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Intellectual capital and organisational performance in Malaysian knowledge-


intensive SMEs

Article  in  International Journal of Learning and Intellectual Capital · January 2018


DOI: 10.1504/IJLIC.2018.088345

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20 Int. J. Learning and Intellectual Capital, Vol. 15, No. 1, 2018

Intellectual capital and organisational performance in


Malaysian knowledge-intensive SMEs

Muhammad Khalique*
MUST Business School,
Mirpur University of Science and Technology,
Mirpur, Azad Jammu and Kashmir, Pakistan
Email: drmkhalique@gmail.com
*Corresponding author

Nick Bontis
DeGroote School of Business,
McMaster University, Hamilton, ON,
Canada
Email: nbontis@mcmaster.ca

Jamal Abdul Nassir bin Shaari


Faculty of Economics and Muamalat,
Department of Business Management,
Universiti Sains Islam, Negeri Sembilan
Malaysia
Email: jamalnassir@yahoo.com

Mohd Rafi Yaacob


Faculty of Entrepreneurship and Business,
Universiti Malaysia Kelantan, Kelantan,
Malaysia
Email: rafi@umk.edu.my

Rohana Ngah
Faculty of Business and Management,
Universiti Teknologi MARA, Selangor,
Malaysia
Email: rohanangah@salam.uitm.edu.my

Abstract: This study was designed to test and validate the integrated
intellectual capital model by examining the relationship between intellectual
capital and organisational performance of small and medium enterprises
(SMEs) operating in the electrical and electronics manufacturing sectors in
Malaysia. Data was collected through a validated survey instrument
administered on a sample of 237 respondents from targeted SMEs. Cronbach’s

Copyright © 2018 Inderscience Enterprises Ltd.


Intellectual capital and organisational performance 21

alpha and confirmatory factor analysis were used to examine the reliability and
validity of the research instrument. Structural equation modelling was used to
test the proposed research hypotheses. The results demonstrate that human
capital, customer capital, structural capital, social capital, technological capital
and spiritual capital are crucial components of intellectual capital and all link to
organisational performance. Although there are limitations to measuring
intellectual capital quantitatively, this study provides further insight into the
relationship between intellectual capital and organisational performance within
a developing nation. The limitations of the study include a limited scope of
generalisability.

Keywords: customer capital; human capital; integrated intellectual capital


model; Malaysia; organisational performance; SMEs; social capital; spiritual
capital; structural capital; technological capital.

Reference to this paper should be made as follows: Khalique, M., Bontis, N.,
Abdul Nassir bin Shaari, J., Yaacob, M.R. and Ngah, R. (2018) ‘Intellectual
capital and organisational performance in Malaysian knowledge-intensive
SMEs’, Int. J. Learning and Intellectual Capital, Vol. 15, No. 1,
pp.20–36.

Biographical notes: Muhammad Khalique is presently working as an


Associate Professor/Director, MUST Business School (MBS), Mirpur
University of Science and Technology Mirpur (MUST) Pakistan. He is a
Founder of MUST Business School, MUST Entrepreneurial Incubation Centre
and MUST Business Research Centre. He received PhD in Entrepreneurship
from Universiti Malaysia Sarawak, Malaysia in 2012. He has also worked as a
Senior Lecturer in the Department of Business Management, FEB in Universiti
Malaysia Sarawak for a couple of years. He has 13 years of teaching experience
at national and international level. He has published more than 50 articles in
international refereed journals, in conference proceedings and as book chapters.
He has more than 200 citations. He is a reviewer of 12 international refereed
and indexed journals. He is a member of various professional bodies.
His research focuses on intellectual capital, knowledge management,
entrepreneurship, innovation, SMEs & organisational performance. He worked
on various research projects. He has invited as a Keynote Speaker at national
and international level.

Nick Bontis is a Chair in Strategic Management at the DeGroote School of


Business in McMaster University. He received his PhD from the Ivey Business
School at Western University. He is the first McMaster Professor to win
Outstanding Teacher of the Year and Faculty Researcher of the Year
simultaneously. He is a 3M National Teaching Fellow, an exclusive honour
only bestowed upon the top university professors in Canada. He is recognized
as a leading professional speaker and consultant in the field of intellectual
capital, knowledge management and knowledge worker productivity in
worldwide.

