Vol. 7(16), pp.

1470-1485, 28 April, 2013

DOI: 10.5897/AJBM11.1493
African Journal of Business Management
ISSN 1993-8233 © 2013 Academic Journals
http://www.academicjournals.org/AJBM

Full Length Research Paper

A study on the effect of intellectual capital and

organizational learning process on organizational
performance
Hosein Habibi Badrabadi1 and Taghi Akbarpour2*
1
No. 46, Alley No. 60, Shohadaye Haftome Tir St., Shahid Beheshti St., Emam Qomeini Ave., Qom City, Iran.
2
No. 51, 7th Javad-al-Aemeh Alley, Javad-al-Aemeh St., Azadshahr, Yazd City, Yazd Province, Iran.
Accepted 19 December, 2011

Today, the nature of business is facing some important and critical challenges and changes that have
changed organizations' economic activities greatly. Issues such as competition expansion, advances in
information technology, the changes to organizational structures, and economic units' attempt to land
on a pioneer rank have made continuous improvement of organizational performance inevitable.
Survival and flourishing in such environments is possible only through achieving a leading place which
necessitates implementation of the leading organizations' characteristics and focusing on influencing
factors on organizational performance. An effective factor on organizational performance is an
organization's intellectual capital which is the issue studied in this article. This research studied the
impact of the variable "intellectual capital" on "organizational performance" and meanwhile, it seemed
that the variable "organizational learning" also influenced the relation between these two variables and
functions as a mediatory variable. The research population consisted of all the managers and
employees of Melli Banks including people from the main supervising unit and other service branches
in the city of Qom and the data were gathered through questionnaires. To examine the dimensions of
the research variables and its construct validity, confirmatory factor analysis was first applied and then,
discriminant validity and convergent validity were calculated. For testing the research hypotheses,
structural equations modeling was used. Findings showed that the direct effect of intellectual capital on
organizational performance was not very strong, but this variable influenced Melli Banks performance
through the mediatory variable "organizational learning process". The effect of intellectual capital on
organizational learning process was confirmed. Moreover, the findings indicated that organizational
learning process had a direct and positive effect on Melli Banks performance.

Key words: Intellectual capital, organizational learning process, organizational performance.

INTRODUCTION

Today, due to technological developments and advances, are seeking solutions to differentiate their business from
the nature of work has shifted from traditional and that of their competitors through offering quality services,
manual, to intellectual and mental. On the other hand, all flexibility, and quick innovation and responsiveness and
the businesses throughout the world are pressed with reach higher effectiveness and efficiency. Many believe
policies as constant cost reduction and increasing that in today's competitive world, the surviving
customer-offered value. Therefore, many organizations organizations are only the ones that enjoy optimum

*Corresponding author. E-mail: [email protected]. Tel: (+98) 913 850 13 45. Fax: (+98) 351 623 42 91.
 Badrabadi and Akbarpour 1471

organizational performance and higher to that of the Edvinsson and Malone (1997), Johnson (1999), and
competitors, make a good use of their opportunities and Smith and Parr (2000), intellectual capital is comprised of
benefit from the threats on their way. The factors three components: human capital, structural capital
affecting organizations' performance are divided into two (organizational capital) and relational capital (customer
categories of inter-organizational and extra-organizational capital). Intellectual capital comprises all knowledge-
factors. Extra-organizational factors- the roles of which based resources that create value for an organization but
are becoming more and more outstanding in does not enter financial statements (Pablos, 2003). In
organizations, include economic, social, political, cultural other words, intellectual capital is "possessing
and legal factors and inter-organizational factors consist knowledge, making use of experiences, organizational
of issues as social capital, intellectual capital and technology, relationship with customers and suppliers,
organizational culture, structure, technology, strategies and also possessing professional capabilities which bring
and organizational learning process. This paper aims at a firm a competitive advantage in the market (Edvinson
studying the effects of the two factors "intellectual capital" and Malone, 1997).
and "organizational learning process"- as important inter- According to Hall, intellectual capital may be
organizational factors on "performance" of Melli Banks in categorized with assets (such as trade names or
Qom city in Iran. Intellectual capital is defined as a set of trademarks, contracts and data bases) or be known as
knowledge asset that increases the value of an organ- skills (as knowledgeable employees know how to do the
ization's capitals and improves the organization's status work). This capital is a key performance indicator that
comparing to that of the competitors (Marr et al., 2004). should be identified, preserved and nurtured by
Sinkula (1994) accounts organizational process as a employees to make an organization able to preserve and
tool by which knowledge is preserved in a way that improve its performance in the changing and turbulent
people other than the producers can use. Organizational market (UNI, 2001). The outcome of the research
learning is the creation of conditions in an organization in conducted by Yang and Lin (2009) also uncovered the
which all individuals accept the conditions and changes relative importance of the three different types of capital
and welcome the conditions as a continual process to organizational performance. Intellectual capital
(Stata, 1989). The paper's main question is how to provides organizations with much organizational value
assess the effects of these two factors on organizational such as creation of profit, determination of strategies
performance and stride toward premiere performance (market share, leadership, fame), innovation, customer
through using intellectual capital and realization and loyalty, cost reduction, productivity improvement, etc.
development of the learning process in the organization. (Harrison and Sullivan, 2000). Many believe that
This study was launched regarding the importance of intellectual capital affects determination of organization's
the issue of organizational performance in the branches values and its economic performance (Petty and Guthrie,
of Melli banks and the role of the two factors of 2000). Intellectual capital management has been
intellectual capital and learning process in the recognized as greatly important; organizations with
organization and the need to identify the effects of the intellectual capital management have shown better
two factors on the organization's performance. The performance, compared to the performance of their
researchers were seeking to know whether the competitors who have not been enjoying it (Brennan and
intellectual capital influences the organizational learning Connell, 2000). Different writings and documents have
process and the organizational performance (financial considered some components for the concept of
and knowledge performance) in Melli banks in Qom city. intellectual capital that are mentioned thus.

