The Impact of Knowledge Management Strategies on the Relationship between Intellectual Capital and Innovation: Evidence from SMEs

Abstract

Purpose
The purpose of this study is to investigate the moderating role of knowledge management (KM) strategies in developing the effect of intellectual capital (IC) on innovation for small- and medium-sized enterprises (SMEs). Specifically, the current study explores how different interactions between IC and KM strategies lead to more powerful innovation in SMEs.

Design/methodology/approach
This study analyzes survey responses from 170 owners/managers of SMEs in Iran. The study uses partial least square structural equation modeling methods within Smart PLS software.

Findings
This study reveals that first IC has an excellent level of engagement with both incremental and radical types of innovation, but its engagement level with radical innovation is higher than that for incremental innovation. Second, the human capital component of IC has a direct positive impact on radical innovation although it has no significant impact on incremental innovation. Third, the personalization strategy of KM positively moderates the impact of human capital on both incremental and radical innovation.

Originality/value
This paper is an empirical attempt in SMEs to combine IC and KM strategies to strengthen innovation. It presents research community for SMEs of a developing country that has been investigated in a limited way compared to large firms of developed nations and provides valuable insights into further research.

Keywords: Codification strategy, Personalization strategy, Intellectual capital, Innovation, SMEs

JEL Classification: M41, M10, M13, M19, M50, G30, G34, O34