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Int. j. econ. manag. soc. sci., Vol(3), No (11), November, 2014. pp. 718-723 TI Journals ISSN:
Int. j. econ. manag. soc. sci., Vol(3), No (11), November, 2014. pp. 718-723
TI Journals
ISSN:
International Journal of Economy, Management and Social Sciences
2306-7276
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Copyright © 2014. All rights reserved for TI Journals.

Studying the effect of intellectual capital on organizational performance (A Case Study in the Social Security Organization of Mazandaran Province)

Masoud Poorkiani

Department of Management, Kerman Branch, Islamic Azad University, Kerman, Iran.

Shabnam Vaziri*

Department of Management, Aliabad Katoul Branch, Islamic Azad University, Aliabad Katoul, Iran.

Niusha Meftah

Department of Management, Aliabad Katoul Branch, Islamic Azad University, Aliabad Katoul, Iran.

Mostafa Hoseinali Beigi

Department of Management, Kerman Branch, Islamic Azad University, Kerman, Iran.

Leila Asgharpoor

Department of Management, Kerman Branch, Islamic Azad University, Kerman, Iran.

*Corresponding author: f_shab2007@yahoo.com

Int. j. econ. manag. soc. sci., Vol(3), No (11), November, 2014. pp. 718-723 TI Journals ISSN:

Keywords

Abstract

Intellectual capital

This article aim is to examine the effect of intellectual capital on organizational performance of Social

capital.

Human capital

Security Organization employee of Mazandaran province. This study is applied and survey and its statistical

Structural capital

population include all employed employee of Social Security Organization of Mazandaran province in Iran,

Relational capital

including is 248 persons. The sample size is 148 persons that they were selected through Cochran formula

and by simple random and ranking sampling. Data were collected using two questionnaires; the reliability was 0.86 with Cronbach method for standardized Intellectual Capital Questionnaire of Bontis and 0.82 for researcher made questionnaire and validity was confirmed by content method. Kolmogorov-Smirnov test was used to determine normality of the data and t-test was used to analyze the data and then Friedman test was used to rank dimensions of intellectual capital. The results of the study showed that intellectual capital effects on employee performance in all three dimensions of relational capital, structural capital and human

  • 1. Introduction

In the knowledge-based economy, the intellectual capital is used to create value for organization and in today's world; the success of any organization depends on the ability to manage these assets. Today we witness the growing importance of intellectual capital as an effective tool to enhance the competitiveness of our companies. Intellectual capital measurement in order to compare different companies, determining their true value and improving their controls is essential. The roots of intellectual capital concept are very deep and the importance of intellectual capital in the business world has been increased according to the communities’ transition from industrial age to the information age. During the industrial age, the costs of properties, plants, equipment and raw materials were necessary factors for the success of a business, but in the information age, the effective use of intellectual capital is efficient in success or failure of a complex. New economy that is derived from knowledge and information phenomenon has an important role in the dramatic increase of intellectual capital importance in business and research. Intellectual capital can be considered as a company's most vital asset. Strategically, intellectual capital is used for production and using knowledge in enhancing the company value. However, in terms of intellectual capital value measurement, new reporting mechanisms are emphasized that make measurable non-financial and qualitative aspects of intellectual capital through traditional, quantitative and financial data. With the advent of knowledge economy, knowledge is more preferable compared to other factors of production such as land, capital, machinery and etc. So that in this economy, knowledge is considered as the most important factor of production and it is the most important competitive advantage of organizations [8]. One of the characteristics of knowledge is its intangibility this means that it is non-palpable and intangible and its measurement and evaluation is very hard and difficult. While in the past, organizations using accounting methods were able to compute value and size of their production factors completely, but today, the accounting methods do not have required performance. Knowledge is considered as one of the most important components of intangible assets.If in the past, most of the organization assets were tangible, but today, most of the organization assets are intangible [13]. Therefore, in this study we are searching for this topic that what is the effect of intellectual capital dimensions on organizational performance and how these dimensions can be rated due to their effects on organizational performance.