THEORETICAL BACKGROUND Components of intellectual capital

Intellectual capital Different opinions have been expressed about the

comprising components and parts of intellectual capital.
Roos (1998) postulated that the concept of intellectual One of the most welcomed classifications is the
capital is not the mere understanding and assessment or classification of intellectual capital into human capital,
the illustration of the tacit value of an organization; it also structural capital and customer (relational) capital and is
aims at transposing the results of the assessment or discussed thus.
illustration of organizational tacit values into new values.
Scholars have presented varying perspectives on the
matter of intellectual capital composition and meaning. As Human capital
with most emerging theories, there are many definitions
of intellectual capital, but over the last few years, there Human capital is the most important asset for an
seems to have formed a consensus of dividing a organization and is a source of creativity and innovation.
company’s resources into three different groups. In an organization, employees' tacit knowledge asset is a
According to studies and definitions by Steward (1994), most crucial component that influences organization's
1472 Afr. J. Bus. Manage.

performance significantly. Nevertheless, solely tacit the hard wares, soft wares, data bases, organizational
knowledge is not sufficient for good performance in an structure, organization's exclusive rights, and all an
organization. The purpose is to turn employees' tacit organization's capabilities that support productivity. From
knowledge into explicit knowledge at all levels to make another perspective, structural capital is what remains in
possible of value creation in the organization. Intellectual the organization when employees go home at night
capital arises from the sum of employees' professional (Roos and Roos, 1997). To put differently, structural
knowledge, leadership capabilities, risk taking and capital includes all non-human knowledge stores in an
problem solving capability (Bozbura, 2004). In other organization (Engstrom et al., 2003). Structural capital is
words, human capital is indicative of an organization's comprised of an organization's culture, organizational
inventory of knowledge that is hidden in its employees. structure, organizational learning, organization's
Human capital in an organization is a combination of operating process and its information system. One of the
individuals' knowledge, skills, capability of innovation and intellectual capital theorists views structural capital as the
their ability to perform their tasks and consists of the main pillar in creation of learning organizations. In his
organization's values, culture and philosophy (Bontis, view, if an organization enjoys highly capable employees
2001). Human capital forms the base for intellectual but suffers from weak systems and procedures, this
capital. In other words, it is a main and primary part for would impede gaining a favorable level of performance.
the completion of intellectual capital practices. On the contrary, a strong structure helps to reduce total
costs and increase profit and productivity (Bontis, 2003).
Customer capital
It refers to the current and future value of an Organizational performance
organization's relation with its customers. The essence of
customer capital lies in the knowledge hidden in channels Organizational performance is a product or result of
of distribution and relation channels with customers, that executive processes and fulfillment of organizational
is, the knowledge which develops and advances the goals. In another definition, organizational performance is
organization through a change in its nature (Bontis et al., accomplishing the duties assigned to human forces by
2000). Some theorists have considered customer capital the organization (Cascio, 1989). Organizational
as relational capital. Relational capital is the knowledge performance includes almost all the purposes associated
existing in an organization's relations with its customers, with competitiveness and production excellence and is
raw material suppliers, stakeholders and partners with related to the concepts of costs, flexibility, velocity,
similar strategies. According to Leif Edvinsson (Director reliability, and quality. Moreover, organizational
of Intellectual Capital at Skandia which is a finance- performance can be described as an umbrella for all the
service firm in Sweden), the existing of customer, concepts that encompasses every organization's success
customer relation and potential customers form customer and practices.
capital. The number and structure of customers are High performing organizations possess certain
critical to an organization's future value since customer characteristics in aspects of organization's vision and
relation constitutes an organization's principle of cash missions, goals, strategic thought, leadership,
flows (Pablos, 2003). organizational design, technology and processes. In a
Customer capital accounts as a major component of leading performance organization, the main performance
intellectual capital and has placed value in marketing and propulsions are promulgated by the mission statement.
relation channels that an organization has with the One of the most important and fundamental
leaders of that industry and business. Customer capital characteristics of a high performing organization is its
accounts a bridge or a catalyst in intellectual capital vision and mission (Waal, 2005). High performing
practices. This capital is a main and decisive requisite to organizations formulate clear and measurable goals
turn intellectual capital to market value and consequently, (Hardesty, 2003). Studies indicate that leadership in a
to an organization's business performance. Without leading performance organization knows where to guide
customer capital, market value and business the organization and is sure that all the employees
performance are not achievable by an organization. understand the organization's direction and are clearly
Customer capital has direct relationship with involved and active in helping the organization progress
organization's performance. Studies in Michigan toward its goals (Harpest, 2006). The structures of high
University showed that customers' loyalty could performing organizations are of utmost simplicity and the
safeguard relations and reduce the fluctuating price of the number of junior posts is surprisingly small in such
product and improve the organization's prestige (Chen et organizations. These kinds of organizations emphasize
al., 2004). the use of technology to strategically influence their
businesses. In a leading performance organization,
statement of mission, selection of a strategy concurrent
Structural capital with the mission and the promulgation of the
Edvinsson and Malon (1997) define structural capital as organization's pivotal values do not suffice since the
 Badrabadi and Akbarpour 1473