Jamal Abdul Nassir bin Shaari received PhD from Reitaku University, Japan
and MBA (TQM) from Marquette, USA. He is also a Professional Speaker,
Researcher and Consultant. His activities are oriented towards the field of total
quality management, marketing, intellectual capital and knowledge
management. His research publications appeared in various academic journals.

Mohd Rafi Yaacob works as an Associate Professor/Dean at the Faculty of


Entrepreneurship and Business, Universiti Malaysia Kelantan (UMK). He has a
BSc (Geography) from the University of Malaya 1991 and pursued an MBA at
22 M. Khalique et al.

the Middlesex University in the United Kingdom 1995. He obtained PhD in


Management in 2007 from the University of Newcastle, Australia and
Postgraduate Diploma of Entrepreneurship (PDGE), University of Cambridge
in 2012. His research interests are in entrepreneurship especially in small and
medium enterprises (SMEs) and environmental management in businesses. He
has written more than 100 papers for national and international journals,
conferences and seminar.

Rohana Ngah is an Associate Professor in Faculty of Business and


Management at Universiti Teknologi MARA, Malaysia. She is also a Head of
Quality Unit of Entrepreneurship Research at Malaysian Academy of SME and
Entrepreneurship Development (MASMED). She received her PhD in 2011 and
had attended a postgraduate programme in University of Cambridge. Her areas
of research interest are intellectual capital, knowledge management, innovation
management, youth entrepreneurship, emotional intelligence and transportation
planning. She was a Fellow at Malaysian Transport Institute (MITRAN).
She has published numerous articles and an active reviewer of several journals.
She also frequently invited as a keynote speaker in in academic and seminar
conferences.

1 Introduction

Due to the overwhelming acknowledgment of the positive role intellectual capital plays
in the developed world, a burgeoning track of research has started to explore the concept
of intellectual capital in small and medium enterprises (SMEs) operating in developing
and under-developed economies (Khalique et al., 2015). Several academic researchers
(Bontis et al., 2000; Bueno et al., 2006; Daud and Yusoff, 2011; Dumay and Roslender,
2013; Kamukama et al., 2010; Khalique et al., 2011b) affirm that proactive management
of intellectual capital is a vital element for the success of organisations. In addition,
intellectual capital is equally important for small and medium-sized enterprises SMEs.
SMEs play a vital role in the development of national economies by providing significant
employment, social infrastructure and a growing contribution in GDP for the export
sector (Bruque and Moyano, 2007; Erkena and Gilsing, 2005; Zeng et al., 2010;
Khalique, 2012). Moreover, SMEs are considered critical for the development of
entrepreneurial skills and the advancement of innovation and as such offer a fruitful
setting for the further study of intellectual capital (Chang and Hsieh, 2011; Daud and
Yusoff, 2010; de Castro and Sáez, 2008; de Pablos, 2002; Hsu and Wang, 2012;
Khalique, 2012; Khalique et al., 2013b; Ordonez de Pablos, 2004).
Malaysia is a Southeast Asian country known for its beaches, rainforests and mix of
Malay, Chinese, Indian and European influences. The International Monetary Fund (see
www.imf.org) reports that with a population of thirty million inhabitants and GDP per
capita of $25,833 USD, Malaysia’s economy benefits from bugeoning growth and higher
aspiratons of development. Unfortunately, the focus on intellectual capital research in
Malaysia has been sparse and inconsistent (Haji and Ghazali, 2012). The purpose of this
study is to fill the void in the extant literature by examining intellectual capital within
SMEs in a developing nation setting.
Intellectual capital and organisational performance 23