  • 2. Literature

In the knowledge economy, organizations’ success depends on managing intangible assets (intellectual) and we must first identify and measure them and ultimately manage them [6]. Intellectual capital is called a collection of knowledge-based assets that is assigned to an organization and is considered among its features and leads to organizations’ considerable competitive improvement through adding value to key stakeholders of organization [12].

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Studying the effect of intellectual capital on organizational performance (A Case Study in the Social Security Organization of Mazandaran province)

International Journal of Economy, Management and Social Sciences Vol(3), No (11), November, 2014.

  • 1. Stewart believes that intellectual capital is a set of knowledge, information, intellectual properties, experience, competence and organizational learning that can be used to create wealth. In fact, it includes the intellectual capital of all employees, organizational knowledge and its skills to create added value and leads to sustained competitive advantages [4].

  • 2. Bontis defines intellectual capital as a set of intangible assets (resources, capabilities, competition) that are obtained from organizational performance and value creation [1].

  • 3. Edvinson and Malone define Intellectual Capital as "applied information and knowledge to work for value creation".

  • 4. Intellectual capital is an asset that measures an organization's ability to create wealth. The asset does not have objective and physical nature and is an intangible asset that is obtained through using assets related to human resources, organizational performance and relations out of organization. All these features make the obtained value and as it is a purely local phenomenon, is not capable of dealing [9].

Figure 1. Comparison of intellectual capital (IC) conceptualizations

Broking (Britain)

Russian (Britain)

Stewart (United States)

Benítez (Canada)

Human property:

Human capital:

Human capital:

Human capital:

Skills, abilities and expertise, problem solving abilities and leadership styles

Competence, attitude and intellectual dexterity

Employees as the most important property of the organization

Knowledge of employee

Infrastructure property:

Organizational capital:

Structural capital:

Structural capital:

Technologies, processes and work methods

Intellectual property, innovation, processes and cultural property

Knowledge in Information Technology

Nonhuman property or Organizational capabilities needed for market requirements fulfillment

Intellectual property:

Structural capital:

Renewal and Development

products Patent and

Intellectual property:

Unlike intellectual capital, intellectual property is a registered property with legal definition.

Product patents, designs and trademarks

Capital:

educational efforts

technology knowledge, trade mark and products patent

Relational capital:

Customer capital:

Relational capital:

The market property:

Client capital is only one part of knowledge on organizational

Market data for use in attracting and retaining customers

Relationship with stakeholders within and outside the

Trade names, customers customer’ loyalty, and distribution channels

relationships.

organization

2.1 Dimensions of intellectual capital

Due to the vast concept of researchers’ intellectual capital who has worked in this field, each one has presented his particular category. The first category was conducted by "Sveiby" in 1997 in three areas. Human capital in the areas of personal competence Structural capital in the internal structure area Relational capital in external structure area "Bontis" replaced customer capital for relational capital and investigated intellectual capital. Bontis classification has been shown in Figure 1

[5].

Intellectual capital Human property Structural capital Customer capital The essence and Human intelligence Organizational Market relationships
Intellectual capital
Human property
Structural capital
Customer capital
The essence and
Human intelligence
Organizational
Market relationships
Inter-organizational
Areas of practice
Employee mind
relationships
Relationships outside
the organization
Measurement
Appropriate size
Access to efficiency
Steady size

Figure 2. Intellectual capital dimensions

Intellectual capital experts agree that intellectual capital is composed of three elements: human capital, structural capital and relational capital.

2.1.1. Human Capital

Human capital is defined as individual knowledge, skills, abilities and experiences of employee of an organization to create value and solve organization problems [7]. More theorists, who have targeted human capital, have considered it in individual level and have treated it a combination of knowledge, skill, intelligence and talent. Regardless of what is present in the organization context, for example penning et al. an organization's human capital refers to the knowledge and skills of that organizations’ professionals who provide professional services [13]. The main elements of organization's human capital are workforce skill sets, depth and breadth of their experience. Human resources can be as thought and spirit of intellectual capital resources. The capital exits company at the end of workday when employee leave company, however, structural capital and relational capital remain unchanged even when it leaves the organization. Human capital includes: skills and competencies of workforce, their knowledge in fields that are important for organization success and are their talents and ethics. Broking believes that human assets of an organization include skills, expertise, problem-solving ability and leadership styles. If in an organization, the level of employee

turnover is high, it may mean that organization has lost this important component of an intellectual capital.