processes also need to be efficient to be able to use the Organizational learning process
limited resources for value creation. These organizations
put particular importance on the processes and process Learning ability is an important attribute of the human
management as value is created through the application factor that individuals learn before entering the
of effective and efficient processes for customers. organization but the discussion here is over the
Optimum performance does not happen accidentally knowledge and the skills that employees learn after
but to support it, the structure, strategy and different entering the organization and is described as
processes and among them, the learning process need to organizational learning. In views of many authors, among
be commensurate. The increment in employees' them Huber (1991) and Slater and Narver (1995),
capabilities through continuous training can have a direct organizational learning process is a process consisting of
effect on the organization's financial outcomes (Chen, three different stages; 1) information acquisition
2004.). (production); it points to the gathering and assessing the
To measure organizational performance, Real et al. information related to customers' needs and preferences
(2006) suggested using financial performance as a and the forces in effect reinforcing their needs and wants,
reasonable substitute of objective measures of business 2) information dissemination and distribution; a process in
performance (Bontis et al., 2002; Venkatraman and which the information related to market is exchanged
Ramanujam, 1986; Waal et al., 2009). In contrast to the within a specific organization, and 3) shared
initial scale, in which all the items come together in a interpretation; a process in which the information
single principal factor, the theoretical argumentations becomes meaningful, of course with regard to the
posited for the ontological knowledge dimension in the existing limitations in information exchange and the
study of Real et al. (2006) concluded to consider the development of common understanding and common
knowledge performance as another necessary measure conceptual models among individuals (Hult et al., 2002).
of organizational performance (Hedlund and Nonaka, It should be noticed that organizational learning is not a
1993; Nonaka, 1994; Nonaka and Takeuchi, 1995). fixed position or a limited goal, but a continuous process
Financial performance is defined as a means to provide of adaptation to environmental conditions and evolution in
financial and resources' well-being to prepare the ground which the groups within the organization are encouraged
for development. It is calculated through indicators as to develop skills, knowledge and consensus on the
return on investment (ROI), each employee's productivity organization's goal (Bayraktaroglu and Kutaniz, 2003).
average, customer response time, market share and the Based on the given definition, organizational learning in
costs of transactions, etc. Knowledge performance is organizations is a process comprised of several stages
defined as the qualitative and quantitative growth in by implementing which an organization moves toward
products and services arisen from learning and learning. Based on the researchers and theorists' views
knowledge, the concept which is the determinant of (Table 1), four main stages can be mentioned for
intellectual growth. This is calculated through indicators organizational learning process; 1) information
as the number of the received practical suggestions, the acquisition/creation: search of internal and external
increase in the percentile of the skilled workers through environment and gathering useful information for the
training, the budget dedicated to technology, etc. When organization and reviewing the performance outcomes
referred to the managerial office for Melli Bank, authors and past experiences and creating new information, 2)
found that Melli banks consider the two measures of information interpretation/exchange: distribution and
financial and knowledge performance to assess their exchange of information amongst individuals, groups and
organizational performance. This reinforced the concept different divisions of the organization and interpretation of
of employing the variables. The indicators of the information by them, 3) information
measurement for the two variables were then customized application/knowledge creation: application of information
based on Melli Bank's assessing indicators. proportionate to the organization's conditions and needs;
Regarding the preview of background and literature for practical use of the information and examination of its
the concepts of intellectual capitals and organizational behavioural results, production of new knowledge and
performance, the research first hypothesis can be adding that to the organization's existing knowledge
formulated as "Melli banks' intellectual property in Qom systems, and 4) knowledge internalization: generalization
city has a positive and significant effect on its of the new knowledge throughout the organization and
organizational performance". utilization of the new knowledge in daily practices and
A review of the characteristics of the high performing conversion of the theoretic knowledge to the practical
organizations shows that one of the important factors one.
which influences the relationship between intellectual By examining organizational learning process and its
capital and organizational performance and leads to the definitions, the research's second hypothesis can be
improvement of organizational performance is stated as: "Melli banks' intellectual capital in Qom city has
organizational learning process. Therefore, it is briefly a positive and significant effect on its organizational
explained further. learning process". Since the realization of organizational
1474 Afr. J. Bus. Manage.

Table 1. Theorists' views on organizational learning stages.

Theorist's name First stage Second stage Fourth sage Fifth stage
Daft and Weick Information gathering Information Practical use of information ------------
(1984) interpretation

Huber (1991) Information identification Knowledge exchange Adding the new knowledge Conversion of the
and new knowledge and dissemination to the existing knowledge theoretic knowledge
creation system to practical

Slater and Narver Information acquisition Information distribution Shared interpretation -------------

Nonaka and Information acquisition Information application Information transfer -------------

Tekeuchi (1995)

Crosen (1991) awareness interpretation integration internalization

Pawlowsky (2001) Identification or creation Distribution and Correction and integration Implementation of the
of new information exchange of the of the information knowledge
knowledge

learning process and achieving the characteristics of a method. The research questionnaire consisted of 54 questions, 26
learning organization is a prerequisite to a leading of which were designed for measuring intellectual capital, 20 for
assessing the practices of organizational learning process and 8 for
performance organization, the research's third hypothesis measuring organizational performance. The questions related to
is formulated as:" Melli banks' organizational learning intellectual capital were designed based on the three aspects of
process in Qom city has a positive and significant effect human capital, structural capital and customer capital. The
on its organizational performance". Based on the questions related to organizational learning process were also
theoretical background and the review of the research's designed based on the four stages of information
concepts, Figure 1 gives the suggested research model. acquisition/creation, information interpretation/transfer, information
application and knowledge creation, and information internalization
As Figure 1 shows, the research suggested model is and finally, the questions related to organizational performance
comprised of the three basic concepts; "intellectual were designed based on the two dimensions of financial
capital", "organizational performance" and organizational performance and non-financial (knowledge) performance. To
learning process". The concept of intellectual capital assure the research content validity, the questionnaire benefited
includes three components namely, human capital, from the opinions of 15 professors and experts in the field of
management using Delphi method and the construct validity of the
structural capital and customer capital and the concept of
measuring tool was tested using confirmatory factor analysis as well
organizational learning is subdivided into the two aspects as the discriminant validity and convergent validity. To determine
of financial performance and knowledge performance. the reliability of the questions, internal consistency coefficient was
The research assumed that the variable intellectual applied and the Cronbach's alpha coefficient was calculated for
capital affected organizational learning. The concept of each group of questions. The coefficient for the questions related to
organizational learning process consists of the three intellectual capital was calculated to be 0.93, for the questions
related to organizational learning process was 0.93 and finally, for
aspects of information acquisition, information the questions related to organizational performance proved to be
interpretation, information application, and information 0.85. The results of the composite (dyadic) reliability tests of the
internalization. This concept functions as a mediatory three constructs proved to be 0.77, 0.78 and 0.6.9 for intellectual
variable between the two variables of intellectual capital capital, organizational learning process, and organizational
and organizational performance and modifies the performance, respectively. The Cronbach's alpha coefficient for the
relationship between these two. entire questionnaire was calculated to be 0.967. As was stated
earlier, to test the construct validity, confirmatory factor analysis
was applied and to test the research hypotheses, structural
equations modeling was employed. Structural equations modeling
RESEARCH METHODOLOGY on the one hand, examined the extent to which the research
conceptual model fitted the associated data and indicators and on
This study is the result of a research that is applied based on its the other hand, tested the research hypotheses (the impacts of the
purpose and is a descriptive survey based on its method. The variables on each other). The major indicators used to test the
research statistical population consisted of all the managers and fitness of the research conceptual model were goodness of fit index
employees of the Melli banks' Office for Branches Affaires (staff (GFI), adjusted goodness of fit (AGFI), and root mean square error
branch) and all the managers and employees of all the branches of approximation (RMSEA). It is noteworthy that a model possesses
(line branches) of Melli banks in Qom city in Iran (N=650). 242 suitable fitness when the value of GFI and AGFI are higher than
individuals were selected as the research statistical sample and 0.90 for the model. Models with RMSEA lower than 0.05 are also
information was gathered using systematic random sampling suitable models. Models with RMSEA between 0.05 and 0.8 are
 Badrabadi and Akbarpour 1475
Figure 1: Authors' suggested research conceptual model

