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Journal of Intellectual Capital Intellectual capital, knowledge management and social capital within the ICT sector in Jordan Bushra Meaad Ramadan, Samer Eid Dahiyat, Nick Bontis, Mahmoud Ali Al-dalahmeh,

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Intellectual capital, knowledge management and social capital within the ICT sector in Jordan Bushra Meaad Ramadan

IC, KM and SC within the ICT sector in Jordan 437

Risk Consult Limited, Amman, Jordan

Samer Eid Dahiyat School of Business, University of Jordan, Amman, Jordan Downloaded by UNIVERSITY OF JORDAN At 02:12 30 March 2017 (PT)

Nick Bontis DeGroote School of Business, McMaster University, Hamilton, Canada, and

Mahmoud Ali Al-dalahmeh School of Business, University of Jordan, Amman, Jordan Abstract Purpose – The purpose of this paper is to empirically investigate the mediating effect of social capital (SC) on knowledge management (KM) and intellectual capital (IC). Design/methodology/approach – A conceptual model of the connections between IC, KM, and SC was developed and the posited hypotheses were tested using a survey data set of 281 questionnaires collected from knowledge workers working in 72 information and communications technology companies operating in Jordan. Findings – The findings show that knowledge documentation and knowledge transfer emerged as having the strongest effects on IC, followed by knowledge acquisition and knowledge creation, while knowledge application was found to have an insignificant effect. Also, knowledge transfer and knowledge acquisition emerged as the only two significant processes for the development of SC. Moreover, SC was found to partially and significantly mediate the effects of all processes on IC. Practical implications – To promote the development of IC, particularly, in a knowledge-intensive business service (KIBS) sector, documentation, transfer, acquisition, and creation of knowledge are especially effective processes. Furthermore, SC can be significantly enhanced through ensuring effective internal knowledge transfer and acquisition practices. Nurturing IC in a knowledge-intensive context can also be significantly enhanced through looking at the firm as a cooperative knowledge-sharing entity, i.e. investing in SC. Originality/value – This is the first empirical study that has examined the links among KM processes, SC, and IC in a KIBS sector within an “oil-poor,” “human resource-rich” Arab developing country context. Keywords Social capital, Knowledge management, Intellectual capital, Jordan, Knowledge development, Information communications technology Paper type Research paper

1. Introduction A major facet of the modern economy is the ascending importance of the role of “knowledgeintensive business services (KIBS)” sectors, which inextricably link an organization’s ability to build a sustainable competitive advantage with its ability to develop and exploit its knowledge-based resources and capabilities (Drucker, 1993; Howells and Tether, 2004; Youndt et al., 2004; Romer, 2004; Liao et al., 2010; Tseng and Lee, 2014; AlKhalil et al., 2014; Dahiyat, 2015). A vital driving force behind such a shift in how economic value can be created and enhanced has been Grant’s (1996) knowledge-based view of the firm. According to such a view, the way in which firms create, develop, and use their knowledge and intellectual assets is considered the main factor that explains differences in these firms’ competitive performances. A firm’s ability to manage intellectual capital (IC) assets is inseparably linked to its knowledge management (KM) capability (Bontis, 1999; Gold et al., 2001; Andreeva and Kianto, 2011; Rajesh et al., 2011). In fact, the terms KM and IC are closely related and embrace all

Journal of Intellectual Capital Vol. 18 No. 2, 2017 pp. 437-462 © Emerald Publishing Limited 1469-1930 DOI 10.1108/JIC-06-2016-0067

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aspects of intellectual activities within an organization from knowledge creation to knowledge leverage (Rastogi, 2000). A number of theoretical and empirical studies have investigated the relationships between KM and IC (e.g. Bontis, 2004; Rastogi, 2000; Marr et al., 2003; Zhou and Fink, 2003; Huss, 2004; Shih et al., 2010; Huang and Wu, 2010; Seleim and Khalil, 2011; Hsu and Sabherwal, 2012). Generally speaking, these aforementioned researchers have considered a firm’s IC as a knowledge stock, which it possesses at a particular point in time and that is managed and accumulated through the dynamic processes related to managing the flows of knowledge (Bontis et al., 2002). The widely acknowledged vital roles of KM and IC are particularly important in the context of KIBS sectors such as information and communications technology (ICT) and pharmaceuticals. The core assets in these and other knowledge-intensive industries are reflected in the know-what, know-how, expertise, and creativity of knowledge workers (Dooley, 2000). As such, KIBS sectors are essentially seen as knowledge-dependent ones, where the continuous development and exploitation of knowledge and intellectual-based assets is vital to supporting business improvement and competitiveness (Pappa et al., 2009; Mehralian et al., 2014; Dahiyat, 2015). Although the role of KM processes in building IC is necessary and important, nevertheless, it is not considered to be solely sufficient for the accumulation of essential knowledge assets. Knowledge creation is a social process and as a result requires social interactions among individuals. These social interactions are believed to be critical for creating and accumulating collective knowledge especially within communities normally engaged in frequent dialogue, knowledge sharing, continuous learning, and R&D which shape and define organizational capabilities and competencies (Dahiyat and Al-Zu’bi, 2012; Monavvarian et al., 2013). Therefore, social capital (SC) plays a vital role in mediating the relationship between knowledge management processes (KMPs) and IC development (Nahapiet and Ghoshal, 1998; Gold et al., 2001; Wu and Tsai, 2005; McElroy et al., 2006; Lee and Sukoco, 2007; Huang and Wu, 2010; Manning, 2010; Seleim and Khalil, 2011; Monavvarian et al., 2013). It is suggested that SC can enhance a firm’s capacity to disseminate knowledge resources within the organization by facilitating the right conditions necessary for knowledge processes to take place. Ultimately, intra-firm interactions play a vital role in creating and accumulating collective knowledge (Nahapiet and Ghoshal, 1998), through intensifying the willingness of knowledge workers to share their knowledge (Lee and Sukoco, 2007). As such, SC is considered an important factor to assisting value creation in organizations (Tsai, 2000). The paper is structured as follows: first, an examination of the literature is conducted and then a conceptual model is developed by examining the linkages between IC and KM and delineating those knowledge processes posited as antecedents. Four hypotheses are proposed based on the extant literature addressing the interconnections among KM, SC, and IC. The next section presents the research methodology, data collection, measurements of research variables, and tests of validity and reliability. Finally, results of data analysis and hypotheses testing are presented with a discussion of findings, highlighting the research contributions, and conclusions. 2. Research theoretical model and hypotheses development 2.1 IC and KM Despite the plausibility of the existence of a causal link between KM and IC, it was noticed that most of the extant studies investigated the relationship of either KM or IC on organizational performance (e.g. Youndt, 1998; Dooley, 2000; Seleim et al., 2004; Marr et al., 2004; Seleim and Khalil, 2007; Schiuma and Lerro, 2008; Chang, 2009; Mills and Smith, 2011; Tseng and Lee, 2014) and few have examined the influence of KM processes on developing IC dimensions. Moreover, SC is seen as an important catalyst for both KM and IC, but few