Masoud Poorkiani, Shabnam Vaziri *, Niusha Meftah, Mostafa Hoseinali Beigi, Leila Asgharpoor

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International Journal of Economy, Management and Social Sciences Vol(3), No (11), November, 2014.

  • 2.1.2. Structural capital

Structural capital refers to the structures and processes within an organization that employees use them and thereby utilize their knowledge and skills [15]. Res and et al. believe that structural capital includes all non-human reservoirs of knowledge in an organization, including databases, organizational charts, processes’ operating procedures, strategies, and administrative performances and in general anything that it’s worth for organization is higher than its financial value. Structural capital covers a wide range of essential components. The most important of them includes the most important executive processes of organization; how they are structured; policies, the information flow and databases components; leadership and management style; organizational culture and employee bonus plan. Structural capital can be divided as a sub- culture groups, operations and work habits and intellectual properties.

  • 2.1.3. Relational capitals

Relational capital includes knowledge in all relationships that organization establishes with customers, competitors, suppliers, trade associations or government and is a determinant factor in converting intellectual capital to market value. Relational capital includes all relationships that exist between organization and any other person or organization. These individuals and organizations include customers, agents, employee, suppliers, regulatory authorities, communities, creditors, investors and etc. The relational capital, relationships are divided into two groups according to their purpose: First group include relations that become formal through contracts and obligations with customers and suppliers or main partners, and the second group includes informal relationships. Bontis states that new definitions have developed previous concept of customer capital to relational capital including all knowledge of relationships that organization establishes between customers and competitors, suppliers, trade associations and government. Customer capital is considered as a bridge and organizer of intellectual capital operations, and is a determinant factor in converting intellectual capital to market value. This capital includes the strength and loyalty of customer relations [13].

 

Intellectual capital

 
 
Intellectual capital Customer capital Capital Human capital Contracts Culture Skill Agreement Networks Knowledge Customer satisfaction Intellectual
Intellectual capital Customer capital Capital Human capital Contracts Culture Skill Agreement Networks Knowledge Customer satisfaction Intellectual
Intellectual capital Customer capital Capital Human capital Contracts Culture Skill Agreement Networks Knowledge Customer satisfaction Intellectual

Customer capital

 

Capital

 

Human capital

Contracts

Culture

Skill

Agreement

Networks

Knowledge

Customer satisfaction

Intellectual capital

 

Behavior

and loyalty

Figure 3. Factors affecting intellectual capital

2.2 Intellectual capital characteristics

"Hardvar" considers the most valuable and important resources of a company in his papers and statements as company's intellectual capital and

intangible assets. According to him, due to the special characteristics of these assets, ie, intellectual resources of company have exclusive and

sole state and cannot be copied or imitated, and therefore are valuable for companies and can create competitive advantages for the company. Despite similarities between tangible assets and intellectual capital, in potential ability to create future cash flows, characteristics that distinguish the intellectual capital from these properties include as follows:

  • 1. Intellectual assets are non-competitive assets. Unlike physical assets which can only be used to perform a particular task in a certain time,

intellectual properties can be simultaneously used for a specific task. For example, the supportive system of customer may support thousands of

customers at a particular time. This ability is one of the most important criteria for superiority of physical assets on intellectual property.

  • 2. Human capital and relational capital don’t have the ability to become private property, but must be shared between employees and customers

and suppliers. Therefore, the developments of these types of assets require care and attention [14]. This study is applied in terms of aim and is descriptive- survey in terms of method. Statistical population includes 248 employees of Social Security Organization of Mazandaran province. The sample size is 148 persons that were selected through Cochran formula and by simple random and ranking sampling. Data were collected using two questionnaires; their validity was approved by content method and reliability using Cronbach's alpha as 0.86 and 0.82. In analyzing the data, firstly, their normality is reviewed using Kolmogorov-Smirnov test and then research hypotheses were tested using t-test and finally, the rating importance of each effective dimensions of intellectual capital on organizational performance was determined by Friedman test.