Acquisition
Organizational
learning
Interpretation
Human capital
H2
Application
Intellectual
Structural capital H3
capital
Internalization
Customer capital H1
Organizational Financial
performance performance

Knowledge
performance

Figure 1. Authors' suggested research conceptual model.

Table 2. Demographic features of the Over 50% of the employees owned a diploma. Around
research statistical sample. 78% of them were below 40 years old and 63% of the
sample members had work experience between 5 and 15
Variable Percentage years.
Gender
Male 98.3
Female 1.7 Validity of the measurement tool

Due to the author-designed measurement tool, authors

Age
tried to assure the utmost validity and reliability. To do so,
20-30 19.7 after examining the content validity of the questionnaire
31-40 57.9 by Delphi method, field data was gathered and construct
41-50 22.4 validity was applied through confirmatory factor analysis
method as well as through the calculation of Pearson
Education correlation coefficients to show the discriminant validity
Diploma 54.4 and convergent validity of the constructs. The results are
Associate diploma 16 explained thus.
Bachelor 28.3
Master 1.3
Construct validity through confirmatory factor
Work experience (years) analysis
Below 5 7.9
5-10 31 Construct validity for intellectual capital through
11-15 32.2 confirmatory factor analysis
16-20 11.2
Here, the indicators of intellectual capital which is
Over 20 17.8
comprised of three components of human capital,
structural capital and customer capital are illustrated.
Accepting or rejecting the factor loadings are determined
acceptable models and those with RMSEA equal to or higher than 1
fit poorly.
based on T-values. If the T-value is higher than 2 or
lower than -2, the relationship is confirmed (at 0.05 error
level) and the relationship is positively significant and
RESEARCH FINDINGS negatively significant respectively.
The results of the factor analysis in Table 3 indicates
The demographic qualities of the research statistical that all the indicators except two indicators namely,
sample are briefly demonstrated in Table 2. According to "Employees' learning from each other" and "Individuals'
this table, almost all the sample members were men. not resisting each others' promotion" possess acceptable
 1476 Afr. J. Bus. Manage.

Table 3. Results of confirmatory factor analysis for intellectual capital indicators.

Intellectual Level of T- Factor

Indicators Standard error
capital significance statistic loading
Having best employees 0.001 15.08 0.82 0.32
Encouraging freedom in expressing ideas 0.001 13.82 0.77 0.41
in group meetings
Proposing new ideas continuously 0.001 13.82 0.77 0.4
Employing the best applicants based on 0.001 11.89 0.7 0.52
the assimilation program
Employees' collective attempt to 0.001 11.94 0.69 0.52
differentiate them from competitors
Employees' satisfaction from the 0.001 11.53 0.68 0.45
Human capital organization
Employees' competence at an ideal level 0.001 11.38 0.67 0.55
Employees' cooperation in teams and 0.001 10.39 0.62 0.61
gaining productivity
Sharing excellent ideas amongst 0.001 9.43 0.58 0.67
employees
Having access to intelligent employees 0.001 9.25 0.57 0.68
Employees' learning from each other 0.001 3.45 0.23 0.95
Individuals' not resisting each others' 0.56 3.45- 0.24- 0.94
promotion

Innovation facilitating procedures and 0.001 13.01 0.81 0.34

systems
Easy access to information through 0.001 9.99 0.65 0.58
information systems
Structural capital
Efficient use of available resources 0.001 9.88 0.64 0.59
Least costs to perform tasks 0.001 9.79 0.63 0.68
Organizational structure facilitator of 0.58 2.91- 0.21- 0.96
coordination and cooperation

Assurance of continuous relationship with 0.001 13.07 0.75 0.44

customers
Investing on customers' needs 0.001 12.58 0.73 0.47
Encouraging long term relationship with 0.001 12.29 0.71 0.49
customers
Customers' general satisfaction from the 0.001 12.18 0.71 0.5
organization
considering customers' wants and views 0.001 12.1 0.71 0.5
Employees' understanding of target 0.001 10.65 0.64 0.59
markets and customers
Disseminating customers' feedbacks 0.001 10.41 0.63 0.6
Customer capital throughout the organization
Constant contact with customers to get 0.001 9.45 0.59 0.66
informed of their needs
Having access to loyal customers 0.001 8.15 0.51 0.74
comparing to the other banks
Offering the most valuable services 0.001 7.45 0.48 0.77
comparing the other banks
Investors' easy access to required 0.001 7.3 0.47 0.78
financial information
Decreasing customers' problem solving 0.001 7.14 0.45 0.79
time as much as possible
Biggest market share 0.001 4.37 0.29 0.91

amounts of t-value and factor loadings and these two the model. Amongst the indicators related to customer
indicators were omitted from the test tool due to their low capital, only the indicator "the biggest market share" was
factor loadings. Similarly, all the indicators related to omitted. Table 4 shows the results for the confirmatory
structural capital except "Organizational structure factor analysis of the three components of intellectual
facilitator of coordination and cooperation" remained in capital.
 Badrabadi and Akbarpour 1477

Table 4. Results of the confirmatory factor analysis for the dimensions of intellectual capital.

