The influence of intellectual capital and total quality management on coporate performance

Abstract

Intellectual Capital (IC) is an intangible asset that leverages knowledge on each Total Quality Management (TQM) principle. TQM, a holistic approach, focuses on meeting customers’ needs and expectation through the involvement of all individuals and organisational function for continuous improvement. Organisations cannot depend solely on either IC or TQM in today’s highly competitive environment and context demands, as each complements the other. However, IC and TQM are often investigated separately and contemporary research remains scant on the integration of IC and TQM. Hence, this study examined the impact of integration between IC and TQM on corporate performance. A mixed method research approach, involving quantitative and qualitative methods was applied. Systematic sampling technique with sampling intervals of 2 was used to draw samples for quantitative data. On the other hand, purposive and self-selection sampling techniques were applied in the qualitative approach. Quantitative data collected via questionnaire were distributed to 260 human resource (HR) managers in Malaysian public listed companies and analysed using correlation, simple linear regression and hierarchical regression. Three companies were selected as case studies where semi-structured interviews were held with HR managers. Besides that, companies’ written documents were used as secondary data. Findings revealed that IC and TQM influenced corporate performance individually. However, the results indicated that the integration of IC and TQM created a synergy in enhancing higher corporate performance. Additionally, a newly introduced IC component, that is spiritual capital, demonstrated a strong relationship with TQM practices in improving corporate performance. The major implication of the finding is that when IC values are integrated with TQM implementation, they enhance corporate performance.