1. Introduction
Previous studies have reported intellectual capital as mental property based on facts, figures and institutional experiences [
1]. It was argued that, in addition to improving employees’ knowledge, skills, perception and other non-sensorial and intangible characteristics, intellectual capital could be exploited to acquire wealth by expanding business assets [
2]. The definitions of intellectual capital vary according to its scale. The intellectual capital of an organisation can be used to generate extra benefits or items that may be easily understood by its employees, thereby achieving the financial target. In this context, [
3] described the probability of formalising, controlling and enabling intellectual contents to generate valuable assets wherein intellectual capital acts as the gap between the ledger interest of an enterprise and the value expected to be paid for it.
According to [
4], intellectual capital is the static aspect of knowledge; it is passive, measurable, classified and potentially value-generating. A number of researchers have reported that intellectual capital is composed of four correlated elements: human, structural, relational and social capitals [
5,
6,
7]. In addition, three facets of intellectual capital taxonomy were established as an emergent standard. In fact, human capital, an essential ingredient of intellectual capital, determines the organisation’s capital growth and overall performance enhancement [
8]. Despite dedicated effort, no consensus has been reached regarding the actual essence of human capital and its impact on improvements in organisational performance.
Furthermore, human capital comprises over 50% of intellectual capital values, making it the foremost constituent of intellectual capital [
7,
9]. In terms of relational capital, the reliance on diverse modes, such as horizontal or vertical as well as downstream or upstream, reflects the different types of cooperation or collaboration mechanisms in a variety of settings. Social capital refers to the embedded interactional knowledge of an organisation, signifying the nature and level of interaction amongst its members. The main function of structural capital is to assemble and disseminate knowledge across the organisation, enabling interaction of the organisation with other communities and institutions [
10].
Intensive review of previous literature has revealed that a dynamic and turbulent economic environment requires innovative strategies for survival, wherein modernisation acts as a key element in the organisation’s performance [
11,
12,
13]. Synergy between intellectual capital and success in innovation performance has emerged as a recurring theme in economic growth studies, especially in the banking sector [
14,
15]. Few studies have investigated the role of intellectual capital in the correlation between the financial innovation performance of the banking sector and its growth [
16,
17]. In fact, sustained successful innovation performance is decided by efficient and reliable actions based on the capacity of a bank to learn and adjust dynamically [
18].
The current research focused on the idea that innovation performance is vital for achieving competitive advantages, such as quality service or/and management, efficient strategy formulation and creativity, in the banking sector [
15,
19,
20]. The majority of the studies related to innovation performance have focused mainly on the services and manufacturing sectors [
21,
22]. Intellectual capital comprises intangible assets that improve the competitive advantage in terms of organisational skills, knowledge, experiences, technologies and relationships [
14]. Previous study demonstrated a close connection between the organisation’s intellectual capital and innovation performance, which was further validated in different contexts, regions and industries [
23]. Earlier study examined the role of intellectual capital in encouraging radical and incremental innovations [
24]. Despite all these efforts, insight into intellectual capital and its impact as a value creator is lacking.
Thus, the aim of the current research was to investigate the influence of two intellectual capital antecedent factors, culture and trust, on the main components of intellectual capital and the relationship between intellectual capital components and innovation performance. Hence, the following research questions were developed to help in the current investigation:
What is the effect of the antecedent factors of culture and trust on intellectual capital?
What are the impacts of human capital on structural and relational capitals?
What are the influences of intellectual capital on innovation performance?
5. Discussion and Conclusions
A robust correlation was established between the antecedent factor of culture and the main components of intellectual capital. The findings of cultural impacts on intellectual capital support hypotheses H1a, H1b and H1d (
t = 3.496, 3.548 and 3.669, respectively). It was demonstrated that Iraqi banks predominantly reflect some flexibility regarding culture to gain higher levels of human and structural capital. Conversely, the results do not support hypothesis H1c since no statistical significance was found between the antecedent factor of culture and the relational capital component of intellectual capital (
t = −0.245). This result differs from those of the previous studies [
38]. This inconsistency may be due to the different culture measurement scales, such as the competing-values approach [
121,
122]. This discrepancy may also emanate from an obvious cultural difference in terms of the attributes of relational capital in the Iraqi context and research conducted within the Western settings [
27]. These findings also lend empirical support to the theoretical observations consistent with previous studies [
33,
36,
48,
123,
124].
