Interplay of Intellectual Capital and Digital Transformation to Enhance Innovation Performance

Abstract

The current era of knowledge economy equipped with technological advancements has intensified the importance of innovation. Firms are seeking ways to upgrade their innovation related performance in order to achieve the competitive advantage as well accomplishing the growth. The innovation performance is heavily focused towards improving existing products or creating new products. Moreover, firms tend to amass their capabilities to enable process innovation as well, in order to gain efficiency, improve service quality, and cost reduction. This study investigates the role of intellectual capital to improve the innovation performance of firms. Moreover, the mediating role of digital transformation is undertaken in this relationship. As a result of performing empirical investigation on Malaysian high-tech firms where data collected was undergone to PLS-SEM. The findings reveal that the dimensions of intellectual capital – including human, structural and relational – improve the innovation performance of firms. Furthermore, results exhibit the full mediation of digital transformation for improving innovation performance of firms. This study contributes novel insights in literature by uncovering the role of intellectual capital and digital transformation towards innovation performance of high-tech firms. The study recommends that firms and policy makers should pay attention to developing the intellectual capital dimensions of firms in order to realize the benefit of digital transformation towards enhancing innovation performance of firms. Future researchers are suggested to perform investigations on medium-tech and low-tech firms as well as across the manufacturing sectors.