studies have attempted to develop an integrative model that takes into consideration the possibility of the existence of a mediation effect of SC on this relationship (Shih et al., 2010; Seleim and Khalil, 2011; Hsu and Sabherwal, 2012; Mehralian et al., 2014). This study aims to address these gaps by developing and empirically testing a conceptual model that delineates the interrelations among five KMPs and IC, as well as examining the mediation effect of SC. More specifically, this study seeks to determine the relative impacts of KMPs (defined as acquisition, creation, documentation, transfer, and application) on IC as well as SC development. It also aims to examine the nature of the mediating role of SC in the KM/IC context. In an era of knowledge-based economies and knowledge-intensive industries, the development of IC has become a key element for competitive superiority and sustainability (Bontis, 1998; Bontis et al., 2000). The roots of such an intensifying interest in IC mainly derived from early historical emphases placed upon the role of knowledge possessed by a firm’s employees in utilizing its resources effectively and efficiently, as well as more recent studies underpinning the vital role of intangible knowledge-based assets in driving value creation (Penrose, 1959; Barney, 1991; Grant, 1996; Stewart, 1997; Huss, 2004; Serenko and Bontis, 2013). Terms such as the stock of knowledge (Penrose, 1959), the knowledge industry (Machlup, 1962), and the knowledge economy and the knowledge worker (Drucker, 1993), shaped an important context for the conceptualization of IC. As a result, the fundamental contribution of human knowledge and intellect to organizational competitiveness and wealth creation has led to its consideration as a key organizational asset/capital. Moreover, the emergence of the resource-based as well as the knowledge-based views of the firm further facilitated the promulgation of the term IC and its eminent contribution to a firm’s competitive advantage (Wernerfelt, 1984; Barney, 1991; Grant, 1996). A crucial turning point in the ascension of IC in the business world was reflected in the efforts exerted by Skandia; a Swedish financial services firm, which embarked on a comprehensive search for the IC possessed by it. This later led to Skandia’s establishment of the world’s first IC function in 1991 and the subsequent development of the so called “Scandia Navigator” framework, which was used to facilitate the auditing of IC possessed by the firm. Such a framework was later published in 1995 under the title “Visualizing IC” (Edvinsson, 1997; Serenko and Bontis, 2013). As a result, the IC concept witnessed heightened interest and broadening to include all intangibles in a firm representing a combination of employees’ skills, specializations, know-how, and expertise, in addition to the managerial processes and procedures, structure, social/cultural values, and intellectual property (e.g. innovations, trade secrets, designs, software) of an organization (Stewart, 1997; Bontis, 2001). A number of pioneering studies have sought to explore and identify specific dimensions or components pertinent to understanding the nature of IC, which has resulted in the emergence of a number of taxonomies (e.g. Edvinsson and Malone, 1997; Stewart, 1997; Nahapiet and Ghoshal, 1998; Bontis, 1998, 1999). The most commonly used categorization was introduced by Stewart (1997), when he argued that IC encompasses three components: human capital (HC), structural capital (STC), and customer capital (CC). Edvinsson and Malone (1997) concurred with Stewart (1997) and further elaborated upon STC by including within it both: customer as well as organizational capital (OC). Bontis (1998, 1999) argued that IC consists of HC, STC and relational capital (RC); the latter one emphasizing the importance of developing relations with stakeholders other than customers (e.g. suppliers, government, competition). Youndt et al. (2004) confirmed HC and OC, and introduced the dimension of SC stressing the importance of inter- as well as intra-firm cooperation and interaction in developing a firm’s IC. Based on these conceptualizations of IC dimensions, IC can be viewed as a knowledge stock that an organization possesses at a particular point in time, which is managed and accumulated through dynamic knowledge processes (Bontis, 2004). Such KMPs are


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considered to be critical factors for facilitating the right conditions for a firm’s IC to develop, thus ultimately supporting overall organizational performance (Huss, 2004; Curado, 2008; Shih et al., 2010; Huang and Wu, 2010; Schiuma and Carlucci, 2012; Hsu and Sabherwal, 2012). In order for KM to play an enabling and supportive role, the extant literature suggests that its processes (i.e. knowledge acquisition, creation, documentation, transfer, and application) should be aligned with individual IC dimensions (i.e. HC, OC, and RC) (Zhou and Fink, 2003). Based on this, it is logical to conclude that KMPs and practices play an instrumental role in supporting and enhancing an organization’s IC. 2.2 KMPs as antecedents for IC development The extant literature discusses (KM) from a number of perspectives. One dominant perspective focuses on organizational knowledge creation activities that are concerned with the conversion of knowledge along two main forms: explicit and tacit. These activities are depicted in what is known as the socialization, externalization, combination, and internalization (SECI) model as espoused by Nonaka and his colleagues (Nonaka, 1994, Nonaka and Takeuchi, 1995; Nonaka et al., 2006). Another dominant perspective follows a broader view that considers KM comprising two main sets of capabilities: infrastructural as well as process capabilities (Gold et al., 2001). Accordingly, a supportive organizational infrastructure, in terms of structure, culture, and technology, facilitates the undertaking of managerial processes designed to manage knowledge as a resource. These KM process capabilities refer to managerial routines and activities that primarily deal with knowledge assets as inputs that need to be acquired, developed, and properly transformed into useful form so that they can be utilized in value-adding processes (Salojarvi et al., 2005). Reviewing the extant literature showed significant interest in the processes of managing knowledge resources. Such KMPs aim at enabling firms to get the most value out of their knowledge assets (Wiig, 1997), through explaining how organizational knowledge can be created, transferred, and utilized. Different terms have been used to refer to such knowledge processes in the context of IC, which has led to various classifications and numerous definitions of KM being proposed. In essence, KM is seen as the management processes and activities that an organization practices to improve the effectiveness of generating, creating, and sustaining organizational intellectual assets (Marr et al., 2003). Shih et al. (2010) and Mehralian et al. (2014) look at KM as knowledge flow activities and management skills that are oriented toward systematic creation of knowledge, which can develop and restructure various types of intellectual assets. Moreover, Zhou and Fink (2003) refer to KM as a comprehensive system that includes a number of activities ranging from knowledge creation, to storage and knowledge reuse, specifically designed to leverage and accumulate an organization’s IC. More specifically, Rastogi (2000) defines KM as a “systematic and integrative process for coordinating organization-wide activities of acquiring, creating, storing, sharing, diffusing, developing, and deploying knowledge by individuals and groups in pursuit of major organizational goals” (Rastogi, 2000, p. 40). Similarly, Andreeva and Kianto (2011) describe KM as consisting of cyclically interrelated processes that include external knowledge acquisition, knowledge documentation, intra-firm knowledge sharing, and knowledge creation. Seleim and Khalil (2011) follow Filius et al.’s (2000) definition of KM, which considers it as encompassing knowledge acquisition, knowledge creation, knowledge documentation, knowledge transfer, and knowledge application. These processes are often deemed as constituting a generic system through which organizations generate valueadded intellectual assets from knowledge-based resources (Rastogi, 2000; Jang et al., 2002) and will, thus, be adopted by this study. Table I shows a representative sample of KM definitions. The extant literatures addresses some interconnections between some knowledge processes and IC dimensions (e.g. Shih et al., 2010; Huang and Wu, 2010; Ramezan, 2011; Seleim and Khalil, 2011; Schiuma et al., 2012; Hsu and Sabherwal, 2012; Piri and Jasemi, 2013;

Author(s)

Definition

Nonaka (1994)

A systemic process of acquisition, organization and communication of both tacit and explicit knowledge of individuals so that others could benefit from it and become effective and productive in their work Distinct and interdependent processes to create, store, retrieve, transfer, and apply knowledge KM is concerned with knowledge identification, acquisition, generation, validation, capture, diffusion, embodiment, realization, and use Knowledge management consists of capturing, storing, disseminating and using knowledge Knowledge management practices are presented with the aim to define, create, capture, share, and use knowledge A systematic and integrative process of coordinating organization-wide activities of acquiring, creating, storing, sharing, diffusing, developing, and employing knowledge by individuals and groups in pursuit of major organizational goals Knowledge process capability that consists of knowledge acquisition, conversion, application, and protection KM is a process that through creating, accumulating, organizing and utilizing knowledge helps to achieve objectives and enhance organizational performance

Davenport and Prusak (1998) Johnston and Blumentritt (1998) Bennett and Gabriel (1999) Van Buren (1999)


Rastogi (2000) Gold et al. (2001) Darroch and McNaughton (2003)

