Intellectual Capital and Its Role in Crisis Management During the COVID-19 Pandemic: An Empirical Study in Kuwait

Abstract

The study aimed to assess the availability of intellectual capital in Kuwaiti private universities in terms of its three dimensions (human capital, structural capital, and relational capital), as well as its role in crisis management (crisis preparedness, crisis mitigation, confrontation, and response to the crisis, and learning from the crisis) during the COVID-19 pandemic. Members of the boards of trustees, university presidents, their deputies, and deans of the colleges were chosen as respondents to this study from a sample of (8) private universities in Kuwait, with the sampling unit consisting of leaders in these universities. The study revealed that all dimensions of intellectual capital play a statistically significant impact in executing crisis management during the COVID-19 pandemic at Kuwaiti private universities after conducting the data analysis process. The study concluded that universities should pay attention to intellectual capital in all its dimensions (human capital, structural capital, and relational capital) because of its role in improving their ability to implement crisis management strategies and strive to improve their capabilities to face crises by implementing crisis management strategies.

1. Introduction

Following the onset of the COVID-19 Pandemic, it has become difficult to overlook the crises that have occurred in various parts of life, as the pandemic has impacted individuals’ social, educational, and professional lives. Individuals, institutions, and decision-makers have faced major problems as a result of the crisis (Ellil, 2021). As a result, effective ways to address this issue are required to avoid severe and unforeseen risks that could jeopardize institutions including educational institutions’ capacity to achieve their objectives (Al Eid & Arnout, 2020). Evidence suggests that crises have recurred throughout history in the lives of nations and peoples. Civilizations have experienced many crises throughout history, and many of these crises have relied on the resourcefulness of decision-makers, leaders, and actors to manage them (Nguyen, 2021).

The outbreak of the COVID-19 Pandemic is one of the crises that people and institutions are going through in the world today, which in turn affected various sectors, including the education sector, and caused many negative effects, which necessitated the need to develop plans and strategies to confront this crisis in all sectors.

Given that the COVID-19 Pandemic is a sudden event that affects institutions’ possibilities of advancement and excellent performance, proper management of this crisis, which institutions are exposed to through a variety of activities and types, is required to address and control it (Nguyen, 2021). The methods and processes used to reduce the number of emergency cases that accompany a crisis, as well as the mechanism for dealing with them when they arise to minimize their negative, destructive impacts, are referred to as crisis management strategies (Bryan et al., 2017). As a result, during the various stages of the crisis, these institutions must use a set of scientific and practical tools and methods based on a special strategic plan prepared in advance to address such conditions and try to control them to avoid their negative effects and capitalize on their positives (Zraqat et al., 2021).

Intellectual capital has evolved into the true capital of institutions, as it is the cornerstone that drives innovation and renewal, as well as being the driving force behind change and creativity. This has to do with the quality of a person’s performance, services, or other excellence strategies. In light of the knowledge economy, the information age, and globalization, a focus on information and knowledge has become the arbitrator of the ability to respond to challenges and disasters (Zraqat, 2019). The idea of a company’s resources is no longer limited to physical assets (Alotaibi et al., 2021), but has expanded to include intangible intellectual assets, which now account for the majority of institutional assets. Rather, these assets have become one of the most critical components of an institution’s existence, continuity, and expansion. Intellectual capital, defined as skills and knowledge that enable an organization to respond to opportunities and challenges, is the true capital of the organization since it plays a key role in the process of innovation, creativity, and modernization (Pedro et al., 2020).

Responding to new requirements, according to Chatterton and Goddard (2009), necessitates new types of resources and management to enable higher education institutions to provide a more dynamic contribution to the effective implementation of the community’s development process. Higher education institutions have been identified as critical actors in national innovation systems to meet knowledge building goals in this setting (Pedro et al., 2019). The European Union has also published a particular suggestion to boost international cooperation in higher education and research institutions (OEU, 2006). As a result, the purpose of this research was to determine the importance of intellectual capital in Kuwaiti universities’ crisis management techniques during the COVID-19 Pandemic.

