Proceedings of the 3rd European Conference on Intellectual Capital

The Structural Model <strong>of</strong> Intellectual Capital in Higher
Education Institutions
Fattah Nazem
Islamic Azad University- Roudehen Branch, Tehran, Iran
nazem@riau.ac.ir
Abstract: Higher education system is one <strong>of</strong> <strong>the</strong> most important and complicated products <strong>of</strong> human
achievements. In addition, universities are social systems which have been known as <strong>the</strong> center <strong>of</strong> knowledge
and information as well as thinking bases for leading societies. In today’s complex, competitive world, intellectual
capital is considered as a competitive advantage for organizations and an indication <strong>of</strong> a part <strong>of</strong> <strong>the</strong>
organization’s economic function. The purpose <strong>of</strong> <strong>the</strong> present study was to provide a structural model <strong>of</strong>
intellectual capital in higher education institutions based on managers’ creative problem-solving and
organizational culture. The population <strong>of</strong> <strong>the</strong> research included all employees <strong>of</strong> Islamic Azad University (IAU).
332 managers and three employees under <strong>the</strong>ir supervision (totally 996 employees) were selected using
stratified and cluster random sampling method. The research instruments were three questionnaires which were
administered in 86 IAU branches and education centers: Bontis’s (1997) Intellectual Capital Questionnaire which
consisted <strong>of</strong> 52 items with three underlying constructs <strong>of</strong> human capital, customer capital, and structural capital
and Cronbach Alpha <strong>of</strong> 0.95; Managers’ Creative Problem-Solving Questionnaire (Whetten & Cameron, 2006)
which was comprised <strong>of</strong> 22 items with dimensions <strong>of</strong> logical problem solving, creative problem solving,
developing innovation and Cronbach Alpha 0.82; and a researcher-made questionnaire for organizational culture
which was constructed based on <strong>the</strong> Robbin’s (1996) <strong>the</strong>ory with 28 items and underlying factors <strong>of</strong> individual
initiative, risk tolerance, direction, integration, conflict tolerance, management contact, control, and reward
system (α = 0.92). The results <strong>of</strong> path analysis using LISREL s<strong>of</strong>tware indicated that dimensions <strong>of</strong> creative
problem-solving and organizational culture had a direct effect on intellectual capital with <strong>the</strong> indices <strong>of</strong> 0.03 for <strong>the</strong>
former variable and 0.80 for <strong>the</strong> latter one. The model also showed that <strong>the</strong> factor <strong>of</strong> integrity in organizational
culture had <strong>the</strong> highest direct effect on <strong>the</strong> intellectual capital.
Keywords: Intellectual capital, creative problem-solving, organizational culture, higher education, structural
model
1. Introduction and purpose <strong>of</strong> <strong>the</strong> study
Higher education system is one <strong>of</strong> <strong>the</strong> most important and complicated products <strong>of</strong> human
achievements. Green (1997) explains that higher education provides <strong>the</strong> technical knowledge and
skill that industry requires it in future and <strong>the</strong> fact that governments depend on this knowledge to have
an effective and strategic programming. In <strong>the</strong> past decade, academics have paid attention to <strong>the</strong> role
<strong>of</strong> knowledge for global competitiveness in <strong>the</strong> third millennium. Obviously, knowledge is recognized
as sustainable strategies to acquire and maintain companies’ competitive advantage (Barney, 1991;
Drucker, 1988). Therefore, in <strong>the</strong> knowledge-based world, organization capabilities are based on
knowledge and managers should have to understand which capabilities <strong>the</strong>y need in order to maintain
<strong>the</strong>ir competitive advantages (Barney, 1991).
Intellectual capital provides <strong>the</strong> concept <strong>of</strong> knowledge management that helps managers to identify
and to classify <strong>the</strong> knowledge components <strong>of</strong> an organization. Intellectual capital concepts have been
an explosion <strong>of</strong> interesting studies since FORTUNE magazine published in 1991 (Stewart, 1991).
Intellectual Capital — such as knowledge, skill, relationships — is, more than ever, <strong>the</strong> vital strategic
and competitive resources. Academics believe that <strong>the</strong> benefits, which all economic participants –
employees, managers, investors, governments - gain by accepting Intellectual capital as a resource
and by measuring its efficiency (Pulic, 2004). In knowledge-based economy, companies do not
produce just products or services but create added value to survive in <strong>the</strong> new economic reality.
Academics believe that intellectual capital is <strong>the</strong> lever for maintaining competitive advantages and
sustainable performance. Accordingly, identifying, valuing, managing Intellectual capital is becoming
increasingly important for companies (Bontis, 1996). In Fortune, Steward (1991) defines intellectual
capital as “knowledge that transfers raw materials and makes <strong>the</strong>m more valuable”. The concepts <strong>of</strong>
intellectual capital seem to have classified as a consensus <strong>of</strong> dividing an intellectual capital into three
different groups (Edvinsson and Sullivan, 1996). Human capital simply comprises <strong>the</strong> competence,
skills, experience, and intellectual agilities <strong>of</strong> <strong>the</strong> individual employees (Bounfour, 2003), structural
capital includes processes, systems, structures, brands, intellectual property, and o<strong>the</strong>r intangibles
that are owned by <strong>the</strong> firm but do not appear on its balance sheet (Brooking, 1996). The remaining
type <strong>of</strong> intellectual capital is customer (social) capital resides ei<strong>the</strong>r at <strong>the</strong> individual or <strong>the</strong>
organizational level. Customer (social) capital is an intermediary form <strong>of</strong> intellectual capital consisting
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