Mehralian et al., 2014; Wang et al., 2014). These have mostly followed a direct and simplified approach to the examination of the effect of a few particular KMPs on IC development. For example, Wexler (2002) argues that for IC to develop and accumulate in an organization, the developed knowledge needs to be stored and documented. On the other hand, Shih et al. (2010) and Mehralian et al. (2014) found that knowledge creation contributes the most to the development of IC, while Seleim and Khalil (2011) found that in software firms, IC is positively influenced by knowledge application, knowledge creation, and knowledge sharing. Moreover, very few studies have empirically tested a model including all of the key five knowledge processes and their impact on IC; most noteworthy of which is Seleim and Khalil’s (2011) study conducted in the software sector in Egypt. Therefore, there have been many calls for focusing on developing integrative models that clarify the relationships among KM processes and IC (e.g. Zhou and Fink, 2003; Issac et al., 2009), as well as exploring the possibility of the existence of mediated relationships. 2.3 Hypotheses development 2.3.1 The effects of KMPs on IC. Many have acknowledged the vital role of external knowledge sources in supporting an organization’s endeavors to improve existing organizational knowledge (Gold et al., 2001; Zahra and George, 2002; Liao et al., 2009; Dahiyat and Al-Zu’bi, 2012). Knowledge acquisition refers to the organization’s ability to identify, capture, and organize knowledge from external sources that is essential for its operations (Zahra and George, 2002; Dahiyat and Al-Zu’bi, 2012). It involves the accumulation of new knowledge and the updating of existing knowledge (Leonard-Barton, 1992), and plays an important role in developing HC in that acquiring knowledge at the individual level can improve the cognitive attitudes, skills, and competences of organizational knowledge workers (Seleim and Khalil, 2007, 2011). As such, the vital contribution of a firm’s HC to its economic success, as postulated by HC theory (Schultz, 1961; Becker, 1964), is believed to be enhanced by systematic knowledge acquisition activities through developing organizational members’ skills, capabilities and competencies. Moreover, engaging in systematic knowledge acquisition activities concerned with acquiring and obtaining externally generated knowledge, through forming knowledge networks, aids in the development of outstanding relationships with organizational


Table I. Definitions of knowledge management

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stakeholders, such as customers, suppliers, and competitors, among others, thus enriching the relational dimension of a firm’s IC (Gold et al., 2001; Fabrizio, 2009; Seleim and Khalil, 2011; Dahiyat and Al-Zu’bi, 2012). When firms operate in fast-changing business environments such as those in the ICT sector, knowledge creation becomes a competitive necessity (Spraggon and Bodolica, 2008). Knowledge creation refers to the ability of the organization to develop new and useful ideas, solutions, insights, skills, and knowledge concerning various aspects of organizational activity from existing or new ones (Nonaka et al., 2006; Andreeva and Kianto, 2011). Intra-firm social exchanges and sharing of information, ideas, and expertise, through such means as teamwork, dialogue and discussion, were found to be instrumental in the generation and creation of new knowledge ( Jantunen, 2005; Nonaka et al., 2006; Shih et al., 2010). Creating knowledge through such means was found to have a significant influence on the accumulation of subsequent IC, as it leads to the development of new technical and organizational competencies, thus playing a vital role in enhancing the caliber of a firm’s HC and, as a consequence, would have positive effects on OC (Shih et al., 2010). In order for the organization to be able to benefit from and exploit acquired as well as created knowledge, it needs to be proficient at institutionalizing such knowledge and enriching the organizational knowledge base, through capturing, documenting and protecting it in the form of routines and processes, manuals, files and intellectual property rights ( Jantunen, 2005; Liao et al., 2009; Seleim and Khalil, 2011). It is when knowledge is given a coherent and concrete form that it becomes an organizational asset (Stewart, 1997; McGill, 2006). An important knowledge process in this regard is knowledge documentation, which has received considerable attention due to its important role in institutionalizing knowledge, through making it more formalized and codified. This has allowed it to reside in the organization in a variety of forms including databases, manuals, work procedures, and reports (Lee et al., 2013). As such, knowledge documentation has significantly enabled the preservation of knowledge in the form of organizational memory (OM) ( Jashapara, 2011; Seleim and Khalil, 2011), making it easily transferrable, accessible, and usable (Davenport and Prusak, 1998). OM is widely considered an intangible asset, which if successfully managed can confer different types of OC (Stewart, 1997; Wexler, 2002; Seleim and Khalil, 2011). Furthermore, in order to enhance an organization’s IC through knowledge creation, an organization needs to codify such knowledge (Chou, 2005), as this will enable the documentation and subsequent storing of organizational knowledge, thus preventing organizational collective knowledge from being lost (Stein and Zwass, 1995; Jashapara, 2011). Creating new knowledge does not alone lead to superior performance unless it is disseminated to and shared with others in an organization (Alavi and Leidner, 2001). As such, for an organization’s IC to be enriched, it is not merely sufficient for knowledge to be made available. Instead, it has to be transferred, diffused, and absorbed (Zahra and George, 2002; McGill, 2006). Hence, knowledge transfer can be described as an organizationwide process that relies on social interaction involving the exchange and dissemination of extant forms of knowledge, experiences and skills both within and between individuals, groups, and organizational units (Szulanski, 1996; Bhatt, 2001; Hogel et al., 2003). Moreover, the transfer of knowledge among individuals and groups, through the four knowledge conversion processes of SECI, is believed to play an important role in developing and enhancing both: human as well as OC (Nonaka et al., 2006; Reychav and Weisberg, 2010). Knowledge transfer contributes to creation of new knowledge that facilitates the accumulation of HC, mainly through converting organizational knowledge into individual or group knowledge when internalization and socialization take place. Moreover, when externalization and combination occur, individual and group knowledge translate into organizational knowledge which enriches OC.


Knowledge transfer can also have a positive impact on RC, as the more effective knowledge transfer activities are between an organization’s members and its stakeholders (e.g. customers, partners, vendors, and government institutions), the higher the quality of both: organizational relations with external parties and resulting knowledge emerging from the subsequent exchanges (Carmeli and Azeroual, 2009; Dahiyat and Al-Zu’bi, 2012). Knowledge application refers to the activities oriented toward the actual use of knowledge (Davenport et al., 1996; Gold et al., 2001). It involves the utilization of the available knowledge in order to contribute to business performance by producing commercial value (Kalling, 2003). Knowledge application and utilization reflect the ultimate benefit of KMPs, since it is through applied knowledge that organizational capabilities are created and competitive advantage is built (Grant, 1996; Gold et al., 2001; Zahra and George, 2002; Dahiyat, 2015). Knowledge application also enlarges and enhances the body of organizational knowledge (Chen and Mohamed, 2007). As a result, knowledge is transformed from being a potential capability to a realized one that impacts organizational performance (Zahra and George, 2002; Seleim and Khalil, 2007). Effective application of knowledge also supports individual and group learning, through involving human resources in utilizing their individual and collective knowledge in developing, marketing, and supporting products and services, which is believed to augment the different types of IC in the firm (Grant, 1996; Sarin and McDermott, 2003). In addition to that, knowledge application process relies on directions, procedures, and routines that lead to the embedding of knowledge within the organization, resulting in the accumulation of OC (Grant, 1996). On the basis of this, it is hypothesized that: H1. There is a positive and significant effect of each of the KMPs (i.e. knowledge acquisition, knowledge creation, knowledge documentation, knowledge transfer, knowledge application) on IC. 2.3.2 The mediating role of SC in the relationship between KM and IC. The above discussion reflects the effects of the five aforementioned knowledge processes on IC. More specifically, most of the reviewed literature focuses on a simplified, direct, unmediated assumption of KM and IC. However, there might be a further explanation by considering some contextual factors that might have an influence on the hypothesized effects. In response to the calls for developing integrative models that clarify the effects of basic KM processes on IC development, the possible mediating role of SC will be examined in this study (Huang and Wu, 2010; Manning, 2010; Hsu and Sabherwal, 2012). This becomes particularly important since this study does so in the context of the ICT sector; a knowledge-intensive community characterized by high levels of social interaction. 2.3.2.1 KM and SC. The importance of KM for SC has been an interesting point of study in the extant literature (e.g. Nahapiet and Ghoshal, 1998; Lang, 2004, McElroy et al., 2006; Mu et al., 2008; Manning, 2010; Monavvarian et al., 2013). The undertaking of knowledge processes inherently entails a firm’s HC to engage in social activities and practices that require them to jointly participate in observations, dialogues, discussions, reflections, and social interaction (Seufert et al., 1999; Jashapara, 2011). As such, KMPs play an integral role in developing SC, especially when recognizing that SC essentially refers to “the sum of the actual and potential ‘knowledge’ resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit” (Nahapiet and Ghoshal, 1998, p. 243). The managing of knowledge through knowledge processes has often been described as an organization-wide process that essentially involves social interactions concerned with the acquisition, creation, exchange and dissemination of extant forms of knowledge, experiences and skills both within and between individuals, groups, and organizational units (Szulanski, 1996; Bhatt, 2001; Hogel et al., 2003; Lee and Sukoco, 2007).