Several studies indicated that the COVID-19 Pandemic revealed the weakness of institutions in managing the crisis across all countries of the world. Given the current circumstances that emerged in light of the outbreak of the COVID-19 Pandemic, the possibility of all institutions, including Kuwaiti universities, being exposed to threats and crises that may affect their performance, has increased. The ability to respond effectively to unexpected situations is the most important challenge for organizations (Dobrowolski, 2020).

Intellectual capital also represents the set of knowledge and creative and innovative ideas owned by the institution, which contributes to enhancing its ability to face crises (Ibarra-Cisneros et al., 2020). Therefore, universities have realized that their real value of them is magnified by what they possess of distinguished intellectual capital capable of providing opinions and ideas that improve their ability to deal with emergency conditions such as the COVID-19 Pandemic, which ultimately contribute to increasing the competitive capabilities of the university (Al Eid & Arnout, 2020). Universities must pay attention to their intellectual capital and direct it towards innovation to raise the level of these universities. In addition, there is intense competition between universities to win a greater market share. This is a challenge facing the management of each university, and to meet this challenge, the administration must direct its intellectual capital and it’s urging to raise the university’s ability to adopt strategies that would enable it to manage the crisis. Pedro et al. (2019) pointed out the role that intellectual capital plays in enhancing the societal participation of universities. This calls for conducting a study that helps decision-makers to manage the crisis.

This study is considered important in dealing with a topic of great importance in modern accounting and management studies, which is summarized in intellectual capital and its role in crisis management strategies in Kuwaiti universities. The study focuses on the reality of crisis management strategies by universities and focuses on forms of intellectual capital represented by human capital, structural capital, and relational capital. It is also hoped that the current study will benefit researchers in the fields of accounting and management and open doors for them to conduct similar research. It is also hoped that this study will contribute to providing recommendations to decision-makers and leaders in Kuwaiti universities that contribute to enhancing their interest in and development of intellectual capital, which will be reflected in their ability to adopt appropriate crisis management strategies in these universities, especially in light of the outbreak of the COVID-19 Pandemic.

2. Literature Review and Hypothesis Development

2.1. Intellectual Capital

Intellectual capital is of great importance and helps business organizations to reach globalization through a set of competitive assets on which the creative and strategic development process depends on innovation and renewal (Rahman & Khatun, 2019). Therefore, the central objective of intellectual capital as one of the success factors is to support the competitive position of business organizations and enable them to continue and grow and help them acquire knowledge and renew their knowledge balance, and get rid of traditional concepts prevailing in the work environment, as well as providing creative and innovative capabilities that contribute to solving problems and developing performance methods in business organizations. Companies today have identified two types of assets, which are considered important for measurement, they are tangible assets and intangible assets, where intangible assets are not recorded in the financial statements but constitute a high percentage as part of the market value of the institution (Akil et al., 2021). Intellectual capital is one of the concepts close to the concept of intangible assets (Christensen, 2018).

Referring to the accounting and administrative literature related to the concept of intellectual capital, it is noted that there are multiple names to indicate this concept, including cognitive assets, intellectual assets, mental assets, intangible assets (Kittikunchotiwut & Siriyota, 2021). Cabrita and Bontis (2008) have pointed out that intellectual capital was first introduced by Kenneth Galbraith in 1969 who asserted that intellectual capital includes intellectual act as the ‘use’ of knowledge and skills. The delineation of intellectual capital structures is due to the theoretical threads embedded in human capital theory, the resource-based view of the firm, and social capital theory (Leon, 2016).

Bontis and Fizenz (2002) define intellectual capital as the sum of everything everyone knows in a company that gives them a competitive advantage and pointed out that intellectual capital is the collaboration, shared learning between a company and its customers that forges a bond between them and returns the customer. Intellectual capital consists of knowledge, skills, and practical experiences that are implemented through intellectual activity, as intellectual capital activities may appear in the form of intellectual, ethical, and cultural skills in creating new knowledge. Intellectual capital is also viewed as a complex integrated system that engages the intellectual, creative, innovative, and other capabilities of individuals and organizations that are united through interactions to maximize value in the organization (Curado et al., 2011).

