The relationship between intellectual capital, innovation and firm performance: A research in automotive supplier industry

Innovation is widely regarded as one of the most important sources of sustainable competitive advantage in an increasingly changing environment because it leads to product and process improvements, makes continuous advances that helps firms to survive, allows firms to grow more quickly, be more efficient, and ultimately be more profitable than non-innovators. The competitive advantage in today?s information age has shifted from material assets to intangible assets. Traditional factors of production -natural resources, labor and capital- have not disappeared but they lost significance as the importance of intangible assets like intellectual capital increased. Intellectual capital which is a core strategical resource of a company is playing a crucial role in firm innovativeness.The main objective of the study is to examine the effects of intellectual capital and its components (human capital, relational capital, structural capital and renewal capital) on firm innovativeness (product, process, organization and marketing innovation) and effects of innovativeness on firm performance in automotive supplier industry which is a leading industry in making innovations. According to results it is found that three components of intellectual capital -human capital, relational capital and structural capital- have significant positive effect on the product and organizational innovativeness, and also human capital and relational capital positively influenced the process and marketing innovativeness. Moreover it is observed that human capital positively influenced firm performance. In addition it is found that product and process innovation is playing a role in enhancing firm performance. These results highlight the importance and the influence of the intellectual capital on innovativeness, and also influence of innovativeness on firm performance.