Refueling intellectual capital toward innovation performance of SMEs in Saudi Arabia: mediating the role of entrepreneurial opportunity recognition

Purpose The objectives of this research were to inspect the relationship of intellectual capital (IC), along with its dimensions (human, structural and internal and external relational capital) with innovation performance (IP), to explore entrepreneurial opportunity recognition (EOR) as a mediator between the IC and IP of small and medium-sized enterprises (SMEs) in Saudi Arabia. Design/methodology/approach This research used data collected via a well-structured questionnaire. The sample size was comprised of 457 participants who were owners and/or managers of SMEs in Saudi Arabia. Further, the findings were extracted from data using partial least squares (PLS) techniques. Findings The results indicated that all dimensions of IC, including human capital (HC), structural capital (SC), internal relational capital (IRC) and external relational capital (ERC), had a significant relation with both IP and EOR. It was also shown that EOR positively influenced IP. Furthermore, the results showed that EOR played an important role as a mediator between IC (HC, SC, IRC and ERC) and IP. Practical implications The present research offered a beneficial and novel managerial and theoretical strategy for improving a given firm’s IP with the support of IC and EOR. This finding offered a vision to the management teams of SMEs for full utilization of IC and IP. The present study also provided policymakers, administration and future studies with a path to improving the production and services of SMEs to secure market advantages. Originality/value According to the author’s best knowledge, the present research represented the first attempt to expose the mediating role of the EOR relationship between IC and IP. Furthermore, the present study also developed the relationship between dynamic capabilities (DC) theory, intellectual capital-based view (ICV) theory and resource-based view (RBV) theory, with variables that reveal the theoretical foundation of the study. Finally, the results of this study were verified by the existing literature.