Dimensions Level of significance T-statistic Factor loading Standard error

Human capital 0.01 15.32 0.83 0.31
Intellectual capitals Structural capital 0.01 15.20 0.83 0.32
Customer capital 0.01 14.22 0.79 0.38

Table 5. Results of the confirmatory factor analysis for the indicators of the organizational learning process.

Organizational learning Indicators Level of T-statistic Factor Standar

stages significance loading d error
Employees' identification of new ways of 0.001 14.26 0.82 0.32
performing tasks
Information Quick and constant reporting 0.001 13.03 0.76 0.42
creation/ Being allowed to exchange and save data 0.001 11.97 0.72 0.49
acquisition Identification of new information related to the 0.001 11.61 0.70 0.50
work area
Review of past experiences 0.001 7.63 0.50 0.75

Turnover of information amongst 0.001 16.16 0.90 0.19

organizational units
Human forces' ability of interpretation 0.001 11.95 0.72 0.49
Exchange of information and learning amongst 0.001 10.63 0.65 0.58
Information interpretation/ individuals
transfer Involvement in decision makings 0.001 7.63 0.49 0.76
Feedbacks, justifications and reasoning about 0.001 7.37 0.48 0.77
behaviors
Involvement in people's mental models 0.001 5.68 0.38 0.86
through dialogues

Using educational books and pamphlets 0.001 14.56 0.85 0.28

Arranging official educational courses (creating 0.001 14.12 0.83 0.31
explicit knowledge)
Information application/
Information consolidation and integration 0.001 9.86 0.62 0.62
knowledge creation
Acquisition of scientific skills (creating implicit 0.001 7.73 0.50 0.75
knowledge)
Imitating others' successful methods 0.001 4.41 0.30 0.91

Classification and generalization of knowledge 0.001 13.31 0.80 0.37

throughout the organization
Constant improvement of organizational 0.001 12.89 0.78 0.40
Knowledge internalization performance
Converting theoretical knowledge to practical 0.001 11.76 0.72 0.48
Developing competitive advantage 0.001 8.95 0.58 0.67

As Table 4 shows, the results indicated that all the customer capital placed next with a factor loading of 0.79.
dimensions of intellectual capital possessed acceptable
amounts of t-statistic and factor loadings. The factor
loadings in Table 4 show that the dimensions (human, Construct validity of the organizational learning
structural and customer) were suitable dimensions to process through confirmatory factor analysis
measure intellectual capital in Melli banks in Qom city. In
measuring the intellectual capital of Qom's Melli bank, Here, the results for the confirmatory factor analysis
human capital and structural capital stood in the first related to the indicators of the dimensions and stages of
place of importance with factor loadings of 0.83 and organizational learning process are offered in Table 5
 1478 Afr. J. Bus. Manage.

Table 6. Results of the confirmatory factor analysis for the dimensions of organizational learning process.

Dimensions of organizational learning

Number Level of significance T-statistic Factor loading Standard error
process
1 Knowledge institutionalization 0.001 12.95 0.79 0.38
2 Information acquisition 0.001 8.37 0.77 0.41
3 Information interpretation 0.001 12.03 0.74 0.45
4 Information leverage 0.001 10.67 0.67 0.55

Table 7. Results of the confirmatory factor analysis for the indicators of organizational performance.

Level of T- Factor Standard

Dimensions Indicators
significance statistic loading error
Financial assimilation of resources 0.001 13.07 0.99 0.01
performance The organization's market share 0.001 8.74 0.60 0.64
The rate of the granted mortgage 0.001 8.40 0.58 0.67
Organizational performance

Knowledge Increase in sharing of knowledge in the 0.001 12.31 0.76 0.43

performance organization vertically
Increase in sharing of knowledge 0.001 10.64 0.68 0.54
horizontally (amongst the units)
Improvement of relationship with customers 0.001 10.68 0.67 0.55
Improvement of employees' efficiency or 0.001 10.47 0.66 0.56
productivity
Increase in capability of knowledge 0.001 10.03 0.64 0.59
acquisition from research institutions and
universities

and then, the four major stages of organizational learning resources" related to the dimension of financial
process are discussed and analyzed in Table 6. performance with a 0.99 factor loading and "Increase in
The results of the confirmatory factor analysis shown in sharing of knowledge vertically based on the
Table 5 indicates that all the indicators of organizational organizational hierarchy" related to the dimension of
learning process had acceptable amounts of t-statistic knowledge performance with a 0.76 factor loading were
and factor loadings and were suitable to measure the the most powerful indicators to measure organizational
organizational learning process. Table 6 illustrates the performance in Melli banks of Qom city. Table 8 shows
relationship between the four dimensions and the entire the relationship between the financial and knowledge
concept of organizational learning process. dimensions on the one hand and the concept of
Table 6 shows that none of the dimensions of organizational performance on the other hand in Qom's
organizational learning process had to be omitted. The Melli banks.
dimension of "knowledge institutionalization" with a 0.79 The results shown in Table 8 indicate that both the two
factor loading had the highest impact on the dimensions of financial and knowledge performance were
organizational learning process and the dimension suitable dimensions for measuring the organizational
"information leverage" with a 0.67 placed the last. performance of the study's population. Based on the
values of the factor loadings, it could be claimed that
knowledge performance was more important than
Construct validity of the organizational performance financial performance for measuring organizational
through confirmatory factor analysis performance.
By calculating the construct validity of the measuring tool
This study considered the two dimensions of "financial" and leaving out the poor indicators and also by
and "knowledge" for the concept of organizational calculating its reliability explained in the methodology, the
performance in Qom city's Melli banks. Table 7 shows the questionnaire was standardized and the other analyses
data related to construct validity of the organizational such as tests of the hypotheses and the test of the
performance. research conceptual model were made after ensuring
Table 7 conveys that the two indicators "assimilation of the reliability of the data gathered.
 Badrabadi and Akbarpour 1479

Table 8. Results of the confirmatory factor analysis for the dimensions of organizational performance.

