Relationship Between Intellectual Capital And Innovations The Mediating Role Of Organizational Capital (the Case Of Commercial Banks In Ethiopia)

The study was conducted with the aim of investigating the direct and indirect effect ofrnintellectual capital on innovations considering organizational capital as a mediator in thernEthiopian commercial banking sector. Primary data was collected using a 5 item likert scaledrnquestionnaire from 235 branch managersfrom282 expected sample size having a response raternof (83%). Data was tested in confirmatory factor analysis and it fulfills construct validity (bothrnconvergent and discriminant validity) using Analysis of Moment Structure (AMOS) version 20. Arndeductive and quantitative approach was followed to test the model. Empirical findings of thernstudy show that, intellectual capital does not have a significant direct effect on productrninnovation with the exception of organizational capital. Organizational capital mediates thernrelationship between intellectual capital and innovations. Human, organizational and customerrncapital have a positive direct effect on process innovation while social capital has a negativerndirect effect. Human, customer and social capital do not have a significant direct effect onrnEthiopian banking sector's product innovation.To becompetitivein the industry, managers shouldrnutilize the skills, competencies, and experiences of their employees through well designedrnlearning, organizational culture and supportive organizational structure.rnKey words: intellectual capital, product innovation, process innovation

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