Structural Model 3: IC and Mediating Role of Innovation Capability

The structural model 3 investigates the mediating effect of innovation capability between IC and organisational performance. Figure 4.3 depicts the estimated model. Model fit indices and standardized effect are reported in Table 4.11 and Table 4.12 respectively.

Figure 4.3: Structural Model-3

The model fit indices of structural model 3 (Table 4.11) indicate the value of APS which is 0.383 represent level of significance at 1%. Similarly, the value of ARC 0.274 is also significant at 1%. Besides, the value of AVIF is 1.211 which is lower than 3.3. Finally, GoF value is 0.379 that shows a large effect. Thus, model 3 represents a satisfactory level of goodness-of-fit measure.

Table 4.11: Model Fit Indices (Model 3)

Indices Observed value Acceptable Fit Standard

APC 0.383* _{p <0.05}

ARS 0.274*

AVIF 1.211 Equal to or lower than 3.3

GoF 0.379

GoF: Small ≥0.1 Medium ≥0.25

Large ≥0.36 *represent level of significance at 1%.

The standardized effects of model 3 are reported in Table 4.12. The results of second mediating variable (innovation capability) are highlighted. The bootstrapping was applied to check the indirect effect between IC and organisational performance and result shows a significant relationship with β= 0.174 (f 2 = 0.078) and p value = 0.001. Further, the value of R2 _{is 0.304 suggesting that the model is acceptable. The value of}

Q2 _{is 0.305 which is greater than zero. It illustrates that independent variable has}

predictive relevancy for dependent variable. Overall, results report that innovation capability is partially mediated between IC and organisational performance, accepting H3. Compared with the mediating effect of innovation capability, results in Table 4.10 depict that knowledge process capability has greater influence between IC and organisational performance.

Table 4.12: Standardized Effect IC with Mediating Role of INC (Model 3) Hypothesis Paths _Estimates Direct Estimates Indirect

a*b P value Effect size Results

H3 IC-OP 0.303 - 0.001 0.136 Supported

IC-INC-OP - 0.174 0.001 0.078

4.4.4 Structural Model- 4: IC Dimensions and Organisational Performance

The structural model 4 (Figure 4.4) examine the relationship between the dimensions of IC (human, structural, relational and technological capital) and organisational performance. The model fit indices of model 4 are reported in Table 4.13. Similarly the standardized effects are shown in Table 4.14.

Figure 4.4: Structural Model-4

Based on structural model 4, the model fit indices reported that all indices meet standard criteria. The value of APC is 0.210 and ARS is 0.337. Both indices are

significant at 1%. The value of AVIF is 1.104 which is also lower than cut-off value of 3.3. Lastly, value of GoF shown as 0.461 which represent a larger effect.

Table 4.13: Model Fit Indices (Model 4)

Indices Observed value Acceptable Fit Standard

APC 0.210* _{p <0.05}

ARS 0.337*

AVIF 1.104 Equal to or lower than 3.3

GoF 0.461

GoF: Small ≥0.1 Medium ≥0.25 Large ≥0.36 *represent level of significance at 1%.

Table 4.14 reports the relationship between the dimensions of IC and organisational performance. A significant relationship exists between human capital and organisational performance with the β = 0.189 (f 2_{= 0.070) and p-value which is 0.003, accepting H4.}

Similarly, a significant relationship is observed between relational capital and organisational performance with β = 0.402 (f 2_{= 0.192) and p-value less than 0.001.}

Likewise, there is a significant relationship between technological capital and organisational performance with β = 0.224 (f 2= 0.074) and p-value less than 0.001. Hence, these two relations are supporting hypothesis H6 and H7 respectively. Among all dimensions of IC, relational capital is the strongest predictor of organisational performance and structural capital is the only dimensions which is insignificant, rejecting H5. On the other hand, R2 _{for organisational performance is 0.337. It means}

that the contributions of all variables (human, structural, relational, and technological capital) are about 0.337 of variance described in the dependent variable- organisational performance. Similarly, the value of Q2 _{is reported as 0.339. The Q}2 _{value demonstrates}

that independent variable as predictive relevance on dependent variable.

