The effect of intellectual capital on employees’ satisfaction and retention Mariolina Longo, Matteo Mura * Department of Management, University of Bologna, Via Terracini 28, 40131 Bologna, Italy 1. Introduction The past decade has been seen as a time of growing dematerialisation of strategic resources in firms. The globalisation of markets has forced firms to attempt to increase their competitive advantage via internally generated intangible assets which cannot be easily imitated by competitors. In this context, knowledge has been advocated as a key driver of sustained firm performance [3,19]. Intellectual capital (IC) has been defined as the knowledge that firms utilise for competitive advantage and it includes human capital (knowledge, skills, and abilities of individuals), structural capital (routines, processes, and databases), and relational capital (interactions among individuals and their networks of relation- ships) [23]. By taking an organisational perspective, scholars have suggested that IC drives firm performance, influences firm innovative capabilities, and positively affects firm capability and knowledge transfer [2,7,14,20]. Additionally, studies have identi- fied specific human resource configurations and organisational structures as antecedents of IC [13,22]. Organisational-level metrics to assess IC have been proposed, together with the links among IC dimensions of human, structural, and relational capital [9,11,16]. IC is a resource that is embedded in the actions and capabilities of the individuals that operate in the company; it has therefore been suggested that researchers should explore IC from an individual-rather than an organisational-level perspective in order to gain more precise knowledge about IC-related phenomena [15,17]. Also, knowledge-based theorists have strongly under- scored the need to address the process of knowledge-based value creation, and that this is typically rooted in individual action and interaction [6]. Therefore we decided to: (1) investigate the link between IC and firm outcomes; (2) refine existing IC metrics; and (3) investigate the factors that influence IC. Thus we investigated the effect of IC on employees’ job satisfaction and retention and identify and empirically validate two human resource management (HR) practices and links them to IC improvement. We surveyed all the employees of the 13 plants of a large Italian company in the food-product market. Overall, about 3400 questionnaires were distributed; with a response rate of 35%, the sample consisted of 1117 observations distributed uniformly across professional category, company area, and number of years that the employee worked in the company. 2. Definitions and research model Our model was analysed in two ways: (1) IC and employees’ job attitudes—we determined how IC affected job satisfaction and lowered turnover rate (commonly termed job attitudes [1]); (2) HR practices and IC—we evaluated the effect that employees’ perception of two HR practices had on IC. The practices were identified by holding numerous focus groups with a panel of company managers. Information & Management 48 (2011) 278–287 A R T I C L E I N F O Article history: Received 10 December 2008 Received in revised form 22 March 2011 Accepted 16 June 2011 Available online 5 July 2011 Keywords: Intellectual capital Knowledge assets Employees’ job attitudes Survey Structural equations modelling A B S T R A C T We examined the effect of intellectual capital on employees’ job satisfaction and retention, and also identified two human resource management practices that positively influence intellectual capital. Survey data were collected from 1117 employees of a large Italian company leader in the food product market. Structural equations modelling results showed that intellectual capital positively affects the job attitudes examined, although differences emerged between the three dimensions of intellectual capital. Specifically, human capital and relational capital did not directly affect employees’ job satisfaction and retention as we hypothesised; in fact, these relationships were fully mediated by structural capital. Also, our results identified two measures of human resource management practices (communication and alignment) that positively influenced intellectual capital and also contributed to the improvement of employees’ job satisfaction and retention. Our findings may help managers design and implement intervention programmes and policies for effective intellectual capital management. ß 2011 Elsevier B.V. All rights reserved. * Corresponding author. Tel.: +39 051 209 0212; fax: +39 051 209 0222. E-mail address: matteo.mura@unibo.it (M. Mura). Contents lists available at ScienceDirect Information & Management jo u rn al h om ep ag e: ww w.els evier.c o m/lo c ate/im 0378-7206/$ – see front matter ß 2011 Elsevier B.V. All rights reserved. doi:10.1016/j.im.2011.06.005