The basis of the intellectual capital theory lies in the fact that tangible assets in today’s organizations are less valuable than intangible assets, which may not necessarily be recognized in accounting books (Serenko & Bontis, 2021).

This theory is founded on the belief that the wealth of an institution is based on human capital, structural capital, and relational capital, with value creation occurring as a result of interactions between the parts of capital at the institutional level. The overlapping of studies by academics from various disciplines such as accounting, economics, finance, strategy, and human resources has resulted in a plethora of dimensions of intellectual capital measurement based on various ideas. The previous study has indicated that ongoing interaction between human, structural, and relational capital is required for businesses to efficiently exploit their knowledge base. That is until employees’ isolated information is assimilated into the organization, it has no impact on the question of value. In general, research has identified three components of intellectual capital.

2.1.1. Human Capital

Human capital consists of all the features related to human resources in business organizations, which includes the experiences of the human resource, its skills, creative and innovative capabilities, meaning that it includes all the intangible information and knowledge of the human mind of the organization. Human capital is a basic base for the innovative and strategic sustainability of the organization, as superior human capital is linked to improving the productivity of the organization, its superiority, and improving its performance. Therefore, human resource managers must strive to recruit and prepare the best possible team to achieve a competitive advantage for their organization (Dahash & Al-Dirawi, 2018). Human capital is defined as the set of skills, experiences, and knowledge possessed by individuals, which consists of innovative and creative capabilities (Di Bernardino & Corsi, 2018).

2.1.2. Structural Capital

Structural capital refers to the organization’s human capital’s sustainable infrastructure, and it reflects all storage facilities. It ensures that knowledge is stored in the organization and that this knowledge does not depend on the presence of a specific human element, meaning that the organization is not affected by the departure of employees. The numerous physical characteristics of a company, such as its culture, operations, database, operational processes, and intellectual assets, not only provide value to the business but also its financial value. Structural capital refers to the mechanisms that enable an organization to leverage its intellectual capital. These structures can range from tangible assets such as patents, trademarks, and databases to intangible assets such as culture, transparency, and employee trust.

2.1.3. Relational Capital

Relational capital is based on the idea that firms are not considered as isolated systems but as systems that depend largely on their relationships with their environment (Hormiga et al., 2011), and based on the intellectual capital measurement and management model, the first level refers to knowledge and its management in relation to the relationships that can be organizations can maintain with agents who are part of their closest environment, and the closest environment usually offers several agents such as customers, suppliers, or shareholders.

The study of the previously described relationships, which can be considered as a direct influence on the company’s capacity for achievement, is critical to a company’s ability to understand, analyze, and make judgments about its industry (de Leaniz & del Bosque, 2013). Corporate reputation, on the other hand, is a mediator of inter-organizational connections, since it is defined as a set of impressions held by people both inside and outside the company (Walecka, 2021). As a result, relational capital is defined as all relationships - market relationships, power relationships, and cooperation - established between firms, institutions, and people, which stem from a strong sense of belonging and a highly developed capacity of cooperation typical of culturally similar people and institutions (Ritala et al., 2021).

With regard to the literature that examined the role of intellectual capital in universities, Pedro et al. (2019) presented an innovative operational proposal to measure the intellectual capital of higher education institutions in the European Union, and the empirical results indicated that human capital, structural capital and relational capital constitute the basic components of the intellectual capital of higher education institutions, and its play an important role in enhancing the role of higher education institutions in the communities in which you work.

In a similar vein, Pedro et al. (2020) investigated the relationship between higher education institutions’ intellectual capital and their sustainable development practices, as well as whether higher education institutions’ sustainable development practices are related to stakeholders’ quality of life, and the study’s findings revealed that intellectual capital has a direct impact on sustainable development practices at Portuguese universities. Ibarra-Cisneros et al. (2020) aimed to determine the impact of intellectual capital on the performance of Mexican universities through its dimensions and knowledge management, and the study concluded that intellectual capital plays a critical role in university performance and enhances their ability to interact with community needs.

