THE MEANING OF INTELLECTUAL CAPITAL (IC)

As asserted by scholars, we are in a new era, the era of knowledge-based industries rather than
just labour-intensive industries. The concept of intellectual capital has attracted the attention of
many researchers since the time it was first proposed by Galbraith (1969) who defines it as the
use of intellectual capacity rather than the inherent possession of knowledge and intelligence.,
intellectual capital was defined as “the possession of knowledge, applied experience,
organizational technology, customer relationships, and professional skills that provides a
competitive edge in the market” (Edvinsson 1997). Stewart (1997) viewed intellectual capital to
be the intellectual material such as knowledge, information, intellectual property, and experience
that can create wealth when put to use. However Bontis (1998) argues that intellectual capital
does not include intellectual property. Intellectual capital includes assets such as copyrights,
patents, semiconductor topography rights, and various design rights Bontis (1998). However
intellectual capital is considered as a subset of intellectual assets Petty and Guthrie (2000).
Huang and Hsueh (2007) define IC as the sum of all knowledge and capabilities of every
employee that results in performance and creates wealth for the enterprise. The difference in
research background has resulted in different definitions and classifications of intellectual capital
Huang and Hsueh (2007). Earlier authors like Edvinsson (1997) viewed IC to comprise of two
components, human capital (the knowledge and skills of employees- it is volatile) and structural
capital (made up of customer capital and organizational capital). Building on this, Bontis (1998)
classifies IC into three components Human capital, Structural capital, and Customer capital.
Many studies have been done to show the relationship between IC components and performance,
most authors focus on its effects on firm performance. Empirical literature has produced
significant evidence on the positive relationship between IC and firm performance Hussinki et al.
(2017). For example, IC in the knowledge-based economy is an essential intangible resource for
business success and is viewed as the primary source of sustainable competitive advantage that
guarantees real benefits (Bontis et al. 2018). Intangible resources are of great significance and
value for the mutual interaction of organizational elements and the enhancement of firm
performance, (Carmeli and Tishler, 2004; Doudo and Rowlinson, 2021). Laure and Bontis
(2012) find IC components to directly and indirectly affect business performance in the banking
sector. Based on a cluster analysis Hussinki et al. (2017) identified four profiles of IC (generalist
IC firms, specialist IC firms, IC superstars, and IC laggards) and found that they all had an
impact on firm performance. Lin et al. (2018) in an empirical study of Taiwan's construction
industry found that the business performance of the construction industry relies highly on
intellectual capital. By leveraging the intellectual capital of the organization, intellectual
property, including new products and processes, can be developed, which in turn improves
business performance Narvekar and Jain, (2006).
Some authors also explore the relationship between IC and innovation. Through an empirical
analysis, Han and Li (2014) suggest that achieving a greater innovation performance relies on a
firm’s intellectual capital and its ability to sense opportunities and threats, to make timely and
correct decisions, and to facilitate necessary changes efficiently. Narvekar and Jain, (2006)
believe that Technological innovation excites the growth of organizations and intellectual capital
is necessary but not sufficient to facilitate innovation. There is a clear positive influence of social
capital on product innovation, Lavado et al. (2009).
A few other authors touched on the relationship between intellectual capital and project success.
Empirical evidence supports the proposition that IC has a positive impact on project success and
thus may be a good indicator of future projects’ performance in the IT industry Hanzic et al.
(2016). In the construction industry context, (Sigla, Shrivas, and Sharma, 2020) found structural
and relational capital has a direct impact on project performance, whereas human capital has an
indirect effect on project performance, using data from the Indian construction industry. Due to
limited studies in the relationship between IC components and project success, our research will
focus on that using the Ghanaian Construction Industry as our context.

