Over the recent decades, higher education institutions (HEIs) have been challenged by the shifting landscape of employment, technologies and demand. In the globalisation era, HEIs require a paradigm shift which is expected to focus more on ‘global, digital and information’-based rather than being conventionally ‘national, analogue, industrial economy’-orientated. ¹ HEIs play a critical role in the knowledge-based society and serve as a reservoir of knowledge. Recently, HEIs faced considerable competition and challenging situations to gain a competitive advantage in national and international settings. In particular, private higher education institutions (PHEIs) encounter considerable challenges to strike a balance between maximising shareholders’ financial growth and improving educational quality. Many local PHEIs are encountering difficulties to persist in the industry, with 53% of PHEIs incurring losses before taxes and 55% incurring losses after taxes. ² This tremendous fiscal strain has caused various impacts including of job losses and learning disruptions for approximately 5,800 academic staff and 121,000 students in Malaysia, given the inadequate quality of education in unprofitable institutions. ²

In addition, PHEIs have been blooming in Malaysia to meet the increasing population demand. ³ As a result, intense competition is apparent among PHEIs. PHEIs are transforming education into a business model where the curriculum and programmes are tailored to accommodate the masses and are expected to generate high commercial value. Reductions in funding will have implications on the quality of education. ⁴ An urgent need exists for quality revolution in PHEIs, and for building a 21st century model to adapt to current social and technological changes. PHEIs should be ready to explore and innovate their curriculum design to produce graduates with high competency and skills. Furthermore, PHEIs must secure additional resources to finance their modernisation and development in a period of tight or decreasing public budgets, without forcing students to pay for the benefits of higher education which accrue to society at large. ^{5 - 7}

Recently, PHEIs have been experiencing unexpected challenges because of limited budgets, declining revenues, resources constraints and increasing cost. ⁸ Therefore, business sustainability has become the main issue for the higher education system. Sazonov et al. ⁹ asserted that only HEIs with stable and sound financial positions will be able to persist and meet the requirements of their various stakeholders, to provide high quality yet equitable and affordable education while maximising shareholder wealth. Additionally, PHEIs face pressure from industry and academia to boost innovation through alternative approaches in a resource-constrained environment without considerable investment, ¹⁰ and provide solutions that are substantially more affordable. ¹¹ Therefore, financially challenged PHEIs are adopting low-cost approaches which require new innovative paradigms such as frugal innovation (FI). ¹²

Most importantly, a paradigm shift in the mindset and approach among leaders is needed and will require PHEIs to respond to a rapidly changing environment, by aligning their strategies to meet the current landscape. ^{13 , 14} Moreover, according to, ^{15 , 16} private education has been the main contributor to the nation’s economic development and gross domestic product (GDP). A consistent increase in GDP contribution has arisen between 2015 and 2019, at RM14.09bil, RM14.84bil, RM15.70bil, RM16.62bil and RM30bil. ¹⁷ Moreover, PHEIs must focus on core functions, create closer integration with industry, collaborate with local and international communities and promote greater efficiency in operations.

Intellectual capital (IC) is an emerging issue for academics, governments and investors ¹⁸ and has been studied in developed countries, as it is regarded as a crucial indication of organisational development in a knowledge economy. ¹⁹ Youndt et al. ²⁰ asserted that, in knowledge-intensive organisations such as universities, prudent management of IC can ensure that procedures are successful and that entities can produce value. IC is vital in improving PHEI performance, innovation and creativity. ^{21 , 22} Several calls have been made for research on improving the management of IC in PHEIs. ^{23 , 24} However, studies that focuses on IC management and resource efficiency in PHEI are still limited. ^{25 , 26}

FI involves managing the entire value chain with limited physical and financial resources, resulting in improved product quality and cost savings. Therefore, a company can benefit through cost reduction, because of prudent resource management, full utilisation of existing components, adoption of cost-effective technology, and simplified design. ^{27 , 28} By adopting FI, PHEIs will be able to meet stakeholder expectations and eventually lead to increased profitability and sustainability. Therefore, developing a resource-saving agenda and services, by aiming at core elements and avoiding wasteful spending, is crucial in a resource-constrained environment. FI is observed as ‘core functionality’, is performance-based, focuses on usage of resources, ‘ruggedisation’, cost saving, ‘no-frills strategy’ and environmental concern. ^{12 , 29 - 32}

Information technology capability (ITC) supports innovation processes for increasing productivity, improving customer relationships and lowering operating expenses. An organisation’s success is not solely contributed to by investing in an IT system, but also arises from the ability of firms to acquire ITC in an ever-changing business environment. Brown and Sambamurth ³³ defined capability as ‘the distinctive organisational skills for combining available resources and sustaining superior performance’. Thus, ITC refers to particular resources, skills, information, knowledge, procedures and relationships that empower companies to viably acquire, adopt and control IT applications and administrations, to gain innovations and superior performance. ³⁴ As such, a PHEI with efficient IC management can achieve frugal innovation with the existence of robust ITC, as the institutions would be able to scan the environment and sense, monitor and strengthen their organisational capabilities.

