Wisnu Yuwono Primary Author Dadan Umar Daihani Primary Author Willy Arafah Primary Author

The purpose of this study is to examine the effect of intellectual capital and potential absorptive capacity to the realized absorptive capacity of the tourism service industry in Batam City, Riau Islands Province, Indonesia. The concept of realized absorptive capacity has become an important issue for the development of industry, whereby the relevant knowledge of the organizations, they can develop further knowledge into useful knowledge for increasing creativity. The involved respondents of this study are amount to 54 CEOs (Chief Executive Officers) who manage a travel business. Data were analyzed by Structural Equation Model (SEM) by using the 3.0 version of SmartPLS software. The results showed that the intellectual capital had an effect of potential absorptive capacity, intellectual capital had an effect of realized absorptive capacity, potential absorptive capacity had no effect of realized absorptive capacity, and potential absorptive capacity did not mediate the relationship of both intellectual capital and the realized absorptive capacity.