2.2. Crisis Management

A crisis, according to Fener and Cevik (2015), is any unexpected incident that hinders a company’s ability to develop and improve, perhaps leading to its decline or destruction. As a result of management’s loss of control over operations, the crisis includes an incident that requires the organization to change previous plans (Alves et al., 2020). In finding measures to help the institution reduce the rapid negative impacts that accompany the development of the crisis, the role of intellectual capital in efficient crisis management is underlined (Bryan et al., 2017). Intellectual capital contributes to an organization’s ability to deal with crises by reducing the negative consequences of the crisis or maximizing the opportunities that come with it. Research has agreed on a set of crisis-management tactics that businesses should employ.

2.2.1. Crisis Preparedness

The process of preparing ways for preventing or limiting the effects of crises by developing numerous scenarios for the events that are likely to accompany the crisis to deal with them efficiently and effectively is known as crisis preparedness (Pearson & Mitroff, 1993). Capturing warning signals by watching the earliest indicators that suggest the possibility of a crisis, to studying and referring to them when dealing with the crisis at the time of its occurrence, is also part of crisis preparedness (Vardarlier & Zafer, 2020).

2.2.2. Crisis Mitigating

The process of mitigating the crisis includes the procedures that work to remove the causes of the crisis and reduce the possibility of its occurrence and its impact on the organization (Fener & Cevik, 2015). In the phase of crisis mitigation, the organization works to contain the damage, as the organization translates appropriate plans to contain the crisis and implements them at the moment of the crisis to prevent the spread of its effects across the organization (Vichova et al., 2017).

2.2.3. Facing and Responding to the Crisis

In the phase of facing and responding to the crisis, the crisis management plan and dealing with the crisis are implemented according to the previously drawn plans (Thumiki et al., 2019). Where this stage is an important test of the efficiency and effectiveness of the plans drawn in advance, as well as a test of the equipment taken by the institution before the occurrence of the crisis, the more effective and efficient the measures taken previously, were, the more this led to the successful management of the crisis during the stage of confrontation and response to the crisis (Oplachko et al., 2019).

2.2.4. Learning from the Crisis

Learning from a crisis allows an organization to apply what it has learned from prior crises to improve its effectiveness and efficiency in coping with future crises (Hur & Kim, 2020). Where the institution reviews a previous crisis, its causes, and the consequences that occurred from it to learn from it and prevent a repetition of the crisis in the future by drawing lessons and developing efficient crisis management methods (Vichova et al, 2017).

Based on the previous literature review, the following hypotheses have been developed:

H0: There is no statistically significant role at the significance level (α ≤ 0.05) of intellectual capital in terms of its dimensions (human capital, structural capital, and relational capital) in crisis management strategies during the COVID-19 Pandemic in Kuwaiti private universities.

The following sub-hypotheses are derived from this hypothesis:

H01: There is no statistically significant role at the significance level (α ≤ 0.05) of human capital in crisis management strategies during the COVID-19 Pandemic in Kuwaiti private universities.

H02: There is no statistically significant role at the significance level (α ≤ 0.05) of structural capital in crisis management strategies during the COVID-19 Pandemic in Kuwaiti private universities.

H03: There is no statistically significant role at the significance level (α ≤ 0.05) of relational capital in crisis management strategies during the COVID-19 Pandemic in Kuwaiti private universities.

3. Research Methodology

3.1. Study Approach

The study used a descriptive-analytical approach to characterize the issue under investigation, which was the intellectual capital and its impact on crisis management strategy in Kuwaiti private universities in the wake of the COVID-19 outbreak. The study relied on a secondary source data collection technique. To collect data from the study sample, the researcher created a questionnaire.

