Intellectual capital for exploratory and exploitative innovation: Exploring linear and quadratic effects in construction contractor firms

Purpose: Intellectual capital (IC) has been suggested to be a means by which firms develop capabilities that enhance competitive advantage. There is, however, a paucity of empirical research linking IC with innovation in construction firms, leaving the IC–innovation link in such environments unclear. The purpose of this paper is to advance understanding of the relationships between IC components and strategic exploratory and exploitative innovation in construction contractor firms. Design/methodology/approach: The sample comprised 135 management personnel from construction contractor firms in Hong Kong. Data were collected through a questionnaire survey using validated scales in the literature which were subjected to confirmatory factor analysis. Hierarchical linear regression was used to test the hypotheses while partial least squares structural equation modelling was used for post hoc analysis. Findings: Social capital (SC) and organisational capital (OC) each have significant positive linear effects on exploratory and exploitative innovation, while human capital (HC) has no direct linear effect on either innovation type. HC, however, affects both exploratory and exploitative innovation through SC or OC. None of the three IC dimensions has a significant quadratic effect on exploratory or exploitative innovation. The findings suggest that in construction contractor firms increases in the accumulation of SC and OC are associated with proportional increases in exploratory and exploitative innovation. Originality/value: Despite the growth of studies connecting IC to innovation, the link between IC and exploratory and exploitative innovation has focussed on linear effects in units or on radical innovation outcomes. This study makes a novel contextual contribution by exploring both linear and quadratic effects of IC dimensions on strategic exploratory and exploitative innovation processes in construction contractor firms. The insights contribute to advance knowledge on the relationship between IC and innovation categories in different industrial settings.