The effects of knowledge creation process on organizational performance using the BSC approach: the mediating role of intellectual capital

Purpose Knowledge is a key success factor in achieving competitive advantage in the current fast-paced and uncertain economic environment. Several studies in the literature have analyzed the relationship between knowledge creation (KC) and organizational success; however, the mechanisms by which KC leads to accumulation of intellectual capital (IC) and thereby affects various dimensions of organizational performance are understudied. The purpose of this paper is to examine how KC and IC and their relationship influence key dimensions of organizational performance. Design/methodology/approach A research model was developed and tested based on the literature in the areas of KC, IC and organizational performance. This study uses a survey sent to companies in an intensive knowledge-based industry. The balanced scorecard (BSC) approach was used to measure the key dimensions of organizational performance. Findings The results from structural equation modeling (SEM) on 470 completed questionnaires received from the pharmaceutical companies in Iran reveal that KC activities lead to the accumulation of organizational IC and IC has a crucial and positive impact on the BSC. Furthermore, the results from the path analysis indicate that IC mediates the effects of KC on the BSC. Practical implications The findings of this study contribute to the extant literature on the relationship between knowledge and organizational performance by demonstrating that knowledge and KC lead to performance when organizations utilize KC activities and leverage them to accumulate IC. Once used effectively, IC will result in a better performance in the knowledge-intensive environments. Originality/value This is the first study that investigates how KC contributes to firm performance by incorporating the mediating impact of IC on the BSC. The proposed model and results will help organizations to identify the mechanisms through which KC initiatives improve organizational performance.