3.2. Population and Sample

All Kuwaiti private universities, including fourteen (14) universities, are represented in the study population. The respondents for this study were members of boards of trustees, university presidents, and college deans. The study used a stratified random sample, and a sample of (8) private universities in the State of Kuwait was chosen, with the sampling unit consisting of leaders at these universities. At a rate of (87 percent) of the total distributed questionnaires, 217 questionnaires were retrieved, of which 209 were full and valid for analysis, resulting in a statistically acceptable proportion of (87 percent) of the total dispersed questionnaires (Zraqat, 2020).

4. Results

4.1. Descriptive Analysis

The mean, standard deviations, and ranks of relative importance were relied upon in describing the answers of the sample members to the questionnaire items and their axes, and the results were as follows.

4.1.1. Intellectual Capital Dimensions

Table 1 shows that the sample members’ preferences were for the dimensions of intellectual capital to have high relative importance, with an arithmetic mean of (3.933), a standard deviation of (0.435), and (relational capital) ranking first, with an arithmetic average of (4.196), a standard deviation of (0.497), and high relative importance, while (structural capital) ranked last, with an arithmetic mean of (3.771), and a standard deviation This demonstrates Kuwaiti universities’ interest in intellectual capital and its development.

Table 1: Arithmetic Averages, Standard Deviations, Levels, and Relative Importance of Intellectual Capital Dimensions

4.1.2. Crisis Management Dimensions

Table 2 shows that the sample members’ trends were towards high relative importance of the dimensions of crisis management, with an arithmetic mean of (3.848), a standard deviation of (0.458), and the dimension (learning from the crisis) ranking first, with an arithmetic mean of (3.955), a standard deviation of (0.522), and high relative importance, while the dimension (mitigating the crisis) ranked last, with an arithmetic mean of (3.705), This suggests that Kuwaiti universities can address the underlying reasons of the crisis and reduce the possibility of a recurrence. The findings further highlight the importance of institutions in mitigating damage.

Table 2: Arithmetic Averages, Standard Deviations, Levels, and Relative Importance of Crisis Management Dimensions

4.2. Pearson Correlation

To answer the study questions, the study used multiple regression analysis and gradient regression analysis to test the hypotheses. Before beginning the analysis, it was confirmed that the data was free of a problem of multicollinearity, which is defined as a near-complete linear correlation between two or more variables. It inflates the coefficient of determination R² such that it is larger than its actual value. As a result, for each variable, the linear correlation coefficient and the value of the variance inflation coefficient were calculated, yielding the following results.

Table 3 shows that the highest value of the correlation coefficient appeared between the two independent variables (human capital) and (relational capital), which was (0.584), while the value of the correlation coefficient among other independent variables was less than that, indicating that there is no multicollinearity problem among the variables of the independent study, as values of the linear correlation coefficient that exceed (0.80) indicate that there is no multicollinearity problem (Gujarati, 2004).

Table 3: Multiple Correlation Matrix for Independent Variables

**Statistically significant at the level of significance of 0.01, *statistically significant at the level of significance of 0.05.

4.3. Hypotheses Test

To test the hypotheses of the study, multiple linear regression analysis was used, and the results were as follows:

The results in Table 4 indicate that the correlation coefficient (R = 0.794) indicates a relationship between the independent variables and the dependent variable, and the effect of the independent variables (dimensions of intellectual capital) on the dependent variable (crisis management) is a statistically significant effect. The estimated F value is (46.659), with a significance level of less than 0.05 (Sig = 0.000), and the value of the coefficient of determination (R² = 0.751), indicating that variation in (dimensions of intellectual capital) together can explain (75.1 percent) of the variance in (crisis management).

Table 4: The Results of the Study Hypotheses Test

*The effect is statistically significant at level (α ≤ 0.05).

The transactions table revealed that the value of B at the dimension (human capital) was (0.177), and the value of t was (2.515), with a level of significance (Sig = 0.013), indicating that this dimension has a substantial effect. The value of B on the dimension of (structural capital) is (0.402), and its t-value is (7.997), with a significance level of (Sig = 0.000), indicating that this dimension has a significant effect. The value of B on the dimension of (relational capital) was (0.147), and its t-value was (1.999), with a significance level of (Sig = 0.048), indicating that this dimension has a significant effect.

