Understanding the role of organizational intellectual capital on developing absorptive capacity to strategize innovation ambidexterity

Abstract

Purpose The purpose of this paper is to empirically investigate the impact of organizational intellectual capital (IC) components on absorptive capacity (ACAP) such as potential absorptive capacity (PACAP) and realized absorptive capacity (RACAP). Furthermore, it attempts to investigate the mechanism through which PACAP and RACAP jointly influence innovation strategies (i.e.) exploitative and exploratory innovations. Design/methodology/approach This is an explanatory research using a deductive approach. This study uses survey data from 184 manufacturing export firms analyzed through partial least squares structural equation modelling. Findings The results have found that the cognitive and social capital of a firm positively affects PACAP and RACAP, whereas relational capital has a significant effect on RACAP. Moreover, the study reveals that both potential and realized absorptive capacities considerably lead to the development of organizational exploitative and exploratory innovation strategies. Research limitations/implications The research focused on two driving factors, i.e. IC components and ACAP dimensions, and overlooked how each component of IC and ACAP influences ambidextrous innovative strategy. Practical implications Providing managers with insights about the critical role of developing IC to facilitate the transfer and exchange of crucial absorptive capacity necessary for ambidextrous innovative strategy. Originality/value This study makes a significant contribution to the existing literature by highlighting the importance of ACAP and provides useful insights for firms in developing economies to improve their exploitative and exploratory innovation capability. This study likewise reveals the significance of the four dimensions of IC, which can facilitate bringing in knowledge from developing economies.