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These processes at their core are expected to facilitate the building of SC by fostering communities of practice, which can be defined as “informal groups of employees sharing knowledge and expertise built on common ways of doing things” (Lesser, 2000, pp. 13-14). 2.3.2.2 SC and IC. SC represents the value of human connections and collaboration and is considered a key factor in the augmentation of knowledge (Cohen and Prusak, 2001), as it encourages collaboration and sharing of ideas, information, and expertise across the organization (Subramaniam and Youndt, 2005). Essentially, SC provides the means for combining knowledge and exchanging it back and forth between social network members. In other words, SC puts the knowledge into action to build distinctive organizational capabilities and without SC, innovations and knowledge productivity can be seriously undermined (Bueno and Salmador, 2004). As such, SC is believed to play a significant role in building organizational core competencies and the development of new forms of innovation, which in turn will leverage an organization’s IC reflected in forms of OC such as new products or services as well as intellectual property assets (e.g. patents, trademarks, and copyrights). Based on this, Nahapiet and Ghoshal (1998) suggest that “social relationships and the social capital therein are an important influence on the development of intellectual capital” (Nahapiet and Ghoshal, 1998, p. 245), especially when viewing IC as an aggregated intangible asset of social collectivity that possesses a knowledge and knowing capability. 2.3.2.3 SC as mediating the effect of KMPs on IC development. Although the role of KM processes in building IC is necessary and important, it is not considered to be alone sufficient for the accumulation of essential intellectual assets. Rather, it is encouraged to view knowledge as a social creation process emerging as a result of social interactions among people. These interactions are believed to serve as vital means for creating, sharing, and storing collective knowledge, especially in knowledge-intensive firms known for their engagement in frequent communication, knowledge sharing, continuous learning, and potential innovations that shape and define organizational capabilities to achieve competitive edge (Monavvarian et al., 2013). In this way, the network of relationships formed and possessed by a social entity (i.e. an organization) builds an organizational social structure that defines the underlying connections and collaborative relationships among involved participants, and that is expressed by information flows, mutual influences and coherence (Adler and Kwon, 2002). According to organizational theorists, these relationships are key to the creation, sharing, and utilization of the knowledge embedded in organizations. SC was first introduced in the field of sociology to indicate the importance of networks and strong personal ties to provide the basis for trust and norms in a social network (Nahapiet and Ghoshal, 1998; Woolcock, 1998). While SC is considered to enhance the management of knowledge resources (Spender, 1996), other researchers are viewing it as a tool that helps to convert individual knowledge possessed by workforce into collective knowledge owned by the organization (Nonaka, 1994). SC is supposed to facilitate the right conditions necessary for knowledge to be exchanged back and forth in the firm, and combined from different parties with the purpose of creating new knowledge (Manning, 2010). Then, it was improved to play a role in the development of core competencies (Kogut and Zander, 1996) because most of the influential knowledge lies within complex social interaction, particularly tacit knowledge shared between individuals in the same area. Because of that, this type of knowledge is difficult to identify, track, and imitate (Lang, 2004): H2. There is a positive and significant effect of each of the KMPs (knowledge acquisition, knowledge creation, knowledge documentation, knowledge transfer, knowledge application) on SC.

H3. There is a positive and significant effect of SC on IC. H4. There is a positive and significant mediating effect of SC on the relationship between each of the KMPs (knowledge acquisition, knowledge creation, knowledge documentation, knowledge transfer, knowledge application) and IC.

IC, KM and SC within the ICT sector in Jordan

Figure 1 represents a graphical summary of the conceptual model and proposed hypotheses.


445 3. Research methodology 3.1 Research design and population Most empirical studies investigating the relationship among KMPs, IC and SC have done so based on data from developed countries. Therefore, it is not clear whether findings reached by such studies can in fact be generalized to other contexts, particularly within emerging economies. In addition, this paper represents one of only a handful in the extant literature that focuses on examining the links between KM and IC in the Arab region. Bontis (2004), for example, in a study on national IC development called on Arab countries classified as “poor oil countries” such as Jordan to invest more in knowledge and HC as these resources are renewable. Thus, the emphasis was placed upon choosing a KIBS sector due to the value this would give to a study of this nature. In order to specify a suitable KIBS sector as the population of study for this research, the authors were guided by the following. First, previous studies examining the KM/IC relationship in the context of KIBS sectors have chosen banks, pharmaceuticals, biotechnology, and communications firms, with a very few of them choosing ICT firms (Seleim and Khalil, 2011; Suraj and Bontis, 2012). Second, the ICT sector is considered a high “knowledge-intensive industry,” which provides diversified innovative products/ services. Third, ICT firms significantly depend on high levels of social interaction among knowledge workers as well as with customers and other external stakeholders in order to identify business needs and develop value-added solutions (Seleim and Khalil, 2011). Hence, the ICT sector is considered to be a suitable context to study KM- and IC-related phenomena. Knowledge management processes