Dimensions Level of significance T-statistic Factor loading Standard error

Organizational performance Knowledge performance 0.001 8.37 0.82 0.33
Financial performance 0.001 9.33 0.58 0.66

Construct validity through discriminant and positive and significant impact of organizational learning
convergent validity on organizational performance of Qom's Melli banks was
also confirmed (the third hypothesis). On the other hand,
Another method to measure the reliability of the the confirmation of the impact of intellectual capital on
measuring tool is through discriminant and convergent organizational performance of Qom's Melli banks through
validity. As the definition runs, each indicator should bear organizational learning was another important finding of
a higher correlation coefficient with itself (convergent this study (the major hypothesis).
validity) and a lower correlation coefficient with the other Based on Table 12, it can be figured out that the two
indicators. The discriminant and convergent validities are factors, "intellectual capital" and "organizational learning",
shown for each construct to demonstrate the construct were important factors that influenced organizational
validities more precisely. These were calculated through performance-both financial and knowledge performance.
the Pearson correlation coefficients. As can be drawn However, the impact of intellectual capital was more than
from Tables 9, 10, and 11, all the indicators bear a higher organizational learning on organizational performance.
level of correlation with themselves than with the other The interesting point is that regarding the characteristics
indicators. that intellectual capital possessed, it influenced
organizational learning process to a great extent.
However, as is shown in Figure 2, in addition to its direct
Construct validity for the intellectual capital through impact on organizational learning, the variable
discriminant and convergent validity "intellectual capital" affected organizational performance
of Qom's Meli banks indirectly through the organizational
Table 9 shows the discriminant and convergent validities learning process.
for the indicators of the intellectual capital.

Test of the research model

Construct validity of the organizational learning
process through discriminant and convergent This article used structural equations modeling method to
validity measure the fitness of the research conceptual model.
Figure 2 shows the results for the test of the model. By
Table 10 shows the discriminant and convergent demonstrating the path loadings, significant levels, and
validities for the indicators of the organizational learning the explain power (R2), the figure illustrates the extent of
process. the relationship of the three potential variables namely,
intellectual capital, organizational learning, and
organizational performance. The factor loadings for the
Construct validity of the organizational performance observed variables of each latent variable are shown
through discriminant and convergent validity above the arrows.
In addition to the values of the path coefficients and the
Table 11 shows the discriminant and convergent factor loadings inscribed in Figure 2, a number of
validities for the indicators of the organizational important indicators related to fitness of the conceptual
performance. model were also obtained. Here, some indicators of
measuring the fitness of the conceptual model are
calculated and shown in Table 13.
Test of the research hypotheses As is shown in Table 13, the values of all the indicators
imply a suitable and acceptable fitness of the research
A summary of the research findings related to the test of conceptual model. Therefore, the consistency of the
the hypotheses is illustrated in Table 12. Based on the conceptual model with the data gathered is confirmed.
data in this table, the variable "intellectual capital" The research fitted conceptual model shows the extent of
influenced the organizational performance of Qom's Melli the direct and indirect impacts of the research main
banks (the first hypothesis). The findings also indicated variables on one another in Table 14.
that intellectual capital had a high and positive impact on Table 14 proves that the variable "intellectual capital"
the organizational learning of Qom's Melli banks. The influenced the organizational performance of Qom's Melli
1480 Afr. J. Bus. Manage.

Table 9. Discriminant and convergent validities for intellectual capital.

Dimensions Human capital Structural capital Customer capital

Dimensions
Indicators
Having best employees 0.707** 0.154* 0.156*
Encouraging freedom in expressing ideas in 0.714** 0.046 0.154*
group meetings
Proposing new ideas continuously 0.664** 0.15* 0.147*
Employing the best applicants based on the 0.762** 0.162* 0.167*
assimilation program
Employees' collective attempt to differentiate 0.811** 0.155* 0.156*
Human capital
them from competitors
Employees' satisfaction from the organization 0.350** 0.097 0.132*
Employees' competence at an ideal level 0.739** 0.146* 0.156*
Employees' cooperation in teams and gaining 0.787** 0.156* 0.052
productivity
Sharing excellent ideas amongst employees 0.654** 0.148* 0.146*
Having access to intelligent employees -0.701** -0.178 -0.193*

Innovation facilitating procedures and 0.164* 0.725** 0.260*

systems
Easy access to information through 0.254* 0.832** 0.348**
Structural capital
information systems
Efficient use of available resources 0.158* 0.771** 0.399**
Least costs to perform tasks 0.229* 0.737** 0.341*

Assurance of continuous relationship with -0.178 -0.152* 0.712**

customers
Investing on customers' needs 0.150* 0.240** 0.572**
Encouraging long term relationship with 0.150* 0.313** 0.661**
customers
Customers' general satisfaction from the 0.328* 0.389** 0.586**
organization
considering customers' wants and views 0.209* 0.274** 0.632**
Employees' understanding of target markets 0.297* 0.374** 0.600**
and customers
Disseminating customers' feedbacks 0.378** 0.388** 0.533**
Customer capital
throughout the organization
Constant contact with customers to get 0.205* 0.254** 0.689**
informed of their needs
Having access to loyal customers comparing 0.241* 0.231* 0.665**
to the other banks
Offering the most valuable services 0.382** 0.193* 0.673**
comparing the other banks
Investors' easy access to required financial 0.394** 0.223* 0.638**
information
Decreasing customers' problem solving time 0.395** 0.314** 0.709**
as much as possible
**Correlation is significant at the 0.01 level (2-tailed); *correlation is significant at the 0.05 level (2-tailed).

