Revitalizing the BSC through knowledge management: The mediating role of intellectual capital

• Published date: 01 February 2022
• Author: Abed Al‐Fatah Karasneh
• Date: 01 February 2022
• DOI: http://doi.org/10.1002/pa.2359

ACADEMIC PAPER

Revitalizing the BSC through knowledge management: The

mediating role of intellectual capital

Abed Al-Fatah Karasneh

Business Department, Yarmouk University,

Irbid, Jordan

Correspondence

Abed Al-Fatah Karasneh, Business

Department, Yarmouk University, Shafiq

Irshidat St., Irbid, Jordan.

Email: akarasneh@yu.edu.jo

There has been growing interest in the relationship between knowledge management

(KM) and intellectual capital (IC) as well as KM and organizational performance, in

addition to IC and organizational performance. Yet, the crucial challenge for an orga-

nization is to integrate a well-designed performance measure based on KM, intellec-

tual capital (IC), and organizational performance through balanced scorecard (BSC). In

this research, the association among KM, IC, and BSC based performance is investi-

gated. The results from knowledge-intensive firms disclosed a positive relationship

between both KM and IC and between KM and BSC. Moreover, empirical results rev-

ealed the presence of partial evidence to support the relationship between KM and

BSC. Thus, a suitable application of IC indicates the necessity to implement KM lead-

ing to organizational performance based on BSC.

1|INTRODUCTION

In a knowledge era, the continuity of organizations depends on their

ability to cope with changes associated with the dynamic turbulent

business environment. This environment has moved organizations to

modify and improve their competencies to maintain a competitive

advantage (Karasneh & Al-zoubi, 2019).

According to the resource-based view (RBV) theory, researchers

indicate that organizations increase resources and capabilities, which

exploit the opportunities to gain and sustain the competitive advan-

tages and reduce the level of certainty within the dynamic environ-

ment. A resource is referred to as any tangible or intangible assets

acquired by a firm; while capability is the ability to utilize the

resources to create value, growth, and adaptation within changing

environments (Attia & Ingy, 2018; Beaugency, Sakinç, & Talbot, 2015;

Pettus, Kor, & Mahoney, 2009; Winter, 2003; Wu & Chen, 2014).

According to Barney (1991), firms characterized by valuable, rare,

inimitable, and non-substitutable resources would be able to maintain

competitive advantages and attain value-creating strategies that are

difficult to replicate by other competitors.

In today's knowledge-based economies, knowledge and knowl-

edge management (KM) stipulate the substance for a new form of

competitive advantage. This competitive advantage may be based on

knowledge assets, which represent the fount of an organization's

competences and capabilities that are deemed essential for its growth,

competitive advantage, and human development that provide distinc-

tive service and performance (Kamasak & Yucelen, 2010). Simulta-

neously, knowledge creation constitutes a focus on the content of the

knowledge that has been developed or generated. It deals with how

the required knowledge can be created individually, and collectively,

through different social interactions and intellectual processes

(Nonaka, Mitsuru, Ayano, & Florian, 2014).

Similarly, organizations with a strong KM resource and capability

should promote a learning environment in which the intellectual capi-

tal (IC) reinforces its ability to create value that provides distinctive

service and improves organizational performance (OP) (Mehralian,

Nazari, Nooriparto, & Rasekh, 2017). Dalkir (2005) indicates that in

the knowledge age, an organization is one that learns, remembers, and

acts based on the best available information, knowledge, and know-

how. The pharmaceutical industry is one of the foremost environ-

ments to investigate and highlight the intellectual theoretical attribu-

tions to companies' applications, which is mainly due to the fact that

this industry can only maintain its operations when paying close con-

sideration to their IC assets management methods. Wegmann (2008)

indicates that a strong KM organization incorporates resources and

competencies. Resources incorporate discrete strategic assets

(i.e., individual know-how, production capacities) and competencies

incorporate strategic assets, allowing the implementation of other

production factors (i.e., collective know-how and capacity to coordi-

nate several production processes).

Received: 19 December 2019 Revised: 7 June 2020 Accepted: 4 August 2020

DOI: 10.1002/pa.2359

J Public Affairs. 2022;22:e2359. wileyonlinelibrary.com/journal/pa © 2020 John Wiley & Sons Ltd 1of14

https://doi.org/10.1002/pa.2359