Therefore, managing IC incorporated with technologies to establish IT capabilities will be able to add value to the company. IT helps organisations, whether it is through better decision-making, developing relationships with customers, business partners, and suppliers, automating manual processes, or fostering organisational innovation. Therefore, there is a need to grasp the role of IT capabilities and proposed relationships with IC and frugal innovation to achieve greater business performance and fully use IT capabilities. Previous studies show that IC is insufficient to create improved company success on its own. However, organisations’ performance will be determined by IT capabilities combined with IC management that encourages innovation. Numerous past studies have shown that there is a mixed findings on the relationship between IC and innovation and their effect on firm performance, however, that research overlooked on the role played by IT capability in supporting, accumulating, and developing IC competencies that encourages innovation. The achievement of the firm is associated also with their ability to discover and acquire new knowledge to be used in innovation and gain success.

IC, ITC and FI together will be able to provide new opportunities for PHEIs to redesign their business processes and model. Therefore, this gap prompted the researchers to investigate and analyse prior research that focused on FI, within the sphere of IC and ITC literature and their relationships in PHEIs.

Given this backdrop, the research questions for this study were as follows: 1.

How did the corresponding literature of IC and FI in PHEIs evolve?

The objectives of this study were as follows: 1.

To identify the main areas of IC and FI in the PHEI context.

Hence, the main contribution of this paper is to fill the gap in existing literature on PHEI, underlining the growing importance of IC and FI. In addition, the researchers aim to provide a review on past studies related to applying IC to achieve FI in PHEI. This paper is organised as follow: first, the scope of this research is explained; the following section describes the method to collect and compare the existing literature; the Results section represents keyword search result, and gap analysis; the Discussion provides avenue for future research, and the Conclusions section outlines the conclusions of this research.

This paper was designed to present a systematic literature review on effects of IC on FI. Our assessment of the literature was based on the five steps of systemic review that were presented by, ³⁵ which entails five phases as shown and described in Figure 1. Major online databases that were selected include IEEE, Sage Publications, Emerald, JSTOR, Scopus, ProQuest, and Science Direct. The search technique employed in each database differed depending on the terms and the capacity to combine the terms using Boolean operators, and the usage of truncations such as ‘intellectual capital’ AND ‘information technology capability’ AND ‘frugal innovation’ AND ‘Higher education institution’ OR ‘higher learning institution’ OR ‘university’ OR ‘institute of higher learning’. The final search method was customised for each database to optimise the retrieval of relevant research. Each article was reviewed for eligibility after checking title, abstract and keyword. Two authors (JJ, MD) independently filtered papers that discussed IC and FI. Any disputes about study inclusion were solved by negotiations among the authors until consensus was reached. The papers analysed were further selected based on inclusion and exclusion criteria as shown in Figure 2, and the selection process is shown in Figure 3 (Prisma extraction flow). Studies were included if they were (i) published between 1990 and 2020, (ii) peer-reviewed journal articles and (iii) focused specifically on IC and FI. Studies were excluded if they were (i) discussing only one term i.e., either IC or FI without relating them, (ii) not published in English and (iii) books, conference proceedings, dissertation or magazines. Prior to the screening procedure, duplicate studies were eliminated. Relevant data were extracted and summarised in tables based on study design, paper type, methodology and publication trend by year. There are a few limitations to this systematic study that should be mentioned. First, because the articles included were only acquired from journal publications, the data on the IC and FI may be incomplete. Second, the review only considered English-language publications. Several publications discovered in this review were in foreign languages, however they were removed as the authors did not have the capacity to comprehend them.

During the data charting, we will test a predefined data extraction sheet that has been accepted by consensus of authors (JJ, MD). We will extract year of publication, source of information, design and study-specific information, and findings that address our research questions. The first author (JJ) extracted the data while the second author (MD) carried out a cross-check to provide an overview of the extracted data items in the results. Results are presented graphically. JJ provided a summary of the study’s features based on both abstract and full-text screening and a random check conducted by the second reviewer. The full spreadsheet listing all extracted items was stored in a database and included in the ‘Data availability’ section and reference list. Figure 3 illustrates the process of document selection based on title and abstract, followed by full text selection. Only published, peer-reviewed journal articles were considered while other publications such as newspaper articles, books and conference proceedings were not included.