2 Literature review

It is clear from nearly 20 years of academic research that intellectual capital is one of the
key factors responsible for the success of knowledge-intensive organisations (Serenko
et al., 2009). According to Feiwal (1975) and Ding (2010), the term ‘intellectual capital’
was first introduced by John Kenneth Galbraith in 1969. He argued that intellectual
capital represents more than just ‘intellect as pure intellect’ but also includes a degree of
‘intellectual action’. According to this argument, intellectual capital is not only a fixed
intangible asset but represents the accumulation of the sum of all an organisation’s
intangible assets. These assets should be used to create value-added products and
services.
There have been several comprehensive reviews of the field of intellectual capital and
therefore it is not necessary to regurgitate it here (Bontis, 1999; Serenko and Bontis,
2013). Nevertheless, a highlight review of the literature is warranted. Stewart (1997)
proposed a model based on three components: human capital, customer capital and
structural capital. Bontis et al. (2000) tested this model in the Malaysian context and
generally found positive results in both service and non-service sectors but respondents
were part-time MBA students. Ismail (2005) conducted a study in Malaysia that extended
the model of intellectual capital with the addition of spiritual capital. Notwithstanding,
Bueno et al. (2006) proposed an Intellectus Model which comprised of five components:
human capital, technological capital, business capital, social capital and organisational
capital. Khalique et al. (2011a) extended this further by developing the integrated
intellectual capital model (IICM) which was comprised of six components as follows:
human capital, customer capital, structural capital, social capital, technological capital
and spiritual capital. A brief review of these six components is as follows.
There is general agreement among researchers that human capital is based on
competencies (i.e. education, professional skills, know-how and experimental
knowledge), attitudes (i.e. motivation, leadership, behavioural patterns) and intellectual
agility (i.e. innovation, creativity, flexibility, adaptability) (Bontis, 1998; Bontis et al.,
1999; Bontis et al., 2002; Tovstiga and Tulugurova, 2007). Customer capital refers to the
knowledge embedded in the relationships with customers based on brand value, a strong
network of customers, customer loyalty and customer satisfaction (Bontis, 1998; Bontis
et al., 1999; Ismail, 2005; Tovstiga and Tulugurova, 2007). Structural capital includes all
the non-human storehouses of knowledge like systems, procedures, databases, networks,
process manuals and routines (Bontis, 1998; Khalique et al., 2011a). Social capital refers
to an organisation’s transparency, corporate social responsibility, honesty and ethics
(Bueno et al., 2006; de Castro and Sáez, 2008; Khalique et al., 2011a; McElroy, 2002;
Nahapiet and Ghoshal, 1998; Subramaniam and Youndt, 2005). Technological capital
can be described as information system knowledge and technological R&D (Bueno et al.,
2006; García-Muiña and Pelechano-Barahona, 2008; Khalique et al., 2014; Khalique
et al., 2011a). Spiritual capital includes the religious and ethical values of the individuals
in an organisation (Ismail, 2005; Khalique et al., 2014; Khalique et al., 2011a; Malloch,
2010).
24 M. Khalique et al.

3 Theoretical development of hypotheses

Many researchers agree that intellectual capital is the most important strategic asset for
the success of an organisation (Chang and Hsieh, 2011; de Pablos, 2004; Díez et al.,
2010; Hormiga et al., 2011; Hsu and Fang, 2009; Khalique et al., 2013a). There is also
general agreement that this positive relationship exists within the SME context (Abdullah
and Sofian, 2012; Bontis et al., 2000; Chen et al., 2006; Daud and Yusoff, 2010; de
Castro and Sáez, 2008; de Pablos, 2003; Ismail, 2005; Khalique et al., 2011b). However,
what is not clear is whether this positive result holds true within a developing nation such
as Malaysia. Nevertheless, Malaysian researchers in particular argue that, in their own
specific context, “knowledge is a necessity and can be used as a strategic tool against
competitors” (Naquiyuddin and Heong, 1992, p.72).
The conceptual framework of this study is based on the IICM (for a comprehensive
review see Khalique et al., 2011a) as reflected in Figure 1.

Figure 1 Conceptual framework

Source: Integrated Intellectual Capital Model (IICM20111) Khalique et al.


(2011)
This study aims to examine the following set of hypotheses to see if the results hold true
in the Malaysian SME context.
H1: Intellectual capital is positively associated with organisational performance.
H2: Human capital is positively associated with intellectual capital.
H3: Customer capital is positively associated with intellectual capital.
H4: Structural capital is positively associated with intellectual capital.
H5: Social capital is positively associated with intellectual capital.
H6: Technological capital is positively associated with intellectual capital.
H7: Spiritual capital is positively associated with intellectual capital.