Intellectual capital H1

Human capital Knowledge acquisition

Knowledge creation

Organizational capital H2

Knowledge documentation

H3 Social capital

Intellectual capital

Customer capital Knowledge transfer

Knowledge application

H4

External stakeholders capital

Figure 1. Conceptual model

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The main point of contact in determining the size of the ICT sector in Jordan was The Information Technology Association of Jordan (int@j, see www.intaj.net), which was founded in the year 2000 as a vision of King Abdullah II and the government to support the Jordanian ICT sector. The main impetus behind establishing int@j was to capitalize on Jordan’s highly skilled and qualified human resources in the field of ICTs so as to position Jordan as a leading regional IT hub in the Middle East, which provides high quality ICT products and services. int@j members included all firms operating within as well as benefiting from the ICT sector in Jordan, which reached 202 companies by January 2015. To specify the final research population, 38 firms in int@j were excluded since they were beneficiaries of the services provided by ICT firms, rather than being ICT service provider themselves. Thus, the total number of ICT service providing firms in Jordan was 164. After initial contact with these, 39 companies declined to participate in the survey due to internal policy matters. In addition, 34 companies had incorrect contact details, while 19 companies did not respond to invitations sent to them to participate in the survey. Accordingly, the final number of the ICT firms who agreed to actively participate in the survey was 72 which represented a 44 percent response rate. The unit of analysis targeted by the questionnaire-based survey consisted of knowledge workers possessing professional technical and/or administrative qualifications, and assuming responsibilities associated with the development of IT-related products/services, and/or managerial responsibilities related to the undertaking of specific KM processes and IC development activities. These included senior managers (general managers or executives), heads of divisions and departments, team leaders, and non-managerial employees (technical and operational employees). Based on contacting the 72 ICT companies participating in the study, 400 questionnaires were distributed by hand to the aforementioned knowledge workers. A total of 296 responses from 72 ICT firms were received. Of these, 15 were excluded from further analysis due to missing data. Therefore, the usable questionnaires were 281, resulting in a response rate of 70 percent. Within the ICT firms surveyed, 55 percent of the respondents occupied positions ranging from senior managers to middle-level ones and team leaders. The remaining respondents (45.5 percent) reported assuming technical and operational responsibilities (e.g. software development, quality assurance, technical support, and design). As ICT firms are considered an emerging sector in Jordan, the characteristics of the surveyed ICT firms were such that most of them were classified as small and medium enterprises, with 59 percent of respondents reporting that they are working for firms employing less than 50 employees, followed by 16 percent working firms employing 50 to less than 100 employees. 3.2 Operational measures After reviewing studies relevant to the theoretical framework of this study and its main constructs, each of KMPs, IC dimensions, as well as SC was operationally defined, and a number of items were developed in order to measure them. Knowledge acquisition refers to a firm’s ability to identify access, communicate, and collect knowledge from its external sources/stakeholders. It was accordingly measured through developing six items (KA1-KA6) based on relevant studies (Zahra and George, 2002; Seleim and Khalil, 2011; Dahiyat and Al-Zu’bi, 2012; Dahiyat, 2015). Knowledge creation refers to the organization’s ability to develop new and useful ideas and solutions regarding various aspects of organizational activities, from products to technological processes to managerial practices. Four items (KC1-KC4) were adopted from Andreeva and Kianto (2011) to measure this construct. The knowledge documentation scale aimed to identify activities that institutionalize knowledge in the form of OM (e.g. written documents, electronic databases, codified knowledge in expert systems, documented organizational procedures and processes),


which can be transferred and reused in the future. The scale consisted of six items (KD1-KD6), which were developed based on Andreeva and Kianto (2011) and Seleim and Khalil (2011). The scale for knowledge transfer was based on Seleim and Khalil (2011) and aimed to provide information on the activities that enable the exchange, distribution and sharing of knowledge so as to facilitate its dissemination among different organizational levels (individuals, groups, and functional divisions) (Hogel et al., 2003; Kianto, 2011). Accordingly, four items (KT1-KT4) were used. Knowledge application is measured through organizational activities designed to facilitate the actual use of available knowledge and capabilities in solving problems, improving existing products/services and developing new ones, as well as improving overall organizational performance. Five items (KAP1-KAP5) were adopted from Dahiyat (2015). With regard to IC dimensions, three main dimensions were used to measure the construct, based on items adopted from Seleim and Khalil (2011). First, HC refers to the personal knowledge, skills, experience, and capabilities of knowledge workers (Youndt et al., 2004; Seleim and Khalil, 2011). Based on this, eight items (HC1-HC8) were used to measure this dimension of IC. OC refers to the codified and institutionalized knowledge that resides within an organization such as organizational routines, organizational processes, procedure manuals, systems, files, patents, and organizational culture (Youndt et al., 2004; Seleim and Khalil, 2011). Accordingly, six items (OC1-OC6) were used to measure OC. The third dimension of IC is RC, which is mainly concerned with the organization’s relationships with all related parties and stakeholders, which essentially depend on organizational members’ capacity to develop and maintain connections with these parties (Youndt et al., 2004; Seleim and Khalil, 2011). Six items (RC1-RC6) were developed to measure the dimension. SC refers to knowledge embedded within, available through and utilized by interactions among individuals and their networks of collaboration and interrelationships (Nahapiet and Ghoshal, 1998). Accordingly, items (SC1-SC6) were developed to measure SC based on Huang and Wu (2010) and Hsu and Sabherwal (2012). 3.3 Validity and reliability The research instrument (questionnaire) was developed after a thorough examination of relevant empirical and theoretical studies related to the main research constructs, i.e., KMPs and IC dimensions. The initial measurement items were designed in English. However, in order to ensure full understanding of survey items and to enhance response rate, the items were translated to the respective language of the respondents, namely Arabic language, and each item was accordingly included in the questionnaire in both English as well as Arabic. A draft of the questionnaire was then subjected to academic refereeing, which included five professors with fluency in both the Arabic as well as the English languages from the Business Management and Management Information Systems departments in the University of Jordan School of Business. Additionally, the opinions of four managers working in two information and communications (ICT) companies operating in Jordan were sought to assess whether the questionnaire items were clear and understandable. Based on the two aforementioned steps, a final copy of the questionnaire was prepared for primary data collection. Thus, both face and content validity were ascertained. Exploratory factor analysis (EFA) employing principal component analysis with varimax rotation was conducted to assess construct validity, which is consistent with many studies in the areas of KM and IC (e.g. Andreeva and Kianto, 2011; Dahiyat and Al-Zu’bi, 2012; Khalique et al., 2015; Alkhalil et al., 2014; Dahiyat, 2015). Thus, the main purpose was to identify whether there were patterns among the items used to measure the study’s constructs, through determining whether items measuring each construct loaded onto one or more factors or dimensions; thus testing the unidimensionality of measurements (Hair et al., 1998; Field, 2009; Sekaran and Bougie, 2009). To assess the EFA, four commonly used assumptions were


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followed: sampling adequacy (Kaiser-Meyer-Olkin measure greater than 0.5) and Bartlett’s test of sphericity to test homogeneity of variances statistics were statistically significant ( po0.05); the minimum eigenvalue for each factor to be one; considering the sample size, factor loading of 0.40 for each item was considered as the threshold for retaining items to ensure greater confidence; and varimax rotation was used since it is a good general approach that simplifies the interpretations of factors (Field, 2009, p. 449). EFA results showed that KMO statistic for all scales was greater than 0.50 and Bartlett’s test of sphericity statistics were statistically significant ( p o 0.05) implying the appropriateness of factor analysis (see Tables II-IV). KM items loaded onto a five-factor solution, representing the five knowledge processes: knowledge documentation and storage, knowledge creation, knowledge transfer, knowledge acquisition, and knowledge application, explaining 59.808 percent of the total variance. Almost all of the items originally developed to measure these factors loaded onto their respective factors except for three items: KAC5, which loaded onto knowledge creation; KAP5, which was deleted due to low cross-loadings onto two factors; as well as KAP6, which loaded onto knowledge transfer. A four-factor solution representing the IC constructs emerged, consisting of: HC, OC, as well as the two dimensions of CC and external stakeholders capital emerging from the initial theoretical dimension of RC, explaining 60.437 percent. SC was confirmed as a unidimensional construct explaining 62.834 percent of the total variance. The Cronbach’s α coefficients for the resulting factors range from 0.609 to 0.901, exhibiting a good acceptable internal consistency of all the composites (Table V). 4. Results Descriptive statistics, which show the mean and standard deviation for each research variable, are presented in Table VI. The table also provides the correlation coefficients among all variables (n ¼ 281). These coefficients demonstrate that all knowledge processes are significantly correlated with each other, as well as with SC. Most noteworthy are the strongest correlations that exist between knowledge acquisition and knowledge creation, as well as between knowledge documentation and knowledge transfer. Also, both knowledge transfer and knowledge creation have the strongest correlations with SC. All knowledge processes have significant and relatively strong correlations with IC, particularly knowledge transfer. In addition, the analysis shows a significant and quite strong correlation between SC and IC. Since all knowledge processes have significant and relatively high correlation coefficients among them, as shown in Table VI, the potential problem of multicollinearity concerning regression analysis is raised. When two or more independent variables are highly correlated, the values of β for these variables will be interchangeable. Multicollinearity makes it difficult to assess the individual importance for each independent variable in the model. This situation increases the standard error of β coefficients, which in turn causes the regression coefficients to be unstable. Therefore, variance inflation factor (VIF) and tolerance values were examined, since they are two related measures that indicate the degree to which one independent variable is explained by the other independent variables. The rule of thumb here is that multicollinearity becomes a cause for concern when tolerance is smaller than 0.10 or when VIF is larger than 10 (Hair et al., 1998). As can be seen from Table VII, all independent variables were all within acceptable ranges; under the cut-off point of 10 for VIF and a value larger than 0.10 for tolerance. In order to test the first-two research hypotheses, multiple regression analysis was used as H1 and H2 are concerned with the effects of five knowledge processes on IC as well as SC, respectively. H1 was tested through the first multiple regression model shown in Table VIII, which revealed that knowledge documentation has the strongest effect on IC development, followed by knowledge transfer, knowledge acquisition, and knowledge creation, according to β values and their significance levels. Knowledge application, however, was found to have an