This study hypothesised that the antecedent factor of trust could positively affect all four components of intellectual capital. The legitimacy of this hypothesis was tested. The results reveal that there is a strong link between trust and the four components of intellectual capital (human, structural, relational and social capitals), supporting hypotheses H2a, H2b, H2c and H2d (
t = 3.412, 4.077, 5.023 and 5.645, respectively). This implies that commercial banks in Iraq reflect a greater extent of trust to acquire higher levels of intellectual capital. The research outcomes strongly indicate the essential role of trust in the development of intellectual components within Iraqi commercial banks. In other words, trust is determinative in promoting the process of intellectual capital development in the context of Iraqi commercial banks. The present findings agree well with those of other studies [
6,
36,
53,
60,
69].
Moreover, this research hypothesised significant impacts of human capital on structural and relational capital. The results support the influences of human capital on structural capital, represented through hypothesis H3 (
t = 3.627). It was inferred that the banks reflect a flexible impact of human capital to achieve a higher level of structural capital. In contrast, the present outcomes do not support hypothesis H4 since no statistical significance was found between human and relational capitals (
t = 1.745), which are in disagreement with earlier reports [
37,
78,
125]. This inconsistency may be due to the different relational measurements [
71,
126] and obvious cultural difference in terms of relational capital features between Iraq and Western nations.
Furthermore, these hypotheses were made to examine whether the components of intellectual capital are positively correlated to the bank’s innovation performance. In this respect, the present outcomes support the positive impact of intellectual capital components on the Iraqi commercial banks’ innovation performance, validating hypotheses H5a (
t = 5.863), H5b (
t = 3.671), H5c (
t = 6.263) and H5d (
t = 5.157). Furthermore, it was reaffirmed that investment in human capital and structural capital rather than other intellectual capital can potentially bring higher levels of innovation performance improvement in Iraqi commercial banks. These findings are consistent with the existing literature that demonstrates the positive role played by human capital in enhancing commercial banks’ performance [
85,
86] when compared with the intellectual capital development. The outcomes of this research support the existing data in the literature concerning the correlation between relational capital and banks’ innovation performance [
52,
85,
86,
88,
90,
109,
116,
127,
128,
129,
130].
Finally, the present conceptualisation of innovation predicted some positive impacts on an organisation’s productivity in the competitive markets. It was shown that the improved innovation performance of banks can be maintained as an empirical intellectual property. Two shortcomings of the previous studies were identified, and a new framework was formulated to resolve these issues. This work evaluated the role of innovation performance in a bank’s growth through intellectual capital, a concept in transition economies seldom addressed by earlier researchers. Following a resource-based view approach, the literature on developing countries showed that organisations’ internal capacity for innovation is limited, making the introduction of innovation less likely and restricting organisations from attaining required innovations. Based on these facts, it was argued that more specialised knowledge and resources might be found for suggesting a shift towards an integrated innovation approach.
The present findings reveal the emphasis on the enhancement of intellectual capital, which defines the levels of innovation performance in commercial banks. The findings are in good agreement with the idea that knowledge-intensive banks should be capable of planning and formulating knowledge-based strategies, communicating and showing the value relevance of such strategies. The integration of financial and non-financial techniques must lead to the development of suitable innovation performance, thereby ensuring that these strategies are realised in the performed financial tasks. To sum up, the results of this study are in harmony with the views in most other reports in the literature on the complexity of measuring intellectual capital, which influences the innovation performance in commercial banks.
5.1. Theoretical Implications
The contribution of this work to the existing state-of-the-art knowledge database was systematically analysed to understand the relationship between intellectual capital and innovation performance for the first time. This allowed Iraqi commercial banks to enhance intellectual property, acting as an indicator for sustaining a high level of innovation performance. It is strongly believed that the generated knowledge can help academicians and scholars to recognise the appropriate indicators of intellectual property that can act as better predictors for an organisation’s success in competitive markets in addition to furthering assessment and development. In addition, this study detected high impacts of the antecedent factors of culture and trust on the level of intellectual property in the commercial banks of Iraq to attain the highest innovation performance.