4 Methodology

The proposed model was empirically tested through a structured questionnaire carried out
in SMEs operating in electrical and electronics manufacturing sector in Malaysia. Six
predictor variables namely, human capital, customer capital, structural capital, social
capital, technological capital and spiritual capital and one predicted variable namely,
organisational performance of SMEs were employed. The variables were tested by using
previously validated multi-item Likert-type scales. The final survey for this study
included 90 items in total as follows:
Intellectual capital and organisational performance 25

• Human Capital: 13 items were used based on the measures proposed by Bontis
(1998), Tovstiga and Tulugurora (2007), Youndt (1998) and Ismail (2005).
• Customer Capital: 10 items were used based on the measures proposed by Bontis
(1998), Tovstiga and Tulugurora (2007), Youndt (1998) and Ismail (2005).
• Structural Capital: 13 items were used based on the measures proposed by Bontis
(1998), Tovstiga and Tulugurora (2007), Young et al. (2007), Youndt (1998) and
Ismail (2005).
• Social Capital: 12 items were used based on the measures proposed by de Castro and
Sáez (2008), Subramaniam and Youndt (2005), Bontis (1999), Ismail (2005) and
Chua Alton (2002).
• Technological Capital: 12 items were used based on the measures proposed by
García-Muiña, and Pelechano-Barahona (2008) and Bueno et al. (2006).
• Spiritual Capital: 11 items were used based on the measures proposed by Ismail
(2005) and Youndt (1998).
• Organisational Performance: 19 items were used based on the measures proposed by
Bontis (1999), Ismail (2005), Tovstiga and Tulugurora (2007) and Youndt (1998).
The population of this study was based on all of the 150 SMEs operating in the electrical
and electronics manufacturing sector in Penang and Selangor Malaysia derived from the
directories of Electrical and Electronics Association of Malaysia (TEEAM, 2009) and
Federation of Malaysian Manufacturers (FMM, 2010). SMEs in this study were defined
to have between five and 150 employees. Targeted survey respondents included the Chief
Executive Officer, Managing Director, General Managers, Owner, Managers or Assistant
Manager. A total of 550 questionnaires were distributed through surface postal mail. This
endeavour yielded a final sample size of 237 respondents from 77 SMEs and a resultant
individual response rate of 43% representing 51% of all SMEs which is sufficient
(Krejcie and Morgan, 1970).

5 Results

The data was normally distributed and the corresponding constructs and measures
showed appropriate levels of reliability as tested through Cronbach’s alpha. The
reliabilities for each of the six constructs and organisational performance were greater
than 0.81, which exceeds the criterion of 0.7, considered well for exploratory research
(Nunnally, 1978) (Table 1).

Table 1 Measurement of constructs

Measure No. of items Rating α-value


Human capital 13 1–5 0.861
Skills knowledge & expertise 3 1–5 0.698
Attitude 5 1–5 0.787
Intellectual agility 5 1–5 0.762
Customer capital 10 1–5 0.810
26 M. Khalique et al.

Table 1 Measurement of constructs (continued)

Measure No. of items Rating α-value


Customer satisfaction & loyalty 5 1–5 0.727
Network 5 1–5 0.738
Structural capital 13 1–5 0.899
Infrastructure and system 6 1–5 0.828
Policies and procedure 7 1–5 0.847
Social capital 12 1–5 0.877
Structural 4 1–5 0.699
Relational 4 1–5 0.781
Cognitive 4 1–5 0.782
Technological capital 12 1–5 0.917
IT knowledge 7 1–5 0.882
Research budget & protection rights 5 1–5 0.867
Spiritual capital 11 1–5 0.885
Religious 6 1–5 0.822
Ethic values 5 1–5 0.835
Organisational performance 19 1–5 0.942
Financial perspective 5 1–5 0.882
Customer perspective 5 1–5 0.846
Internal business process perspective 4 1–5 0.794
Learning and growth perspective 5 1–5 0.859

Byrne (2001) argues that confirmatory factor analysis (CFA) is more appropriate for
applications when the researcher has some knowledge of the underlying latent variable
structure, based on knowledge of theory, empirical research or both. In this study, a
structural equation modelling technique using AMOS 20 with maximum likelihood
estimation was used to test the construct validity of the instrument. CFA was used to test
the validity of the measurement model and the structural model (De Run et al., 2008;
Hair et al., 1998; Meyers et al., 2006; Sing, 2008). Meyers et al. (2006) points out that the
best supported system of categorising model fit indices is their classification into three
categories namely absolute, relative and parsimonious. A brief description of absolute,
relative and parsimonious fit measures is shown in Table 2.