KAC1: our organization is keen on facilitating knowledge Flows with the external business environment, by actively communicating with its most influential stakeholders KAC2: team members are selected based on their contacts and relations with the external environment which enable them to access diverse sources of information and knowledge KAC3: our organization accesses, collects, and acquires new ideas and information from diverse external sources in its business environment, including its customers, suppliers, competitors, and partners KAC4: our organization has processes for acquiring knowledge about new products/ services within our sector KAC5: our organization has special teams devoted to identify best practices in the sector KC1: our organization frequently comes up with new ideas about its products and/or services KC2: our organization frequently comes up with new ideas about our working methods and processes KC3: if existing methods and processes are no longer effective, our organization is capable of developing new ones KC4: our organization is proficient at creating new know-how, skills, and capabilities KD1: our organization has internal processes designed for refining, organizing, and storing the knowledge collected KD2: our organization possesses many patents and licenses KD3: in our organization, we are used to document in writing the things that are learned in practice KD4: failures and successes are evaluated and “lessons learned” are set down KD5: in our organization, we make sure that the most important experiences gained are documented KD6: our organization has at its disposal up-to-date handbooks, manuals, and so forth which are frequently used KT1: our organization uses mechanisms and means for knowledge exchange across individuals, groups and organizational levels KT2: members change jobs and tasks regularly, thus distributing their know-how

Items

0.630

0.782

0.669 0.751

0.609 0.512


0.475 0.585

0.590

0.436 0.550

0.780 0.695

0.726

0.700

0.549

0.775

0.707

Factor loadings Knowledge Knowledge transfer acquisition

0.505

Knowledge creation


(continued )



Table II. Exploratory factor analysis (EFA) for the knowledge management processes construct

Table II.

KT3: the employees in our organization share with colleagues and others their knowledge/ know-how KT4: the members in our organization regularly inform each other about positive experiences and successful work methods KAP1: our organization modifies its products, strategies, and behaviors in the light of its past experiences KAP2: our organization uses a set of activities designed for using the available knowledge to develop new products KAP3: our organization uses a set of activities designed for using the available knowledge to solve new problems KAP4: our organization uses the available knowledge to improve its productivity KAP5: our organization stores and retrieves the available knowledge KAP6: our organization attempts to use its stocks of knowledge across different projects Sampling adequacy (KMO measure) and sig. Eigenvalue (% of variance) 9.415 (37.415)

0.451 0.415

0.841

0.837

Factor loadings Knowledge Knowledge transfer acquisition

0.751 0.580 0.432

0.507

0.423


0.918 (sig. ¼ 0.000) 1.796 (7.184) 1.472 (5.889) 1.153 (4.613) 1.116 (4.464)

Knowledge creation

450

Items



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HC1: our employees are highly skilled 0.693 HC2: our employees are widely considered the best in our industry 0.701 HC3: our employees are creative and bright in their jobs 0.771 HC4: our employees are considered experts in their particular jobs and functions 0.758 HC5: our employees develop new ideas and knowledge 0.753 HC6: Our employees are able to focus on the quality of service provided 0.726 HC7: our employees are well-educated compared to their peers in the industry 0.726 HC8: our employees are able to find simple solutions for more complex problems 0.732 OC1: our organization documents knowledge in manuals and databases OC2: organizational processes in our company are contained in structures, systems, mechanisms and manuals OC3: our organization uses intellectual property rights (patents/registered software, and copyrights) as a way to store knowledge OC4: our organization protects knowledge and key information to avoid loss if key people left the company OC5: our organization documents its projects in order to use it in other projects OC6: our organization possesses work methods and procedures in support of innovations and new products RC1: we get a lot of important information from external collaboration partners RC2: we collaborate extensively with external parties (e.g. customers and suppliers) to develop new solutions RC3: customer feedback guides our activities RC4: we are well aware of our customers’ needs RC5: our company’s services bring added value to our customers RC6: the organization is keen on developing long-term relationships with its customers Sampling adequacy (KMO measure) and sig. Eigenvalue (% of variance) 7.684 (38.422)

Items

Human capital

2.120 (10.598)

0.526

0.753 0.468

0.756

0.646

0.665

0.764 0.557

0.793

External Stakeholders Capital

0.668 0.795 0.726 0.903 (sig. ¼ 0.000) 1.263 (6.313) 1.021 (5.104)

Factor loadings Organizational Customer capital capital



Table III. Exploratory factor analysis (EFA) for the intellectual capital construct


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Items

Factor loadings

SC1: our employees are skilled at collaborating with each other to diagnose and solve problems SC2: our employees share information and learn from one another SC3: our employees interact and exchange ideas with people from different areas of the company SC4: our employees partner with customers, suppliers, alliance partners, 452 etc., to develop solutions SC5: our employees apply knowledge existing in one area of the company to solve problems that arise in another Table IV. SC6: our company possesses techniques and mechanisms for knowledge Exploratory factor sharing and exchange analysis (EFA) for the Sampling adequacy (KMO measure) and sig. social capital construct Eigenvalue (% of variance)

0.757 0.757 0.889 (sig. ¼ 0.000) 3.77 (62.834)

Knowledge management Knowledge acquisition Knowledge creation Knowledge documentation Knowledge transfer Knowledge application

4 5 6 5 4

0.709 0.847 0.802 0.803 0.609

Intellectual capital Human capital Organizational capital Customer capital External stakeholders capital Social capital

8 6 3 3 6

0.901 0.692 0.807 0.746 0.880

Knowledge acquisition Knowledge creation Knowledge documentation Knowledge transfer Knowledge application Social capital Intellectual capital Note: ***p o0.001

Variables

Table VII. Collinearity statistics

0.754

Cronbach’s α

Variables

Table VI. Means and standard deviations and correlations

0.867

Number of items

Construct

Table V. Cronbach’s α coefficients for research constructs

0.772 0.841

Knowledge acquisition Knowledge creation Knowledge documentation Knowledge transfer Knowledge application Social capital

Mean

SD

1

2

3

3.85 3.84 3.35 3.76 3.76 3.85 3.89

0.770 0.815 0.785 0.735 0.892 0.753 0.595

1 0.649*** 0.475*** 0.544*** 0.466*** 0.516*** 0.620***

1 0.537*** 0.592*** 0.526*** 0.536*** 0.641***

1 0.494*** 0.485*** 0.452*** 0.638***

4

5

6

1 0.524*** 1 0.676*** 0.439*** 1 0.649*** 0.503*** 0.695***

Tolerance

VIF

0.448 0.619 0.432 0.616 0.498 0.515

2.234 1.616 2.313 1.623 2.010 1.944

Model

Criterion

1

Intellectual capital

Predictor


Knowledge acquisition Knowledge creation Knowledge documentation Knowledge transfer Knowledge application 2 Social capital Knowledge acquisition Knowledge creation Knowledge documentation Knowledge transfer Knowledge application 3 Intellectual capital Social capital Notes: *p o0.05; **p o 0.01; ***p o 0.001

