The catalyst of change in small and micro enterprises: how intellectual capital uses dynamic capabilities to foster innovation

Purpose This study explores the relationship between intellectual capital and innovation in small and micro enterprises (SMEs) and analyses the mediating effect of dynamic ability on this relationship. Design/methodology/approach This study used a questionnaire survey to obtain research data on intellectual capital and innovation in 290 SMEs in the Jiangsu and Shandong provinces of China. The impact of intellectual capital on the innovation of SMEs is tested using hierarchical regression analysis in SPSS 22.0. The effect of intellectual capital on the innovation of these enterprises was examined using the SPSS PROCESS macro version 3.3. Findings The findings reveal that intellectual capital not only directly promotes innovation inputs, patent applications, and innovation income but also indirectly fosters innovation by enhancing dynamic capabilities. Originality/value This study not only deepens the understanding of intellectual capital and its role in SME innovation but also further elucidates the intermediary role of dynamic capabilities and the differences in the impact of various dimensions of intellectual capital on innovation. Theoretically, it provides new evidence for the application of intellectual capital theory in the field of innovation research. Practically, it provides empirical evidence to further harness the role of intellectual capital in driving innovation in SMEs.