The Relationship between Firm Intellectual Capital and the Competitive Advantage

Previous studies rarely examined the relationship between intellectual capital and competitive advantage. Most studies underestimate the shift towards knowledge based economy where, capital and work are no longer the differentiating and generating factors of sustainable competitive advantage. Relatively, little is known in the literature about how intellectual capital affects competitive advantage. This study will contribute to the literature by proposing a theoretical model considering the relationship of intellectual capital with the creation of competitive advantage in knowledge intensive organizations. Additionally, the extensive literature review will be utilized in the development of five hypotheses linking intellectual capital with competitive advantage. The hypotheses show that, human capital, organizational capital and relational capital positively influence competitive advantage. Moreover the positive influence of intellectual capital on strategy formulation and the positive influence of strategy formulation on competitive advantage constitute the basis for the hypothesis; intellectual capital positively influences competitive advantage. The last hypothesis is based on the positive influence of innovation on competitive advantage regarding the positive relationship between the relational capital and innovation. A future research opportunity can be the statistical testing of the hypotheses with the survey method.