banks much more than the organizational learning did which is considered to be remarkable. In this regard, it
and thus, points out the great importance of the should be noted that although the direct impact of
intellectual capital in the study population. In addition to intellectual capital on organizational performance was
its direct impact on organizational performance (0.46) 0.46, the impact of the same variable on organizational
which was higher than the impact of the organizational learning process was 0.96. In other words, the amount of
learning (0.33), intellectual capital also indirectly and the impact of intellectual capital on organizational
through the impact of the mediatory variable performance through the mediatory variable
(organizational learning) influenced organizational "organizational learning process" was also substantial.
performance (0.31). The total impact of intellectual capital That is to say intellectual capital tried to influence
on organizational performance was obtained to be 0.77 organizational performance indirectly through realization
 Badrabadi and Akbarpour 1481

Table 10. Discriminant and convergent validities for the indicators of the organizational learning process.

Process Information creation/ Information interpretation/ Information application Knowledge

Process
Indicators acquisition transfer /knowledge creation internalization
Employees' identification of new ways of
0.700** 0.512** 0.429** 0.455**
performing tasks
Quick and constant reporting 0.590** 0.464** 0.325** 0.368**
Information creation/
Being allowed to exchange and save data 0.501** 0.252** 0.125** 0.284**
acquisition
Identification of new information related to the
0.748** .485** 0.361** .502**
work area
Review of past experiences 0.585** 0.508** 0.451** 0.485**

Turnover of information amongst

0.546** 0.800** 0.488** 0.430**
organizational units
Human forces' ability of interpretation 0.449** 0.708** 0.439** 0.493**
Exchange of information and learning
0.574** 0.768** 0.341** 0.454**
Information amongst individuals
interpretation/ transfer Involvement in decision makings 0.545** 0.692** 0.404** 0.575**
Feedbacks, justifications and reasoning about
0.556** 0.582** 0.451** 0.533**
behaviors
Involvement in people's mental models
0.510** 0.604** 0.349** 0.361**
through dialogues

Using educational books and pamphlets 0.404** 0.317** 0.840** 0.364**

Arranging official educational courses
0.421** 0.326** 0.902** 0.416**
Information (creating explicit knowledge)
application Information consolidation and integration 0.421** 0.386** 0.756** 0.418**
/knowledge creation Acquisition of scientific skills (creating implicit
0.410** 0.223** 0.558** 0.350**
knowledge)
Imitating others' successful methods 0.367** 0.346** 0.612** 0.328**

Classification and generalization of

0.656** 0.564** 0.630** 0.810**
knowledge throughout the organization
Knowledge Constant improvement of organizational 0.503** 0.432** 0.324** 0.790**
internalization performance
Converting theoretical knowledge to practical 0.386** 0.458** 0.569** 0.653**
Developing competitive advantages 0.315** 0.154** 0.82** 0.719**
**Correlation is significant at the 0.01 level (2-tailed); *Correlation is significant at the 0.05 level (2-tailed).

and improvement of organizational learning that the variable "organizational learning" modified performance and brought about an influential
process in the study's organization. This indicates the impact of intellectual capital on organizational synergy between these variables. That means
1482 Afr. J. Bus. Manage.

Table 11. Discriminant and convergent validities for organizational performance.

Dimensions Financial Knowledge

Dimensions
Indicators performance performance
Assimilation of resources 0.851** 0.359**
Financial performance The organization's market share 0.871** 0.157*
The rate of the granted mortgage 0.828* 0.260*

Increase in sharing of knowledge in the organization vertically 0.150* 0.718**

Increase in sharing of knowledge horizontally (amongst the units) 0.343* 0.746**
Improvement of relationship with customers 0.362* 0.808**
Knowledge performance
Improvement of employees' efficiency or productivity 0.242* 0.762**
Increase in capability of knowledge acquisition from research institutions
and universities 0.259* 0.711**
**Correlation is significant at the 0.01 level (2-tailed); *Correlation is significant at the 0.05 level (2-tailed).

Table 12. Results for the test of the research hypotheses based on the structural equations modeling.

Hypotheses Path coefficient T-statistic Level of significance Test result

First hypothesis (H1): positive impact of intellectual 0.46 2.10 0.01 (H1) confirmed
capital on organizational performance
Second hypothesis (H2): direct impact of intellectual 0.96 13.06 0.01 (H2) confirmed
capital on organizational learning
Third hypothesis (H3): positive impact of organizational 0/33 2/19 0.01 (H3) confirmed
learning on organizational performance
Major hypothesis: impact of intellectual capital on 0/96 30/06 0.01 Major hypothesis
performance through organizational learning confirmed

that for improving organizational performance determine the amount of impact of intellectual question was whether there was a compromise
beside investment on intellectual capitals and their capital on organizational performance considering between the research conceptual model and the
applications, Qom's Melli banks managers need to organizational learning process in Qom city's Melli gathered data and the second question was
focus on the variable "organizational learning banks and its branches. To do so, the issue of whether the enhancement of intellectual capital
process" which has been generated through the intellectual capital and its components and also influenced organizational learning and
improvement of the intellectual capital. the variables "organizational performance" and organizational performance of Qom's Melli banks.
"organizational learning process" were studied The answer to the first question is that by using
first and then, the relationships amongst the confirmatory factor analysis, all the dimensions
DISCUSSION AND CONCLUSION
variables were examined. This study sought to and indicators of the three variables, namely
find answers to two major questions; the first intellectual capital, organizational performance
As stated earlier, the purpose of this paper was to
 Badrabadi and Akbarpour 1483

Figure 2: Results for the test of fitness of the conceptual model

Acquisition

PL: .77
SL: .001
t: 8.37

Interpretation
PL: .74
SL: .001
Organizational t: 12.03
Human capital learning
PL: .67
PL: .83 SL: .001
PL: .96 t: 10.67
SL: .01
t: 15.32 SL: .01 Application
t: 13.05
R2: .70 PL: .79
SL: .001
PL: .79 Intellectual t: 12.59
Structural capital SL: .01
t: 14.22 capital
PL: .33
SL: .01 Internalization
t: 2.19
PL: .83 R2: .55
SL: .01 PL: .46
t: 15.20 SL: .01
t: 2.10
Customer capital R2: .35
PL: .58 Financial
SL: .001
t: 9.33 performance
Organizational
performance
PL: .82
SL: .001
t: 8.37
Knowledge
performance

Figure 2. Results for the test of fitness of the conceptual model.