The current findings extend our understanding of the necessary reforms and mechanisms for enhancing intellectual capital in the context of Iraqi commercial banks. Most previous studies are on organisations in developed nations, which may not be fully applicable to emerging economies [
81]. In contrast, this research focused on the common features of emerging economies, such as underdeveloped, market-supporting institutions, weak laws and rapid changes in the context of developing countries at varied settings [
131,
132,
133,
134].
5.2. Practical Implications
Intellectual capital can contribute to healthy innovation performance in the banking sector. This study presented a useful strategy for practitioners, scholars and policy makers to follow by examining the logical factors of intellectual property that can indicate reasons for non-perfect relationships between intellectual capital and innovation performance amongst banking institutions that highly impact the national economic policy. In brief, the study showed that intellectual capital requires more focus on strategic planning in the commercial banking sector. It showed some important managerial implications of the integration between intellectual capital and innovation performance, representing a causal connection between the two concepts.
In addition, this study provided some broad evidence for academics, local business leaders and government officials to play a more active role in encouraging the development of intellectual property or capital in their respective organisations. The proposed conceptual framework would enable them to acquire valid and practical measurements to identify the intellectual property in multidimensional relationships. This concept was incorporated with the findings of [
135], which stated that financial institutions can acquire specific standards for identifying and developing their strategic resources and capabilities.
Together, the present disclosure affirms that intellectual-capital-based success is the essential component of and a prerequisite for the annual reports of every organisation. This may be one way of raising the profile of the intellectual capital usage in the banking sector as well as creating a uniform platform for investors to exploit the potential of intellectual capital property better. This concept can enable bank management to make successful and practical plans in the competitive markets, thus providing further elucidations to academicians about the dynamic relationship between intellectual capital property and innovation performance.
5.3. Limitations and Future Research
Despite the several notable contributions made by this study, it has some limitations. These limitations have been explained in this section, indicating the trustworthiness of the present research findings. The first limitation is related to the conceptual design that maintains a balance between the diagnostic and interactive use in Iraqi commercial banks. Such a design for different banking sectors, involving factors such as strategic and structural changes, overcoming the contemporary environmental opportunities or threats that intensify the competition and new regulation in the organisation, may not be completely applicable. Thus, the examination of these factors can offer a more comprehensive understanding of the mechanisms and conditions of the model fit in various banking sectors.
The next limitation is that this study depended mainly on a single research instrument represented by a survey questionnaire developed under controlled conditions and relying on the perception and opinions of the participants as key informants. Though the research instrument was tested for reliability and validity, previous scholars have indicated the existence of some bias when participants assess their own intellectual capital and innovation performance, which reflects in the bank’s performance. From this standpoint, one may analyse the annual reports of banks to compare and verify the information provided by the respondents in the questionnaire for better legitimacy of the developed research framework. The present conceptual model is examined with a cross-sectional technique rather than a longitudinal one, which may be unable to reflect the real causal relationship between long-term effects for future direction. Thus, the model may miss the effect of time, a limitation of the present study.
Instead, the present conclusive evidence was in line with the theoretical arguments and various outcomes reported in the literature. Future research might embark on a longitudinal survey to determine the causality and interrelationships amongst the present research constructs that are pivotal to the intellectual capital and innovation performance of the financial sector. In addition, the main area for future research is represented in developing an intellectual capital model that will be in multidimensional agreement with the International Accounting Standard Board 215 (IASB) in various research contexts. Moreover, the intellectual capital model must be observed by both internal management and external stakeholders for better innovation performance. The limitations of the present research indicate a way for the development of future lines of research. This study focused on using a single source of information, the consultation at the bank employees’ level, without considering other representative variables to measure innovation capacity. In future longitudinal studies, the opinions of various employees and multiple sources of information from management and other managerial levels should be included to confirm their impact on the development of intellectual capital and innovation performance.