We reject the main nihilistic theory and embrace the alternative hypothesis, which argues that intellectual capital plays a role in crisis management in Kuwaiti universities, based on the following. The findings of the main hypothesis test demonstrate the importance of intellectual capital dimensions in crisis management since all dimensions have an impact on crisis management at Kuwaiti private universities. A progressive multiple regression analysis was conducted to identify which of the aspects of intellectual capital had the most important role in crisis management, and the results are shown in Table 5.

Table 5: Results of Stepwise Regression Analysis

*The effect is statistically significant at level (α ≤ 0.05).

The results of the gradual regression analysis show the order of entry of the variables into the regression model, which represents the impact of the dimensions of intellectual capital on crisis management. Where it was found that (structural capital) came first, describing (47.9%) of the variation in the dependent variable and that (human capital) increased the percentage of explanation to (54.8%), and that (relational capital) led to a high rate of interpretation (to reach) (56.4 percent). At a threshold of significance less than 0.05, the influence of all independent factors was significant.

5. Conclusion

The goal of the study was to determine the availability of intellectual capital in Kuwaiti private universities, as well as its dimensions (human capital, structural capital, and relational capital) and its involvement in crisis management during the COVID-19 pandemic. Members of the boards of trustees, university presidents, and deans of colleges were chosen as respondents to this study from a sample of (8) private universities in Kuwait, with the sampling unit consisting of leaders in these universities. A total of 240 questionnaires were issued to respondents, and 217 were retrieved, with 209 being completed and valid for analysis.

According to the findings of the statistical analysis, the sample members’ patterns pointed to a high relative relevance of the dimensions of intellectual capital in Kuwaiti universities. Relational capital came up first, followed by human capital and structural capital, indicating that Kuwaiti universities are concerned about intellectual capital and its development. In addition, the sample members’ perceptions toward the high relative relevance of crisis management dimensions in Kuwaiti institutions were positive. The priority was to learn from the disaster. The second highest priority was dealing with and responding to the crisis. Crisis preparedness came in third place, with crisis mitigation coming in fourth and last. This demonstrates the critical role Kuwaiti universities have played in dealing with the COVID-19 Pandemic.

The results of the statistical analysis showed the existence of a statistically significant role of intellectual capital with its dimensions (human capital, structural capital, and relational capital) in managing the crisis with its dimensions during the COVID-19 pandemic in Kuwaiti private universities. The order of entry of the variables into the regression model, which depicts the impact of the dimensions of intellectual capital on crisis management was determined by the findings of the gradual regression analysis. Where it was discovered that structural capital came first, explaining 47.9% of the variance in the dependent variable, and that when human capital was added, the percentage of interpretation increased to 54.8 percent, and that when relational capital was added, the percentage of interpretation increased to 54.8 percent (56.4 percent). We note that the effect of all independent variables was significant.

According to the findings, Kuwaiti private universities prioritize human resource development as a strategic priority, and are eager to develop plans to retain highly qualified workers and work to develop training plans to develop the capabilities of all employees in a sustainable manner, particularly new employees, and are eager to develop leadership programs by leveraging international experiences and experimenting with new approaches. These effective programs are developed by drawing on international experiences and attempting to link them to broad scientific research relations in a way that enhances their ability to enhance their role in community service, particularly during times of crisis, such as the COVID-19 pandemic.

The study’s findings suggest that universities should pay attention to intellectual capital in all its dimensions (human capital, structural capital, and relational capital) because of its role in improving their ability to manage crises and seeking to improve their capabilities to confront crises through the adoption of crisis management strategies. As well as continuing Kuwaiti universities’ policy of using crisis management strategies in their current form while working to develop them in response to changing circumstances and changes in the external environment, especially in light of the emergency conditions imposed on the State of Kuwait and other countries around the world by the COVID-19 Pandemic these days, and what is required to confront crises because of these trying circumstances. Finally, the study suggests performing a comparative study with other institutions in Kuwait and other countries, and comparing the results with the findings of this study, to gain a better understanding of the role of intellectual capital in crisis management in these nations.