Table 13. Assessment of fitness of the research conceptual model.

Indicators for fitness of Calculated values of Acceptable values of the

the conceptual model the indicators indicators
Chi square 65.74 -
DF 24 -
Chi square/DF 2.73 Chi square/DF<3
RMSEA 0.08 RMSEA=0.08
GFI 0.94 GFI > 0.90
AGFI 0.9 AGFI > 0.90

Table 14. Direct, indirect, and total impacts of the variables on the performance of
Qom's Melli banks.

Indicator Direct impact Indirect impact Total impact

Intellectual capitals 0.46 0.31 0.77
Organizational learning 0.33 - 0.33

and organizational learning except four indicators related intellectual capital influenced organizational performance
to intellectual capital were confirmed. Based on the and also organizational learning of Qom's Melli banks.
results of the confirmatory factor analysis, the conceptual The impact of organizational learning on organizational
mode was tested using structural equations modeling performance was also confirmed. It is noticeable that
method and finally, some different indicators confirmed intellectual capital influenced organizational performance
the fitness of the model. of Qom's Melli banks more than organizational learning
To answer the second question, based on the obtained process did. Moreover, the research findings also
results and by considering the path coefficients amongst showed that the impact of intellectual capital on
the variables shown in Figure 2, it is concluded that organizational learning process (path coefficient=0.96) is
1484 Afr. J. Bus. Manage.

much more than its impact on organizational performance special attention to organizational learning process and to
(path coefficient=0.46). prepare the necessary educational substructure to
Based on the obtained results, it can be claimed that contribute to the process of the employees' knowledge
development and improvement of the status of acquisition within and outside the organization.
intellectual capital and its three dimensions - human, Development and supporting "Education and Research
structural, and customer capital influenced the Center for Bank Melli Iran" and also outsourcing the
development and realization of organizational learning educational courses which the organization itself is not
process in the studied organization and also the able to afford can be useful. It is also suggested that the
development and improvement of organizational learning organization facilitate the internalization process of
process and progressing toward learning organizations knowledge and employees' sharing of each others'
can highly influence organizational performance. The implicit knowledge as a major organizational knowledge
organization needs to try to boost its intellectual capital source through group thinking, collective problem solving,
and its dimensions and to prepare the necessary job rotation, and in-service training. Managers can
infrastructure to realize organizational learning process to contribute to better organizational learning through
improve its financial and knowledge performance and documentation and providing the necessary books,
achieve a performance leading organization. The pamphlets and other practical and educational software.
organization's investment and focus on development of The researchers confronted some limitations, among
the human capital through training its employees in which was the measuring tool. The researchers used a
different general and specific areas and turning them into self-made questionnaire that was applied after its
knowledgeable employees, improvement of the customer reliability was tested. Moreover, the research studied the
capital through improvement of communications and impacts of intellectual capital on organizational
interactions processes amongst the employees and performance and learning only in Qom city's Melli banks
managers inside and outside of the organization, and while the generalization of the results to the country's all
improvement of structural capital through creation of an Melli banks or other banks is controversial. To increase
atmosphere and culture which encourages learning, the generalizability of the results, the study is suggested
group work and teamwork in the organization, all to be done in Melli bank in other cities as well. Only by
contribute to development and improvement of the results of such studies and their comparison can we
performance. If Qom's Melli banks want to facilitate the obtain a more concise understanding of the study's
development of intellectual capital and the realization of variables throughout the country. Therefore, future
organizational learning process, they need to design a researchers are suggested to try to find answers to two
framework for the qualifications and competencies of the questions associated with the current study; 1) what are
employees and managers in dimensions of their the limitations and obstacles in the way of development
knowledge, skills and capabilities and plan for their and realization of intellectual capital and organizational
development based on their competencies. The banks learning process in Melli banks and other state and
also need to plan and implement a succession planning private banks? and 2) what factors improve the
system for the organization's key employees. Moreover, intellectual capital and successful realization of
the organization needs to plan a support and motivating a organizational learning process in Melli banks and other
system of the employees' premiere ideas to apply them private and state banks?
just in time in its operational processes. The organization
is recommended to enhance its structural capital through
a number of practices including increasing the efficiency ACKNOWLEDGEMENTS
of the human force, augmenting the organization's The authors acknowledge the assistance of their
equipments, designing a support system based on the professors, Mr. Qorbanizadeh and Mr. Sanjari at Allameh
efficiency of the human resource to approach toward a Tabataba'e University for steering them towards insightful
learning organization, removing restrictive regulations, references. They also thank the respondents in Qom's
removing waste procedures and long and complicated Melli banks for taking the time to help us collect the data.
hierarchies to decrease bureaucracy. It also needs to Mr. Habibi would like to thank his parents for their
create a support culture through designing supporting countless help and support. Mr. Akbarpour is grateful to
and motivating systems to improve creativity and his brothers, Hussein and Hadi and his friends Saeed
innovation, learning and development of the human force. Rezaei, Amir Afsar and Mohsen Hejazi who encouraged
To improve their customer (relational) capital, Qom's his interest in doing the research paper. Thanks also go
Melli banks need to plan for improvement of relationships to Hadiseh Panahi for keeping him motivated while
with customers and investors and to notify their accomplishing the research.
employees of target markets and customers. The
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