Scholar 

  • Nahapiet, J., & Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of Management Review, 23, 242–266.

    Article  Google Scholar 

  • North, D. C. (1990). Institutions, institutional change, and economic performance. Harvard University Press.

    Book  Google Scholar 

  • Novillo-Villegas, S. N., Andrade, R. A., Cox, J. P. L., Oyaneder, J. S., & Vargas, P. A. (2022). A roadmap for innovation capacity in developing countries. Sustainability, 14, 6686. https://doi.org/10.3390/su14116686

    Article  Google Scholar 

  • OECD. (2005). Proposed guide lines for collecting and interpreting technological innovation data: Oslo manual. OECD Publications Service.

    Google Scholar 

  • Palazzi, F., Sgrò, F., Ciambotti, M., & Bontis, N. (2020). Technological Intensity as a Moderating Variable for the Intellectual Capital–Performance Relationship. Knowledge and Process Management, 27, 3–14.

    Article  Google Scholar 

  • Peng, M. (2014). Global strategic management. 3rd ed. Cengage Learning.

    Google Scholar 

  • Peng, M. W., Sun, S. L., Pinkham, B., & Chen, H. (2009). The institution-based view as a third leg for a strategy tripod. Academy of Management Perspectives, 23, 63–81.

    Article  Google Scholar 

  • Peng, M. W., Wang, D., & Jiang, Y. (2008). An institution-based view of international business strategy: A focus on emerging economies. Journal of International Business Studies, 39(5), 920–936.

    Article  Google Scholar 

  • Porter, M. (1980). Competitive advantage: Creating and sustaining superior performance; and competitive strategy: Techniques for analyzing industries and competitors. Free Press.

    Google Scholar 

  • Rus, A. I. D., Achim, M. V., & Borlea, S. N. (2019). Theoretical and methodological approaches on the intellectual capital. Studia Universitatis Economics Series, 29(2), 1–16.

    Google Scholar 

  • Salazar-Elena, J. C., Sánchez, M. P., & Otamendi, F. J. (2016). A non-parametric Delphi approach to Foster innovation policy debate in Spain. Sustainability, 8, 487.

    Article  Google Scholar 

  • Schulze, A., & Hoegl, M. (2006). Knowledge creation in new product development projects. Journal of Management, 32, 210–236.

    Article  Google Scholar 

  • Schumpeter, J. A. (1942). Capitalism, socialism, and democracy. Harper & Brothers.

    Google Scholar 

  • Scott, W. R. (1995). Institutions and organizations. Sage.

    Google Scholar 

  • Singer, H. W. (1954). Obstacles to economic development. Social Research, 20(1), 19–31.

    Google Scholar 

  • Smith, K. G., Collins, C. J., & Clark, K. D. (2005). Existing knowledge, knowledge creation capability, and the rate of new product introduction in high-technology firms. Academy of Management Journal, 48, 346–357.

    Article  Google Scholar 

  • SolAbility. (2022). Retrieved 05/04/2023, from https://solability.com

  • Solow, R. M. (1957). Technical change and the aggregate production. The Review of Economics and Statistics, 39, 312–320.

    Article  Google Scholar 

  • Soumitra, D., Bruno, L., Lorena Rivera, L., & Sacha, W. W. (2021). Global innovation index 2021. WIPO.

    Google Scholar 

  • Spender, J. C. (1996). Making knowledge the basis of a dynamic theory of the firm. Strategic Management Journal, 17, 45–62.

    Article  Google Scholar 

  • Spulber, D. F. (2013). How do competitive pressures affect incentives to innovate when there is a market for inventions? Journal of Political Economy, 121, 1007–1054.

    Article  Google Scholar 

  • Starovic, D., & Marr, B. (2004). Understanding Corporate Value: Managing and Reporting Intellectual Capital. Graphicered Institute of Management Accountants (CIMA).

    Google Scholar 

  • Stewart, T. A. (1997). Intellectual capital: The new wealth of organizations. Doubleday/Currency.

    Google Scholar 

  • Su, Z., Peng, M. W., & Xie, E. (2016). A strategy tripod perspective on knowledge creation capability. British Journal of Management, 27, 58–76. https://doi.org/10.1111/1467-8551.12097

    Article  Google Scholar 

  • Subramaniam, M., & Youndt, M. A. (2005). The influence of intellectual capital on the types of innovative capabilities. Academy of Management Journal, 48, 450–463.

    Article  Google Scholar 

  • Sveiby, K. E. (1997). The new organizational wealth: Managing & measuring knowledge-based assets. Berrett-Koehler Publishers.

    Google Scholar 

  • Taalbi, J. (2017). What drives innovation? Evidence from economic history. Research Policy, 46(2017), 1437–1453.

    Article  Google Scholar 

  • Taleb, M., & Pheniqi, Y. (2022). IT agility and Moroccan HEI’s innovation performance: The moderating role of IT ambidexterity. Published in 2022 international conference on intelligent systems and computer vision (ISCV), 18-20 may 2022. https://doi.org/10.1109/ISCV54655.2022.9806112

    Book  Google Scholar 

  • Tolochko, S., Bordiug, N., & Knysh, I. (2020). Transversal competencies of innovative entrepreneurship professionals in lifelong education. Baltic Journal of Economic Studies, Publishing house Baltija Publishing, 6(3), 156–165. https://doi.org/10.30525/2256-0742/2020-6-3-156-165

    Article  Google Scholar 

  • Turner, N., Maylor, H., & Swart, J. (2015). Ambidexterity in projects: An intellectual capital perspective. International Journal of Project Management, 33(1), 177–188.