β

t

Adj. R2

0.203 0.171 0.301 0.272 0.030 0.131 0.105 0.077 0.489 0.029 0.695

3.959*** 3.084** 6.382*** 5.410*** 0.640 2.234* 1.662 1.434 8.491*** 0.543 16.165***

0.612

0.493

0.482

IC, KM and SC within the ICT sector in Jordan 453 Table VIII. Regression results for knowledge processes and social capital on intellectual capital

insignificant and weak effect on IC. H2 was tested through the second regression model, which showed that only two of the five knowledge processes significantly affect SC, namely knowledge transfer and knowledge acquisition. More specifically, knowledge transfer emerged as having the most significant and strongest effect on SC, followed by knowledge acquisition. The third regression model shown in Table VIII is a simple one that is concerned with testing the third hypothesis that addresses the effect of SC on IC development. Findings show a highly significant and strong effect. In order to test the hypothesized mediating effect of SC on the relationship between knowledge processes and IC, Baron and Kenny’s (1986) mediated regression technique was used. Accordingly, Baron and Kenny (1986) recommend a three-step process, in which the significance of the coefficients is examined at each step, as shown in Tables VIII and IX. Based on the results of the three aforementioned regression models, a mediating relationship exists if there is: a significant relationship between the predictor (knowledge process) and the mediator (SC) variables; a significant relationship between the predictor (knowledge processes) and the criterion (IC) variables; a significant relationship between the mediator (SC) and the criterion (IC) variables indicated in step 3; and if the effect of the predictor (knowledge process) on the criterion variable (IC) is less in step 3 than in step 2. In order to determine whether there is full or partial mediation, the effect of the predictor on the criterion in the third regression model should be examined. Full mediation occurs if this effect becomes non-significant, whereas partial mediation occurs if that effect is reduced but is significant. Table X presents the mediated regressions, which demonstrate that while all knowledge processes impact IC, SC partially mediates the effect of each of these knowledge processes (acquisition, creation, documentation, transfer, application) on IC development. When IC is regressed simultaneously on each KMP and SC (see step 3 in the table), the effects of these KMPs on IC decrease (from β ¼ 0.620 to β ¼ 0.355 for knowledge acquisition), (from β ¼ 0.641 to β ¼ 0.376 for knowledge creation) (from β ¼ 0.638 to β ¼ 0.407 for knowledge Analysis Step 1 Step 2 Step 3

Regressing the mediator variable on the predictor variable (social capital on each knowledge management process) Regressing the criterion variable on the predictor variable (intellectual capital on each knowledge management process) Regressing the criterion variable simultaneously on the predictor and mediator variables (intellectual capital on each knowledge management process and social capital, e.g. knowledge acquisition and social capital on intellectual capital)

Table IX. Baron and Kenny (1986) mediated regression three-step process

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Table X. Mediating effects of social capital on the relationship between knowledge processes and intellectual capital

Step

Criterion

Predictor

1 2 3

Social capital Intellectual capital Intellectual capital

1 2 3


1 2 3


1 2 3


1 2 3


Knowledge acquisition Knowledge acquisition Knowledge acquisition Social capital Knowledge creation Knowledge creation Knowledge creation Social capital Knowledge documentation Knowledge documentation Knowledge documentation Social capital Knowledge transfer Knowledge transfer Knowledge transfer Social capital Knowledge application Knowledge application Knowledge application Social capital

β

t

Adj. R2

0.695 0.620 0.355 0.512 0.536 0.641 0.376 0.493 0.452 0.638 0.407 0.512 0.676 0.649 0.329 0.473 0.439 0.503 0.245 0.588

16.165*** 13.184*** 7.795*** 11.235*** 10.619*** 13.957*** 8.219*** 10.773*** 8.456*** 13.844*** 9.767*** 12.273*** 15.326*** 14.231*** 5.965*** 8.595*** 8.168*** 9.732*** 5.370*** 12.870***

0.482 0.382 0.573 0.285 0.409 0.582 0.201 0.405 0.613 0.455 0.419 0.539 0.190 0.251 0.529

Note: ***p o0.001

documentation) (from β ¼ 0.649 to β ¼ 0.329 for knowledge transfer), and (from β ¼ 0.503 to β ¼ 0.245 for knowledge application). In other words, the effects of these knowledge processes on IC, while remaining significant, decreased in magnitude when SC is entered to the equation (from step 2 to step 3). In addition, it is noted that adjusted R2 has increased when SC was added to each knowledge process in the third regression models, which regress the criterion variable (IC) simultaneously on the predictor and mediator variables, for all knowledge processes. This indicates that SC, when added to each predictor, does in fact increase the explanatory power of the variance in the criterion variable (IC), compared with relying only on a particular knowledge process (the second regression models). 5. Discussion In this paper, a comprehensive model was developed and empirically tested to examine IC from a “knowledge process”-based view. The effects of five key KMPs: knowledge acquisition, knowledge creation, knowledge documentation, knowledge transfer and knowledge application on both: IC development, as well as SC, were hypothesized and examined. In addition, the vital mediating role of SC in leveraging the impact of each of these knowledge processes on the development of IC was also investigated. The findings provided important empirical evidence supporting the contention that IC development is positively and significantly affected by KMPs. These results are considered an important theoretical and empirical contribution that add to the extant studies addressing interconnections between some knowledge processes and IC dimensions (e.g. Shih et al., 2010; Seleim and Khalil, 2011; Hsu and Sabherwal, 2012; Piri and Jasemi, 2013; Mehralian et al., 2014). The results interestingly demonstrated that all of the aforementioned knowledge processes, with the exception of knowledge application, have significant and positive effects on the development of IC in ICT firms operating in Jordan. Knowledge application was found to have an insignificant and weak effect. More specifically, knowledge documentation and knowledge transfer were the most important


processes in terms of their effect on IC development, followed by knowledge acquisition and knowledge creation. The two knowledge processes of documentation and transfer were also the least applied and practiced processes in the surveyed ICT firms. The particular importance of knowledge documentation has been earlier emphasized by Wexler (2002), who argues that knowledge developed within an organization needs to be stored and documented for IC to develop and accumulate in an organization. The coupling of knowledge documentation with transfer can well be attributed to their essential role in facilitating the sharing of human-embodied knowledge, through transforming it into non-embodied knowledge (i.e. OC and OM). In this way, documentation and transfer of knowledge play a crucial role in transforming HC into OC ( Jashapara, 2011). Moreover, this finding can be indicative of the emphasis placed upon knowledge creation, since Andreeva and Kianto (2011) conclude that activities aiming at documenting and storing knowledge available within an organization, sharing it via intra-firm interactions, and supplementing it with external knowledge acquisition provide material for knowledge creation processes. This, in turn, enhances the level of organizational intellectual assets as well as subsequent IC accumulation. These findings somewhat differ from those of previous studies, in terms of the relative importance of knowledge processes in IC development. For example, Shih et al. (2010) and Mehralian et al. (2014) found that knowledge creation contributes the most to the development of IC, while Seleim and Khalil (2011) found that in software firms, IC is positively influenced by knowledge application, knowledge creation, and knowledge sharing. The insignificance of knowledge application in IC development might be explained by its direct involvement in translating knowledge into tangible output (products, services, processes), rather than contributing to the accumulation of intangible knowledge assets. Furthermore, knowledge transfer and knowledge acquisition emerged as the only knowledge processes to play a crucial role in building SC. In turn, SC was found to significantly and strongly affect IC development. The results also indicate that SC partially and significantly mediates the effects of each knowledge process on IC. The finding confirming the highly significant and strong effect of knowledge transfer on SC, and the moderate yet significant effect of knowledge acquisition, is considered an insightful addition to the literature concerned with investigating the nature of interrelationships between KMPs and SC (e.g. Nahapiet and Ghoshal, 1998; Hoffman et al., 2005; McElroy et al., 2006; Manning, 2010; Monavvarian et al., 2013). Social interactions, collaboration and exchanges of ideas, information, knowledge, insights, know-how and experiences have always been an inherent feature of KM. The importance of this social aspect of KM has been widely emphasized in the literature, since it clarifies the rich context within which the various knowledge processes are undertaken, and explains how such an undertaking can enhance the quality of organizational SC (Wu and Tsai, 2005). Hence, activities oriented toward exchanging knowledge among individuals and groups, and across organizational levels, play a critical role in the development of a firm’s SC. This, in turn, has been found in this study to significantly enhance the development of a firm’s IC (i.e. human, organizational, as well as customer and external stakeholders capitals) (Nahapiet and Ghoshal, 1998; Lee and Sukoco, 2007; Huang and Wu, 2010; Manning, 2010). Hence, the findings confirm the catalyst role of SC in effectively harnessing various KMPs in the vein of developing IC (Hoffman et al., 2005; Wu and Tsai, 2005; Manning, 2010; Seleim and Khalil, 2011). The findings also endorse the view that considers SC as “a social relations artifact” emerging from human interaction inside the firm (Manning, 2010). 6. Conclusion This study aimed at investigating the relative impacts of five KMPs (acquisition, creation, documentation, transfer, and application) on IC as well as SC development. It also aimed at examining the nature of the mediating role of SC in the KM/IC context. The findings have


