The Effect of Intellectual Capital on Organizational Performance in Red Crescent Society of Lorestan Province

Intellectual capital constitutes assets and mental, intangible resources that organizations render to new processes of production and services to create values. Due to its invisibility and dynamicity, it is difficult to define intellectual capital. The present study purports to investigate the effect of intellectual capital on organizational performance in Red Crescent Society (RCS) of Lorestan province. The determinants of intellectual capital include innovation capital, customer capital and process capital that are directly influenced by intellectual capital. Organizational performance is directly associated with intellectual capital. The components of intellectual capital should be used to measure organizational performance. The study adopted a descriptive method and a survey design. In terms of purpose, the present study is an applied research. The data was collected through field study. The population of the study consisted of 384 employees and disaster workforce with Lorestan RCS. Cheng and Tsang’s questionnaire was used to collect the data. The questionnaire consisted of 19 items addressing five variables including intellectual capital, customer capital, innovation capital, process capital and organizational performance. The validity of the questionnaire was approved by experts. The reliability of the questionnaire was calculated to be 0.776 using Cronbach alpha formula. Structural equation modeling (SEM) was used to analyze the data in LISREL software. The results showed that the fit of the model had an acceptable value. Thus, the proposed model was supported. Besides, the results revealed the direct effect of intellectual capital on innovation capital, process capital and customer capital. Moreover, innovation capital, process capital and customer capital were found to directly influence organizational performance. The study ends with a few viable and research recommendations.