Table 4.14: Standardized Effect IC dimensions and Organisational Performance (Model 4)

Hypothesis Paths Standardized _Estimates P value Effect _size Decision

H4 HC-OP 0.189 0.003 0.070 Supported

H5 SC-OP 0.024 0.402 0.002 _Supported Not

H6 RC-OP 0.402 0.001 0.192 Supported

H7 TC-OP 0.224 0.001 0.074 Supported

4.4.5 Structural Model- 5: IC Dimensions and Mediating Role of Knowledge Process Capability

The structural model 5 investigates the mediating role knowledge process capability between IC dimensions and organisational performance. The estimated model is shown in Figure 4.5. The model fit indices and standardized effects are reported in Table 4.15 and Table 4.16 respectively.

Figure 4.5: Structural Model-5

The goodness-of-fit of model 5 is reported in Table 4.15. The value of APC is 0.212 and ARS is 0.501 which are accepted with significance value of 1%. Besides, the value of AVIF is shown as 1.159 which is lower than accepted cut off of 3.3. Finally, the value of GoF is recorded as 0.567 that is greater than accepted large effect of 0.36.

Table 4.15: Model Fit Indices (Model 5)

Indices Observed value Acceptable Fit Standard

APC 0.212* _{p <0.05}

ARS 0.501*

AVIF 1.159 Equal to or lower than 3.3

GoF 0.567

GoF: Small ≥0.1 Medium ≥0.25

Large ≥0.36 *represent level of significance at 1%.

Table 4.16 reports the mediating role of knowledge process capability between IC dimensions and organisational performance. In this table knowledge process capability role is individually investigated with IC dimensions. However, the reason is to check which dimension has more influence on organisational performance by including knowledge process capability. The mediating role is derived by finding out the indirect estimate (a*b) which is a combination of independent to mediating variable and further mediating to dependent variable relation. As explained in previous models, bootstrapping is applied to derive indirect estimate.

The indirect effect between human capital and organisational performance is recorded. The results illustrate β = 0.122 (f 2= 0.045) and p-value which is 0.001. Hence H8 is supported. The indirect effect between structural capital and organisational performance depict β = 0.094 (f 2= 0.006) and p-value which is significant with a value of 0.036. Although, the direct effect between structural capital and organisational performance

(Table 4.14) showed insignificant results, but authors such as MacKinnon et al. (2002) and Rucker et al. (2011) argue that the requirement for a significant total effect (c) of X → Y is not necessary for mediation to occur. On that basis the hypothesis H9 is accepted.

Furthermore, the indirect effect between relational capital and organisational performance shows value of β = 0.260 (f 2_{= 0.124) and p-value which is 0.001,}

supporting H10. Similarly, the indirect effect between technological capital and organisational performance is also significant. The outcome shows β = 0.108 (f 2₌

0.036) and p-value which is 0.018 supporting H11. Thus, among the four dimensions of IC, relational capital has the highest influence on organisational performance by including mediating construct knowledge process capability. Finally, the value of R2 _is

0.744 which shows that contribution of all variables are 0.744 of the variance explained in dependent variable (organisational performance). The value of Q2 _{is reported as 0.730}

which is greater than zero. It means that the model has a good predictive relevancy.

Table 4.16: Standardized Effect IC Dimensions with Mediating Role of Knowledge Process Capability (Model 5)

Hypothesis Paths _Estimates Direct Estimates Indirect a*b

P

value Effect size Decision

H8 HC-OP 0.133 - 0.003 0.049 Supported HC-KPC-OP - 0.122 0.001 0.045 H9 SC-OP 0.054 - 0.291 0.003 Supported SC-KPC-OP - 0.094 0.036 0.006 H10 RC-OP 0.116 - 0.006 0.055 Supported RC-KPC-OP - 0.260 0.001 0.124 H11 TC-OP 0.077 - 0.05 0.025 Supported TC-KPC -OP - 0.108 0.018 0.036

University of Malaya

4.4.6 Structural Model- 6: IC Dimensions and Mediating Role of Innovation