Table 2 Absolute, relative parsimonious fit

Goodness of fit indices Label Acceptable level


Chi-square/degree of freedom CMIN/df Value less than 5 indicates a good fit
Goodness of fit GFI Value close to 0.90 indicates a good
model fit
Adjusted goodness of fit AGFI Value close to 0.80 indicates a good
model fit
Bentler-Bonett normed fit index TLI Value close to 0.90 indicates a good
model fit
Intellectual capital and organisational performance 27

Table 2 Absolute, relative parsimonious fit (continued)


Goodness of fit indices Label Acceptable level
Comparative fit index CFI Value close to 0.90 indicates a good
model fit
Parsimony comparative fit index PCFI Value greater than 0.50 indicates a good
model fit
Parsimony normed fit index PNFI Value greater than 0.50 indicates a good
model fit
Root mean square error of RMSEA Value less than 0.1 indicates a good
approximation model fit
Standardised factor loading More than 0.50
Critical value More than 0.50
Source: De Run et al. (2008), Sing (2008) and Meyers et al. (2006)
The measurement model for human capital was based on three components namely, skills
knowledge and expertise, attitude and intellectual agility representing 13 items.
The results of CFA showed standardised factor loadings above the cut-off criteria. Two
items of human capital were dropped due to insignificant values. Customer capital was
based on two components: customer satisfaction and loyalty and network representing 10
items. The results showed factor loadings above the cut-off criteria. Structural capital
included two components: infrastructure and system and policies and procedure. Two
items were dropped due to poor factor loading values. Social capital was based on three
sub-components and 11 items that were all above the cut-off criteria. Technological
capital had one item deleted due to poor goodness of fit. Finally, spiritual capital had two
sub-components: religious and ethical values measured with 11 items, and organisational
performance had four sub-components with 19 items, that were all above the cut-off
criteria.
From a nomological perspective, the goodness of fit index indicates that the data had
a good fit to the model. The results of the employed constructs, factor loadings and
critical ratio are deemed to be valid and reliable. A summary of these CFA results is
shown in Table 3.

Table 3 Summary of confirmatory factor analysis

Variables χ2 CMIN/df RMSEA GFI AGFI CFI TLI PNFI PCFI


Human capital 79.09 1.92 0.063 0.94 0.91 0.95 0.95 0.67 0.71
Customer 65.57 1.92 0.063 0.95 0.92 0.94 0.92 0.67 0.71
capital
Structural 54.97 1.62 0.051 0.95 0.93 0.98 0.97 0.72 0.51
capital
Social capital 109.88 2.55 0.081 0.92 0.88 0.93 0.91 0.69 0.72
Technological 140.62 3.27 0.098 0.90 0.85 0.93 0.91 0.70 0.72
capital
Spiritual 107.31 3.16 0.090 0.92 0.86 0.92 0.92 0.67 0.69
capital
Organisational 281.34 1.89 0.061 0.89 0.86 0.95 0.94 0.78 0.83
performance
28 M. Khalique et al.

The results of fit for each measurement are acceptable. The CMIN/df ranges from 1.89 to
3.27 all are less than the recommended threshold of 5.0; (De Run et al., 2008; Meyers
et al., 2006; Sing, 2008). The root mean square error of approximation values (from
0.051 to 0.098) are below the recommended cut-off points of 0.1 (De Run et al., 2008;
Meyers et al., 2006; Sing, 2008). The values of goodness of fit (from 0.948 to 0.988),
adjusted goodness of fit (from 0.948 to 0.988), comparative fit index (from 0.072 to
0.996) and TLI (from 0.961 to 0.991) are all above the recommended threshold of 0.90
(Meyers et al., 2006). Similarly, the values of parsimony normed fit index (from 0.67 to
0.78) and parsimony comparative fit index (from 0.51 to 0.83) are near the threshold of
0.5 and above (Meyers et al., 2006). Therefore, the amalgamation of these findings
demonstrates that the established measurement model fits the data well (Figure 2).

Figure 2 Structural model (see online version for colours)

On the basis of the findings with reference to reliability, validity and overall model fit,
the resultant tests for hypotheses are summarised in Table 4.