The authors used a thematic analysis, summarizing the results by year, source database, methodology used in the study and classification by type of paper. A total of 76,025 papers was obtained with the keyword ‘intellectual capital’. For the keywords search of ‘information technology capability’ and ‘frugal innovation’, 14,122 and 2,320 journal papers were listed, respectively. However, when the researcher entered a combination of ‘intellectual capital’, ‘information technology capability’ and ‘frugal innovation’ keywords, no journal was found. Similarly, when the researcher used the keyword sets ‘intellectual capital’ + ‘information technology capability’ + ‘frugal innovation’ + ‘Higher education institution’ or ‘higher learning institution’ or university or ‘institute of higher learning’, no papers were obtained.

As mentioned in the Introduction, research that explores the relationships between organisational IC dimensions, ITC and FI in the PHEIs in Malaysia remains insufficient.

There has been little empirical study on the influence of IC on innovation as a process or a outcome. Only a few studies have looked at the influence of IC on innovation, which they perceive as a basis to firm success. In these studies, the interrelationships between the various IC components and their impacts on innovation yielded inconsistent results. Hence, further research is required in this area. Indeed, as Ref. 92 has noted, present IC research is very narrow and mostly focused on the issues pertaining to reporting and disclosure. There is a need to explore IC as strategic resources for driving innovation and value creation processes in organisation. In addition, having more IC would encourage greater innovation. As a result, when company’s IC rises, its innovative capability will be better, resulting in improved performance.

In this paper, we propose that information technology capabilities enable and sustain the IC. We claim in this research that ITC can aid in the development of a firm’s knowledge capacity. Firms must establish, cultivate, and nurture their knowledge capacities to continuously reinvent their business operations using IT enabled knowledge to achieve frugal innovation in order to derive strategic value from IC. The findings compel crucial questions from the academic industry’s perspective. First and foremost, academic institutions must be able to utilise their IT resources to stimulate knowledge sharing and expand knowledge capabilities. Second, academic institutions must use IT capabilities to build human capital, structural capital, and relational capital to assist in the creation of a knowledge network that will help them expand their knowledge capabilities. Thirdly, regardless of how well a firm’s internal and external resources are integrated, whether or not it is able to achieve frugal innovations is very much depending on an organization’s ability to utilise its IT capabilities. All three actions will strengthen a company’s capacity and ability to explore new possibilities, enhancing its potential to create cost effective solutions through frugal innovations.

Innovation is not only about creating new items; it also encompasses “creative methodologies, organisational structure, programme management, unique business models, and difference in customer service”. ⁹³ Furthermore, majority of the research in this subject use manufacturing businesses as empirical settings, and they often focus on product innovations over other forms of innovations such as services, organizational, process. So far, empirical data for service sector enterprises, particularly in frugal innovation, has been scant. In the literature on frugal innovation, the Knowledge Based View (KBV) is utilised as a theoretical framework to explain the function of knowledge as a resource and how organisation use their resources and capabilities in resource constrained environments when developing their innovations. ⁹⁴ The role of academic institutions in promoting frugal innovation, focusing on its simplicity of use, and linking them to the external markets has recently been highlighted in emerging studies. ⁹⁵ More studies are required to enhance understanding especially in respect to the techniques used by entrepreneurial universities to promote frugal innovation. In this vein, some unanswered calls for developing new research areas which is not only focusing on the role of FI in the education sector, but also to comprehend the application of the business model concept. Knowledge generated by IC can only be used to create opportunity if it can be “sensed” and ‘transformed” using ITC in order to accomplish frugal innovation that improves organisational efficiency and effectiveness. ⁹⁶ As a result, IC competence combined with IT capabilities will enable the creation of new products, services, processes and business models, hence increasing the relationship between intellectual capital and frugal innovation. Thus, PHEIs should concentrate more on core activities, improve industry integration, engage with local and international communities, and increase operational efficiency. This study aims to inform IC scholars about the research gaps in the literature published from 1990 to 2020 regarding IC applications to achieve FI. The findings of this review suggest three major issues: firstly, an urgent need exists for scholars to streamline the use of concepts pertaining to FI in PHEIs. Secondly, more work is required to ascertain if IC and ITC share similar goals or otherwise to achieve FI. Finally, the use of the FI approach and its relationship with IC and ITC remains unexplored in the literature. Therefore, the extent to which the IC dimension interacts with FI in the PHEI context could be further explored. Finally, additional empirical research is needed to fully comprehend the relationship between IC, ITC and FI in the context of PHEIs.

PRISMA checklist for “Unleashing frugal innovation in private higher education institutions via intellectual capital: a systematic literature review”, URL/DOI: https://doi.org/10.6084/m9.figshare.16726282. ⁹⁸

Data are available under the terms of the Creative Commons Attribution 4.0 International license (CC-BY 4.0).