Various components of IC
Although there have been some disagreement about the components of intellectual capital,
scholars have broadly agreed on three; structural/organizational capital, human capital and
relational capital. Hussinki et al. (2018) suggest an additional four elements of IC; (1) renewal
capital, which they refer to as the capacity of an organization to renew its knowledge through
learning, acquiring new skills and creatively changing its operations, similar to what other
authors call innovation capability (e.g Aramburu, Saenz and Blanco, 2015) and some refer to it
as learning capability (e.g Shahid et al.). (2) Trust capital which is referred to as the trust
embedded in its internal and external relationships. (3) Entrepreneurial capital which they relate
to be the entrepreneurial activities in the organization. (4) The fourth one is a split tradition
relational capital into internal and external categories as they are likely to have different
performance implications because they relate to relationships with different stakeholders.
Similarly, Doudu and Rowlinson, (2020) made a distinction social capital (i.e. internal relational
capital) and relational capital (i.e. external relational capital).
Human capital (HC)
Among all the components of intellectual capital, HC is considered the most important, it has
received the most significant attention (Petty and Guthrie, 2000). Human capital constitutes
inborn skills and acquired skills, thanks to which if adequately invested in can be developed and
enriched (Jerzak 2015). However, human capital is neither acquired nor “owned” the way that
some other types of capital (i.e., physical, technological, financial capital) are stored by
organizations (W.C. McDowell et al.). Human capital in the legal sense cannot be owned by a
firm, it refers to the individual capabilities and also the collective skills and aptitudes of a
workforce Stewart (1997). Human capital constitutes the basis for innovative development of a
company, it is the source of the strategic rebuilding through the usage of for example
brainstorming in a research lab, re-engineering new processes improving personal skills or
developing new leads. The essence of human capital is the fact of intelligence sharing among the
members of the organization (Jerzak 2015), Human capital is the most important constituent of
intellectual capital of a company, as people are the ones who have knowledge they interact with
the surrounding environment, are motivated and supported and can create this value for a
company (Jerzak 2015). Human capital is considered the tacit of the knowledge assets, tacit
knowledge is the type of knowledge which is personal, context-specific and, therefore, hard to
formalize and communicate, Aramburu, Saenz and Blanco (2015). In addition
In construction projects HC is key as it includes people internal to the project such as project
manager, project engineers, site supervisors and other team members who are responsible for
achieving project outcomes and planning, organizing and controlling project tasks (Sigla, Shrivas
and Sharma 2020; Hanzic et al. 2016). (Sigla, Shrivas and Sharma, 2020) in a study identifies
human capital capacity building process as a knowledge asset in the construction industry, they
also found human capital has an indirect impact on project performance and was mediated
through relational capital, structural capital and human capital capacity building process.
According to Huang and Hsueh (2007) management will have full advantage of human capital if
they are “well aware of the staff considerations, and provide proper training to highlight the
affective utilization of collective wisdom. Also Hussinki et al. (2018) concludes that firms will
revel more from its human capital if it invests in the development and promote trust within
internal and external relationships.
Human capital is usually defined as the knowledge, skills and experience that employees take
with them when leaving (Andreeva and Garanina). Andreeva and Garanina point out that r, it is
not enough to have skilled employees: they should also be motivated and committed to
contributing to their organizations.
Relational capital
Having good internal and external social connections can reduce the amount of time spent
gathering information as these connections contain information about best practices, customer
needs, and competitor moves (K. K. Reed et al. 2006). According to Reed et al. 2006 social/
relational capital has two aspect, internal relational (social) capital (i.e. the knowledge embedded
in relationships within a firm, Doudu and Rowlinson, 2020) and external relational (social)
capital (i.e. the potential an organization has due external firm intangibles, Bontis, 1998).
Internal relational capital deals with the inborn relations among the employee of an organization,
it facilitates knowledge combination and sharing, and therefore creating a learning and
innovative internal environment that will bring about firm performance (Reed et al. 2006).
Bontis 1998, asserts that the “essence of customer capital (external relational) is knowledge
embedded in the relationships eternal to the firm”. This makes it the most difficult to measure
and codify, (Bontis, 1998). Although customer capital exists between corporations and external
parties, customer capital originating from customer contributions, satisfaction, and loyalty is
closely related to current and future competitiveness (Lin et al. 2018). This means that
organizations with strong customer relations will have an upper hand towards customers, since
they know what the customer want from their interactions. The communication and information
sharing that occurs via social networks, both internally and externally, are often considered
critical for integrating and synthesizing the knowledge generated by employees McDowell et al.
(2018). McDowell et al. (2018) also affirms that Social capital, as an intangible resource, is
difficult for competitors to imitate and creates value for the firm through the communication and
assimilation of individual-level knowledge, helping firms achieve and sustain competitive
advantage.
Several researchers has found relational capital to have an impact on performance. For example,
according to Huang and Hsueh (2007) the relationship between an enterprise and its customers is
key to long-lasting profit-making and successful business operations. Through a path analysis
Huang and Hsueh (2007) found that only relational capital has a direct and significant influence
on business performance, with a path coefficient of 0.312.
Structural capital
Structural (or organizational) capital refers to the knowledge kept within the organization that is
represented by the intellectual property objects and infrastructure assets, such as management
practices and procedures (IFAC, 1998). According to Stewart (1997) structural capital comprise
knowledge assets that are company property, they are embedded within the organisation’s Bontis
(1998). It consist elements of efficiency, transaction times, procedural innovativeness and access
to information for codification into knowledge, Bontis (1998). “Structural capital refers to things
like proprietary software systems, distribution networks, and supply chains”, Petty and Guthrie,
(2000).

Project success
Therefore, to be able to achieve success on project, one must start by determining the factors that
affect project success and cause project failure. This is because project success does not
commensurate with the product success.
Client perspective
Consultant’s perspective
Contractor’s perspective

Relationship between the various IC components

Impact of components of IC on project success
Direct impact
Impact of the relationships between IC components on Project Success
Indirect impact