Table 4 Hypotheses testing

Standardised
Hypotheses coefficient t-value P value Result
Human capital Æ intellectual capital 0.913 7.695 0.00 Supported
Customer capital Æ intellectual capital 0.980 7.652 0.00 Supported
Structural capital Æ intellectual capital 0.903 7.905 0.00 Supported
Social capital Æ intellectual capital 0.900 8.427 0.00 Supported
Technological capital Æ intellectual 0.814 7.695 0.00 Supported
capital
Spiritual capital Æ intellectual capital 0.809 8.392 0.00 Supported
Intellectual capital Æ organisational 0.871 8.355 0.00 Supported
performance
Intellectual capital and organisational performance 29

6 Conclusion

The objective of this study was twofold. On one hand to design and test the integrated
intellectual capital model (IICM). The findings of this study support the claim that human
capital, customer capital, structural capital, social capital, technological capital and
spiritual capital are vital components of intellectual capital. These findings corroborate
the studies (Bontis, 1998; Bueno et al., 2006; Edvinsson and Malone, 1997; García-
Muiña and Pelechano-Barahona, 2008; Ismail, 2005; Khalique et al., 2011a; Stewart,
1997; Sveiby, 1997; Tovstiga and Tulugurova, 2007; Youndt and Snell, 2004; Youndt
et al., 2004) but extend them by including the spiritual capital.
The other implication refers to the context of knowledge-intensive Malaysian SMEs.
The findings show that intellectual capital has a significant impact on the performance of
SMEs operating in Malaysia. The present results seem to be consistent with other studies
(Bontis et al., 2000; Cohen and Kaimenakis, 2007; de Castro and Sáez, 2008; Hormiga
et al., 2011; Ismail, 2005; Khalique et al., 2013a; Khalique et al., 2011a; Ngah and
Ibrahim, 2009) but in this case extend the generalisability of results within a developing
Asian nation.
The positive and significant impact of intellectual capital on the organisational
performance of SMEs may help entrepreneurs, policy makers and managers to better
understand the importance of capitalising intangible assets in order to create competitive
edge in the market. SMEs generally face financial constrains due to minimal access to
large capital pools. Therefore, SMEs can refocus their efforts on the management of
intellectual capital assets in order to mitigate those constraints.
This study provides a potential roadmap for the use of the IICM in other research
settings that are currently absent in the literature. For example, there are many developing
regions in the world in which intellectual capital research is not available. These research
opportunities might include the study of intellectual capital in regions such as Africa and
Central America. Given the results of this present study, there is a high level of
confidence that generalisability within all developing nations is highly probably.

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Intellectual capital and organisational performance 33

IICM survey items


No Human capital
Skills knowledge & expertise
1 Our organisation has a highly competent management team
2 In our organisation employees are motivated, creative and bright
3 Our employees are experts in their particular jobs and functions
Attitude
4 In our organisation employees are satisfied with the top management
5 Our organisation takes initiative to launch new ideas
6 Our organisation takes initiative to launch new products
7 Our organisation encourages the sharing of ideas, knowledge and practices
8 Our employees generally understand the target markets and customer profiles
Intellectual agility
9 Our organisation recognizes the importance of knowledge as a strategic asset
10 Our organisation implements a large portion of great new ideas
11 Our organisation encourages and supports research and development activities
12 Our employees are unique to our organisation
13 Our employees develop new ideas and knowledge
Customer capital
Customer satisfaction & loyalty
1 Our organisation has good brand name in the market
2 Our customers have loyalty toward our organisation
3 Our organisational market share has been increasing continuously
4 When new business comes into the market, our customers always select us
Network
5 Our organisation cares about what the customer thinks and demands from us
6 Our organisation distributes customer’s data to all relevant departments
7 Collaboration with international organisations can enhance our performance
8 We have enough distribution channels for the satisfaction of our customers
9 Government’s agencies provide support to our organisation to meet the challenges and
serve the customers better
10 Our vendor gives good support to us to achieve our selected business goals
Structural capital
Infrastructure & system
1 Our organisation provides infrastructure to employees to access relevant information
2 Our organisation uses the best and most integrated management system to serve the
customers
3 In our organisation knowledge is embedded in the structures, systems and procedures
4 Our organisation uses patents and licenses as a way to store knowledge
5 Our organisational structure keeps employees close to each other
6 Our organisational system and procedures support innovation
34 M. Khalique et al.