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shown that knowledge documentation and knowledge transfer have the strongest effects on IC, followed by knowledge acquisition and knowledge creation, while knowledge application was found to have an insignificant effect. Also, knowledge transfer and knowledge acquisition emerged as the only two significant processes for the development of SC. Moreover, SC was found to partially and significantly mediate the effects of all processes on IC. A key contribution emanating from this study is that it has followed a broader and more comprehensive approach to investigating the links between KM processes and IC, by developing a model comprising five key knowledge processes, in addition to SC as a mediating variable, impacting IC development. This is in clear contrast to earlier studies that have mostly focused on few of those processes, and examined direct and often simplified relationships without taking into consideration mediated and/or moderated relationships (e.g. Wexler, 2002; Shih et al., 2010; Huang and Wu, 2010; Ramezan, 2011; Schiuma et al., 2012; Hsu and Sabherwal, 2012; Piri and Jasemi, 2013; Mehralian et al., 2014; Wang et al., 2014). Following such a more inclusive approach came as a response to calls made for focusing on developing integrative models that clarify the relationships among KMPs and IC (e.g. Zhou and Fink, 2003; Issac et al., 2009), as well as exploring the possibility of the existence of mediated relationships. Furthermore, the role of SC in knowledge-based IC development has not been previously studied. The findings support that knowledge processes impact IC, and this influence is better explained with SC. This more complex explanation of the inter-linkages among knowledge processes, SC and IC informs future studies on how to understand these issues and should contribute to the growing research efforts aiming at developing models that can provide a better explanation of the complex KM-IC relationship phenomenon and its determinants. Also, this study is one of a limited number of studies in the extant literature that focuses on examining the links among KMPs, SC, and IC in a KIBS sector within an “oil-poor,” “human resource-rich” Arab developing country context. To promote the development of IC, particularly in a KIBS sector, this study offers KM and/or IC managers a number of insightful recommendations. Documentation, transfer, acquisition and creation of knowledge are especially effective processes. More specifically, those responsible for managing knowledge particularly within ICT companies are advised to focus on knowledge documentation, in terms of capturing and evaluating their most important experiences. Failures and successes, as well as “lessons learned in practice,” should be set down and documented as valuable learning opportunities. Another important knowledge process in this regard is knowledge transfer, in terms of encouraging organizational members to regularly inform each other about positive experiences and successful work methods and sharing their knowledge and know-how. This becomes especially important for ICT companies in Jordan since the two knowledge processes of documentation and transfer were also found to be the least applied and practiced processes. KM/IC managers are also advised to appreciate the vital role, which intra-organizational as well as inter-organizational social interactions play (i.e. SC), in significantly enhancing and nurturing IC in a knowledge-intensive context. As such, looking at the firm as a cooperative knowledge-sharing entity with all stakeholders is key for leveraging its knowledge-based assets. References Adler, P.S. and Kwon, S.W. (2002), “Social capital: prospects for a new concept”, Academy of Management Review, Vol. 27 No. 1, pp. 17-40. Alavi, M. and Leidner, D.E. (2001), “Knowledge management and knowledge management systems: conceptual foundations and research issues”, MIS Quarterly, Vol. 25 No. 1, pp. 107-136. Alkhalil, S.S., Dahiyat, S.E. and Aldalahmeh, A.M. (2014), “Intellectual capital development and its effect on technical innovation in banks operating in Jordan”, Journal of Management Research, Vol. 6 No. 1, pp. 211-238.

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Further reading Barton, L.D. (1998), Wellsprings of Knowledge: Building and Sustaining the Sources of Innovation, Harvard Business School Press, Boston, MA. Galbraith, J.K. (1969), The New Industrial State, Princeton University Press, Princeton, NJ. Inkpen, A.C. and Tsang, E.W.K. (2005), “Social capital, networks and knowledge transfer”, Academy of Management Review, Vol. 30 No. 1, pp. 145-165. Nonaka, I., Toyama, R. and Konno, N. (2000), “SECI, Ba and leadership: a unified model of dynamic knowledge creation”, Long Range Planning, Vol. 33 No. 1, pp. 5-34. Youndt, M.A. and Snell, S.A. (2004), “Human resource configurations, intellectual capital, and organizational performance”, Journal of Managerial Issue, Vol. 16 No. 3, pp. 337-360. About the authors Bushra Meaad Ramadan is a Business Researcher and an Analyst at the Risk Consult Limited, Amman, Jordan. Her responsibilities involve providing rigorous and comprehensive risk management analysis and consulting services targeting emerging markets. She holds a Master of Business Administration from the University of Jordan with distinction. Her thesis investigated intellectual capital development within the ICT sector in Jordan and the roles of knowledge management and social capital in such development. Her research interests focus on interdisciplinary topics that seek to integrate knowledge management and Information Technology. Samer Eid Dahiyat is an Associate Professor of Strategic Management and Agility at the Department of Business Management, School of Business, the University of Jordan, Jordan, where he earlier served as the Department Chairman and an Assistant Dean. He holds a Doctor of Philosophy in Organizational Agility as well as a Master of Business Administration, from the School of Business, the University of Huddersfield, UK. He participated in establishing the Arab Certified Quality Manager qualification, offered by Talal Abu-Ghazaleh Group. His current research interests include knowledge management, intellectual capital, absorptive capacity, innovation, strategic flexibility and agility. His earlier research was published in such international journals as International Journal of Learning and Change, International Journal of Services and Operations Management and International Journal of Commerce and Management. Nick Bontis is the Chair, Strategic Management at the DeGroote School of Business at the McMaster University. He received his PhD from the Ivey Business School at the Western University. He is the first McMaster Professor to win Outstanding Teacher of the Year and Faculty Researcher of the Year simultaneously. He is a 3M National Teaching Fellow, an exclusive honor only bestowed upon the top university professors in Canada. He is recognized the world over as a leading professional speaker and consultant. Nick Bontis is the corresponding author and can be contacted at: [email protected] Mahmoud Ali Al-dalahmeh holds a Doctor of Philosophy in Management Information Systems from the Faculty of Informatics at the University of Wollongong, and a Master of Applied Finance from the University of Western Sydney, Australia. He is presently an Assistant Professor at the Department of Management Information Systems, University of Jordan. Al-dalahmeh has several publications, including in Proceedings of the Intellect Base International Consortium, Journal of Information Systems Technology & Planning, International Journal of Accounting Information Science and Leadership. His paper “E-commerce self-efficacy and intention to shop online: the empowerment of internet marketing,” was awarded Academic Excellence at the Intellect base International Consortium Academic Conference held at Atlanta, USA.

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