Examining intellectual capital and knowledge absorptive capacity for high innovative performance

In the contemporaneous business environment, intangible assets and capabilities are building blocks of an organization's innovative performance. Despite the rising importance of absorptive capacity in knowledge management and innovation literature, there has been limited focus on its dimensions, such as knowledge acquisition, assimilation, and transformation, particularly in relation to intellectual capital (IC) and innovative performance. This research unravels the mediating role played by the dimensions of absorptive capacity in connecting IC to innovative performance. This research offers a novel combination of individual mediation effects of absorptive capacity components on the relationship between IC and innovative performance. Data for this cross-sectional research were gathered from 295 organizations through a Likert scale questionnaire. This research employs partial least square-structural equation modeling to analyze the individual mediating pathways of absorptive capacity. This study shows that knowledge acquisition adversely influences the relationship between IC and innovative performance, which challenges conventional wisdom. Conversely, all other mediation paths, including knowledge assimilation, transformation, and exploitation, exhibit a positive influence on innovative performance. Furthermore, this study also offers valuable managerial implications and suggests potential areas for future research.