    Article  Google Scholar 

  • Vatamanescu, E. M., Gorgos, E. A., Ghigiu, A. M., & Patru, M. (2019). Bridging intellectual capital and SMEs internationalization through the Lens of sustainable competitive advantage: A systematic literature review. Sustainability, 11, 2510. https://doi.org/10.3390/su11092510

    Article  Google Scholar 

  • Wan, W. P. (2005). Country resource environment, firm capabilities, and corporate diversification strategies. Journal of Management Studies, 42, 161–182.

    Article  Google Scholar 

  • Wang, Y., Su, X., Wang, H., & Zou, R. (2019). Intellectual capital and technological dynamic capability: Evidence from Chinese enterprises. Journal of Intellectual Capital, 20(4), 453–471. https://doi.org/10.1108/JIC-06-2018-0096

    Article  Google Scholar 

  • Wei, Z., & Zhao, J. (2014). Organizational ambidexterity, market orientation and firm performance. Journal of Engineering and Technology Management, 33(3), 134–153.

    Article  Google Scholar 

  • World Bank (2022). World development indicators.

    Google Scholar 

  • World Economic Forum (2022). Global Competitiveness Index.

    Google Scholar 

  • Worldwide Governance Indicators. (2022). Accessed on 02/03/2023, from www.govindicators.org

  • Yu, Q., Aslam, S., Murad, M., Jiatong, W., & Syed, N. (2022). The impact of knowledge management process and intellectual capital on entrepreneurial orientation and innovation. Frontiers in Psychology, 13, 772668. https://doi.org/10.3389/fpsyg.2022.772668

    Article  Google Scholar 

  • Zhan, G., & Li, Z. (2018). A research on the effect of internationalization drain of intellectual capital on technological innovation. Science Research Management, 39, 96–102.

    Google Scholar 

  • Zhang, Z., Wang, Z., & Chun, D. (2021). The U-shaped relationship between intellectual capital and technological innovation: A perspective on Enterprise ownership and the moderating effect of CSR. Sustainability, 13, 12872. https://doi.org/10.3390/su132212872

    Article  Google Scholar 

Download references

Acknowledgments

This work was supported by a grant from the Romanian Ministry of Education and Research, CNCS - UEFISCDI, project number PN-III-P4-ID-PCE-2020-2174, within PNCDI III.

Author information

Authors and Affiliations

  1. Babeş-Bolyai University, Cluj-Napoca, Romania

    Monica Violeta Achim

  2. Excelia Business School, La Rochelle, France

    Alexandra Ioana Daniela Rus & Nawazish Mirza

Authors
  1. Monica Violeta Achim
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Alexandra Ioana Daniela Rus
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Nawazish Mirza
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Nawazish Mirza.

Ethics declarations

Conflict of interest

No potential conflict of interest was reported by the authors.

Additional information

Publisher’s note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix. Description of variables

Appendix. Description of variables

Variable

Way of expressing

Unit

Source

Dependent variables

  Global Innovation Index (GII)

The Global Innovation Index is a comprehensive measure of the innovation ecosystem's performance across different countries. It ranks the performance of different economies each year based on their innovation strengths and weaknesses.

Scoring measure ranged from minim 0 to maxim 100

World Intellectual Property Organization (WIPO)

Independent variables

  Intellectual Capital Index (ICI)

Takes into account various indicators related to education and technological development

Scoring measure ranged from minim 0 to maxim 100

SolAbility (2022)

Control variables

  Economic development (GDP)

Per capita Gross Domestic Product (GDP)

in US dollars

World Bank

  Public Governance

Worldwide Governance Indicators consist in six dimensions of governance:

1. Voice and Accountability (V A)

2. Political Stability and Absence of Violence (PS)

3. Government Effectiveness (GE)

4. Regulatory Quality (RQ)

5. Rule of Law (RL)

Control of Corruption (CC).

2.5 weak to 2.5 strong

World Bank

  Doing Business Index (DBI)

This topic aims to provide a comprehensive overview of the various steps involved in establishing and operating a limited liability company. It also shows the minimum capital required to start and operate a business in each of the country's major business cities.

Scoring measure ranged from 0-100

 

  Efficacy of Corporate board (CG)

Describes the level of corporate governance in a country

Scoring measure ranged from 1-7

Global Competitiveness Index

  Strength Audit and reports (SAR)

Describes how strong are financial auditing and reporting standards

Scoring measure ranged from 1-7

Global Competitiveness Index

  1. Source: author’s processing

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Achim, M.V., Rus, A.I.D. & Mirza, N. How does intellectual capital spur innovation in economy? A cross-country survey. Int Entrep Manag J (2023). https://doi.org/10.1007/s11365-023-00931-9

Download citation

  • Accepted:

  • Published:

  • DOI: https://doi.org/10.1007/s11365-023-00931-9

Keywords

JEL codes

Search

Navigation