Development of innovation capability through intellectual capital, psychological capital, authentic leadership, and knowledge management in the trading industry

Innovation capability is increasingly critical for organizations facing technological disruption and global competition. In Indonesia, particularly in Batam City’s trading industry, firms struggle to enhance innovation despite the growing availability of digital technologies such as Radio Frequency Identification (RFID), e-commerce platforms, and automation systems. This study investigates how intangible resources – intellectual capital, psychological capital, authentic leadership, and knowledge management – contribute to the development of innovation capability in this context. Data were collected from 306 employees in trading companies and analyzed using partial least squares structural equation modeling (PLS-SEM). The results show that intellectual capital strongly influences knowledge management, while psychological capital, authentic leadership, and knowledge management significantly enhance innovation capability. Knowledge management also mediates the relationship between intellectual capital and innovation capability. The study contributes to the knowledge-based view by integrating human, leadership, and knowledge perspectives, and extends prior research to the trading sector of an emerging economy. For managers, the findings highlight the importance of investing in intellectual and psychological capital, adopting authentic leadership practices, and strengthening knowledge management systems to maximize the benefits of technological tools such as RFID.