Intellectual Capital and Its Effect on Innovative Performance: Insights from the Ethiopian Public Sector

This study examines the effect of intellectual capital (IC) on innovative performance. The data were collected from the public organizations located in the Addis Ababa City Administration, federal institutions, and Sheger City State. A structured questionnaire was distributed to 384 employees. Out of these, 369 valid responses were analyzed using PLS SEM. The findings indicate that human capital, structural capital, and relational capital all positively and significantly influence the innovative performance of the public sector. The findings demonstrate that the educational level, training, and skills of employees in innovative activities, along with their personal values and attitudes, are crucial for enhancing innovative performance. The innovative activities of an organization can also be improved by expanding interactions with external networks, such as customers and other stakeholders. Moreover, the organizational philosophy, management systems, and knowledge management methods all contribute to the innovative performance of organizations.