IICM survey items (continued)


Policies and procedure
7 Our recruitment department is fully dedicated to hiring the best available employees
8 Our organisation provides opportunities to upgrade the skills of employees
9 Our organisation provides opportunities to upgrade the education level of employees
10 Our organisation’s policies, procedures, databases and networks are up-to-date
11 Our organisation encourages employees to speak their minds
12 Our employees are involved in the organisation’s decision making
13 A lot of vital knowledge and information would be lost if key people leave the
organisation
Social capital
Structural
1 Our organisation makes efforts to create and sustain organisational culture in the market
2 Our organisation always considers environmental health & public social benefits in any
planning, development & implementation of projects
3 Our employees are skilful and collaborating with each other to diagnose and solve the
problems
4 In general, in our organisation employees are sincere and honest
Relational
5 Our employees like to share information and learn from each other
6 Our employees have good relationship with each other in performing their duties
7 Our employees exchange ideas with people from different areas of the organisation
8 Our employees have good relationship with customers, suppliers, alliance partners and
friends to develop solutions for organisation
Cognitive
9 Our employees share organisational myths or stories from each other
10 Our employees have strong internal relationship, e.g. respect, friendship, communication,
etc
11 Our employees co-operate with each other to accomplish team tasks
12 Our employees exchange experiences with people from different departments of the
organisation
Technological capital
IT knowledge
1 In our organisation, technological knowledge is easy to understand, transfer and use
2 Our organisation has had a leading role in the market for a long time on the basis of
technological capital
3 Our organisation has a large number of technological concepts which are useful for
innovation
4 Our organisation has coordination among different departments which is vital for
technological innovation
5 Our organisation knows innovation depends on the control of various technologies
6 Our organisation use latest and high-tech equipment & technology to remain competitive
7 Our organisation has good research and development infrastructure
Intellectual capital and organisational performance 35

IICM survey items (continued)


Research budget & protection rights
8 Our organisation has sufficient budget for technological development
9 Our organisation improves technological knowledge by using technologies from external
sources
10 Our organisation has professional skilful employees which are necessary for
technological innovation
11 Our organisation has good systems to secure our intellectual property
12 Our organisation has good systems to protect our industrial property
Spiritual capital
Religious
1 In our organisation employees work to the best of their capabilities because they believe
and practice “working is part of their acts of devotion to God”
2 Our organisation has faith in the management team to perform their duties well
3 Our organisation is more profitable due to religious belief
4 Our employees are committed to work as usual even they were not promoted like their
colleagues, even juniors
5 We have religious key values, e.g. honesty, total commitment, care and respect to
customers
6 Due to religious teaching, employees are sincere and honest in their duties
Ethic values
7 Our organisation is more profitable due to good hearted activities
8 Our organisation has key values, honesty, total commitment and respect to our
employees
9 In our organisation, employees are truthful in performing their jobs
10 Our organisation practices good business ethics in daily business operations
11 Our organisation culture is based on trust, shared knowledge, mutual respect and
reciprocity, which results in continuous innovation for the organisation
Organisational performance
Financial perspective
1 Our organisation’s revenue is continuously increasing growth
2 Our organisation’s profit is continuously increasing growth
3 Our organisation has been continuously reducing cost per revenue unit
4 Our organisation’s net return on assets has been increasing
5 Our organisation’s net return on sales has been increasing
Customer perspective
1 Due to organisational performance, customer loyalty level is increasing
2 Our customers are satisfied with our products
3 Our customers believe that our organisation offers high value added products and
services to them
4 Our customers are satisfied with our services
5 Our market share is continuously increasing
Internal business process perspective
36 M. Khalique et al.

IICM survey items (continued)


1 Our organisation is able to continuously produce competitive products and services
2 Our organisation achieves a high success rate in new products/services launched
3 Our organisation practices 'On Time Delivery' of its products and services to customers
4 Our organisation is very responsive to local & international market needs
Learning and growth perspective
1 Our employee turnover is the lowest among others in the market
2 Our organisation always able to achieve and maintain superior performance
3 Our organisation looks forward to become technological leader in the market
4 Our organisation has the ability to compete globally
5 Our organisation has good overall performance and success

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