Understanding the knowledge management‐intellectual capital relationship: a two‐way analysis

Purpose – Knowledge management (KM) and intellectual capital (IC) are believed to influence each other, and the relationship between the two constructs is of vital importance to organizational effectiveness. While a two‐way relationship between KM and IC is conceivable, the relevant empirical research has yet to produce satisfactory evidences on the nature of the relationship between the two constructs. This paper aims to empirically investigate the plausible KM‐IC two‐way relationship in the Egyptian software industry. Design/methodology/approach – This research adopts a cross‐sectional field survey strategy. It adopts a research model depicting a two‐way relationship between KM processes and IC dimensions. Two sets of hypotheses describing the predicted mutual influence between KM and IC are proposed. An instrument was adopted to collect the required data set on KM processes and IC dimensions from 38 Egyptian software firms. The partial least squares (PLS) procedure was used to assess the measurement model and test the research hypotheses. Findings – The analysis revealed three patterns of relationships between KM and IC: one‐way influence from KM to IC (e.g. knowledge application influences each of human capital, organizational capital, and relational capital; one‐way influence from IC to KM (e.g. human capital influences knowledge acquisition and knowledge transfer); and two‐way influence between KM and IC (e.g. between knowledge documentation and organizational capital, between knowledge transfer and relational capital). Originality/value – Contrary to most of the prior KM‐IC relevant research, this research has adopted a comprehensive research model and research method to facilitate the exploration of the mutual influences between KM processes and IC dimensions in the Egyptian software industry. To a certain extent, the research findings confirm and support the general proposition of a mutual KM‐IC relationship. These findings should contribute to the growing research efforts aiming at developing models that can provide a better explanation of the complex KM‐IC relationship phenomenon.