  • 3. Research hypotheses

    • 1. Human capital effects on employee performance.

    • 2. Structural capital effects on employee performance.

    • 3. Relational capital effects on employee performance.

  • 4. Data analysis

  • Kolmogorov-Smirnov Test.

    We examine the normality of variables distribution using Kolmogorov-Smirnov test. In the Kolmogorov-Smirnov test, the null hypothesis equals to the normality of variable distribution, and if the test significance level is less than 0.05, the null hypothesis is rejected and the variable

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    Studying the effect of intellectual capital on organizational performance (A Case Study in the Social Security Organization of Mazandaran province)

    International Journal of Economy, Management and Social Sciences Vol(3), No (11), November, 2014.

    distribution is not normal and if the variable distribution is normal, parametric tests will be used to evaluate hypotheses, otherwise, nonparametric tests will be used to evaluate the hypotheses.

    Table 1. Results of the Kolmogorov-Smirnov test.

    organization's external information organizational organizational Customer service environment systems culture learning Kolmogorov-Smirnov Z 1.66 2.16 1.58
    organization's external
    information
    organizational
    organizational
    Customer service
    environment
    systems
    culture
    learning
    Kolmogorov-Smirnov Z
    1.66
    2.16
    1.58
    1.88
    2.42
    Sig. (2-tailed)
    0.08
    0.06
    0.13
    0.2
    0.051
    N
    148
    148
    148
    148
    148
    organizational
    Employee
    Employee
    operational processes
    Employee attitudes
    structure
    creativity
    competency
    Kolmogorov-Smirnov Z
    2.99
    2.82
    2.07
    1.61
    1.006
    Sig. (2-tailed)
    0.062
    0.055
    0.2
    0.056
    0.264
    N
    148 148
    148
    148
    148

    *.Correlation is significant at the 0.05 level (2-tailed).

    According to the above table and since the significance level of test is greater than 0.05, it becomes clear that all variables are normalized.

    5. Testing hypotheses

    First hypothesis: human capital affects on employee performance

    Table 2. One-Sample Statistics

     

    N

    Mean

    Std. Deviation

     

    Std. Error Mean

     

    Human capital

     

    164

    3.2995

    0.63063

     

    0.04924

     

    Table 3. Human capital T- test results

     
     
    Test Value = 3

    Test Value = 3

     
     

    df

     

    Sig. (2-tailed)

    Mean Difference

    95% Confidence Interval of the Difference

     

    t

    Lower Upper
     

    Lower

    Upper

    Human capital

    6.081

    Human capital 6.081 163 0.000 0.29946 0.2022 0.3967

    163

    Human capital 6.081 163 0.000 0.29946 0.2022 0.3967

    0.000

    0.29946

    0.2022

    0.3967

    Given the fact that significance level of test is 0.00, and this value is less than 0.05, so we can say with 95% confidence that desired hypothesis is confirmed. The second hypothesis: structural capital affects on employee performance

    Table 4. One-Sample Statistics

     

    N

    Mean

    Std. Deviation

    Std. Error Mean

    Structural capital

    164

    3.2439

    0.62322

    0.04867

    Table 5. Structural capital T- test results

    Test Value = 3

     
    95% Confidence Interval of the Difference

    df

    95% Confidence Interval of the Difference

    Sig. (2-tailed)

    Mean Difference

    95% Confidence Interval of the Difference

     

    t

    Lower

    Upper

    Structural capital

    5.012

    163

    0.000

    0.24390

    0.1478

    0.3400

    Given the fact that significance level of test is 0.00, and this value is less than 0.05, so we can say with 95% confidence that desired hypothesis is confirmed. Third hypothesis: relational capital affects on employee performance

    Table 6. One-Sample Statistics

     

