How IC Enhances Product/Service Innovation in High-Tech Versus Low-Tech Firms

Knowledge resources (i.e. intangible assets or intellectual capital) and the way in which they are governed are deemed crucial for improving organizational performance. Innovation (understood as the creation of new knowledge) is fundamentally linked with intangible resources. Actually, intellectual capital has been widely considered as one of the main drivers of innovation, but the particularities embedded in this relationship remain unclear. The existing body of literature has repeatedly demonstrated that intellectual capital enhances innovation performance, though the analysis made has hardly considered how this relationship varies according to the technology intensity of the firm. High technology companies deal with more complex and tacit knowledge that should be frequently renewed. Since high and low technology firms differ in terms of knowledge, the relationship between intellectual capital and the development of new products and services is also expected to differ between both types of firm. Therefore, this study will address this gap by analysing how intellectual capital stocks influence product and service innovations in high and low technology companies. Data from 180 Spanish firms (representing both manufacturing and service industries) was collected by means of a questionnaire. Structural equation modelling based on partial least squares was then utilized for analysing the data. The results obtained confirm the hypothesis that the relationship between intellectual capital and innovation differs according to the technology level of the firm. In high-tech companies managers should enhance human capital and external relational capital, whereas in low-tech firms, structural capital and external relational capital should be promoted. In other words, the management of intellectual capital should be dependent on the technology level of the firm. This study adds to the existing literature by showing that the technology level of the corporation is an important contingency factor in the relationship between intellectual capital and innovation.