Intellectual Capital Development and its Effect on Technical Innovation in Banks Operating in Jordan

The purpose of this study is to investigate the effect of intellectual capital development on the ability of banks operating in Jordan to undertake technical innovation. Employing a questionnaire-based survey, twenty banks out of twenty six participated, and 163 out of 200 questionnaires were returned and were valid for analysis, thus resulting in a response rate of 81.5%. Exploratory Factor Analysis (EFA) results show that intellectual capital consists of two main dimensions: Human capital, and Structural Capital comprising items originally developed to reflect organisational capital and relational capital. Also, product/service and process innovation items converged to form one construct named Technical Innovation. Multiple regression analysis findings show a significant and positive effect of the aforementioned intellectual capital dimensions on technical innovation. More specifically, structural capital was proved to have a stronger effect on technical innovation compared with human capital. These findings highlight the need for organisations intent on enhancing their technical innovative capabilities to not merely focus on attracting and recruiting highly skilled and competent human resources, but rather, they are advised to develop mechanisms designed to capture and translate the knowledge and expertise of organisational members and stakeholders so that these become internalized in the organisation’s processes and routines.