    N

    Mean

    Std. Deviation

    Std. Error Mean

    Relational capital

    164

    3.1975

    0.58769

    0.04589

    Table 7. Relational capital T- test results

    Test Value = 3

     

    t

    95% Confidence Interval of the Difference
    95% Confidence Interval of the Difference

    df

    95% Confidence Interval of the Difference

    Sig. (2-tailed)

    Mean Difference

    95% Confidence Interval of the Difference

    Lower

    Upper

    Relational capital

    4.303

    Relational capital 4.303 163 0.000 0.19747 0.1068 0.2881

    163

    Relational capital 4.303 163 0.000 0.19747 0.1068 0.2881

    0.000

    0.19747

    0.1068

    0.2881

    Given the fact that significance level of test is 0.00, and this value is less than 0.05, so we can say with 95% confidence that desired hypothesis is confirmed.

    Masoud Poorkiani, Shabnam Vaziri *, Niusha Meftah, Mostafa Hoseinali Beigi, Leila Asgharpoor

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    International Journal of Economy, Management and Social Sciences Vol(3), No (11), November, 2014.

    Ranking Indicators

    Friedman test is used to rank and determine the importance of each variable so that each variable that has the highest mean will be at first place

    and other variables will be at next places.

    Table 8. Ranking intellectual capital sub-indicators

    Rank

    Variable

    Mean

    • 1 Relational capital

    1.95

    • 2 Structural capital

    1.77

    • 3 Human capital

    2.28

    Table 9. Ranking intellectual capital sub-indicators

    Rank

    intellectual capital sub-indicators

    Mean

    • 1 Employee competency

    6.98

    • 2 Main capability of Customer service

    6.75

    • 3 organizational learning

    6.31

    • 4 Useful operational processes

    6.25

    • 5 information systems

    6.21

    • 6 organizational structure

    5.76

    • 7 organization's external environment

    5.59

    • 8 Employee attitudes

    5.39

    • 9 organizational culture

    5.12

    10

    Employee creativity

    4.65

    • 6. Conclusions

    First hypothesis

    As it is clear in Table (3), the significant level is less than 0.05, with 95% confidence it can be concluded that human capital effects on employee performance and the extent of this effect is t=6.081. On the other hand, according to Table (9), human capital with the mean of 2.28 is in the

    third rank of importance.

    Second hypothesis

    As it is clear in Table (5), the significant level is less than 0.05, with 95% confidence it can be concluded that structural capital effects on

    employee performance and the extent of this effect is t=0.012. On the other hand, according to Table (9), structural capital with the mean of 1.77 is in the second rank of importance.

    Third hypothesis

    As it is clear in Table (7), the significant level is less than 0.05, with 95% confidence it can be concluded that relational capital effects on

    employee performance and the extent of this effect is t=4.303. On the other hand, according to Table (9), structural capital with the mean of 1.95 is in the first rank of importance.

    • 7. Suggestions

      • 1. According to the first hypothesis confirmation, Social Security Administration managers are proposed to formulate this type of capital and in any way, the organization must manage all of its systems and human capitals, because access to organizational goals is possible through the activity process of this kind of human capitals. For this purpose, there will be need different systems of human resources for different types of human capital, and using one system will decrease productivity.

      • 2. According to the first hypothesis confirmation, in the New Economy space, organizations compete together in a complex and dynamic environment that knowledge uniqueness and value in organization creates a competitive strategy in this environment. Employee will look to knowledge management as a key factor for organization success. That is why huge investment has been done to exploit this type of management. It should be noted that management of one intangible and subjective thing is essentially impossible. What is managed includes knowledge resources, related technologies, processes and techniques practiced and above all, the human element that is the source of all knowledge. Organization or company that has not created necessary motivation in its employees to share knowledge will lose a considerable amount of knowledge. The main point behind intellectual capital is that improving all factors leading to the success of an organization, such as organizational innovation, quality of products and services depends on the availability and efficient and better use of knowledge. Certainly until the next few years, the concept of knowledge will be as an integral part of all organizational settings and organizations will be successful in this field that provide the necessary infrastructures for its implementation and design appropriate framework.

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    International Journal of Economy, Management and Social Sciences Vol(3), No (11), November, 2014.

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