Intellectual capital and firm performance: an extended VAIC model

2019 ◽  
Vol 20 (3) ◽  
pp. 406-425 ◽  
Author(s):  
Ayse Elvan Bayraktaroglu ◽  
Fethi Calisir ◽  
Murat Baskak
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Manufacturing Firms ◽  
Moderating Effect ◽  
Content Type ◽  
Structural Capital ◽  
Proposed Model ◽  
Capital Efficiency ◽  
The Relationship ◽  
Innovation Capital

Purpose The purpose of this paper is to propose an extended and modified value-added (VA) intellectual coefficient (VAIC) model, which includes intellectual capital (IC) components which were missing in the original VAIC approach. The proposed model has been used to explore the relationship between IC and firm performance for Turkish manufacturing firms on a more detailed level. Design/methodology/approach Multiple regression analysis has been employed to identify the IC components, which predict the performance of the firm and the moderating effect of some IC components on IC components–firm performance relationship. Data are required to calculate the IC components, and firm performance variables have been obtained from the financial reports of the Turkish manufacturing firms for the period 2003–2013. Findings According to the results for Turkish manufacturing sector innovation capital efficiency has a moderating effect on the relationship between structural capital efficiency (SCE) and profitability, meaning, depending on an increase in R&D expenses, the effect of SCE on profitability also increases. On the other hand, it has been found that innovation capital efficiency has a direct impact on firms’ productivity. The results also showed that IC efficiency components have a moderating role on the relationship between capital employed efficiency and profitability. Research limitations/implications There might be a time lag until the effect of R&D investments can be observed in firms’ performance. However, this lagged impact of innovation capital and also other IC components on future firm performance has not been investigated due to concerns related to sample size. Originality/value The proposed model differs from the original VAIC model in three ways: it, namely, includes two additional IC components, customer capital (CC) and innovation capital. It explores the moderating effect of innovation capital on structural capital–firm performance relationship and the moderating effect of IC components on employed capital–firm performance relationship. As the last difference, it proposes an alteration in the VA calculation due to newly added IC components, CC and innovation capital.

Strategic orientations, firm performance and the moderating effect of absorptive capacity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Manuel-Alejandro Ibarra-Cisneros ◽  
María del Rosario Demuner-Flores ◽  
Felipe Hernández-Perlines
Keyword(s):  
Firm Performance ◽  
Market Orientation ◽  
Absorptive Capacity ◽  
Entrepreneurial Orientation ◽  
Manufacturing Firms ◽  
Moderating Effect ◽  
Equation Modeling ◽  
Content Type ◽  
Strategic Orientations ◽  
The Relationship

PurposeThe purpose of this article is to study the moderating effect of absorptive capacity, defined as the set of organizational routines and processes through which companies acquire, assimilate, transform and exploit knowledge to produce a dynamic organizational capacity (Zahra and George, 2002), in three strategic orientations: market orientation; technology orientation and entrepreneurial orientation and their positive relationship in the performance of the medium and large Mexican manufacturing firms. Likewise, it is determined whether these three combined SOs influence firm performance.Design/methodology/approachThe data was collected from 171 medium and large-sized Mexican manufacturing firms. The proposed hypotheses are tested using partial least square structural equation modeling (PLS-SEM).FindingsDespite the importance of knowledge for the development of firms, the results indicate that the moderating effect of absorptive capacity is only present in the relationship between entrepreneurial orientation and firm performance. That is, firms cannot take advantage of knowledge simultaneously between the three strategic orientations. For their part, market orientation and entrepreneurial orientation exert a positive influence on firm performance.Practical implicationsThe main practical implication for the manufacturing industry is that they must develop mechanisms to detect what kind of knowledge affects each strategic orientation, in this way it can make the absorptive capacity influence the relationships between SO and FP.Originality/valueThe main contribution consists of studying the moderating effect of the absorptive capacity on the relationship between three strategic orientations and firm performance, and not concentrating solely on the simultaneous use of these strategies as is commonly done.

The relationship between corporate governance and intellectual capital

2019 ◽  
Vol 61 (2) ◽  
pp. 384-401 ◽  
Author(s):  
Amina Buallay ◽  
Allam Hamdan
Keyword(s):  
Corporate Governance ◽  
Firm Size ◽  
Intellectual Capital ◽  
Content Type ◽  
Listed Firms ◽  
Pooled Data ◽  
Structural Capital ◽  
Capital Efficiency ◽  
High Level ◽  
The Relationship

Purpose The purpose of this study is to examine the moderating role of firm size on the relationship between corporate governance (CG) and intellectual capital (IC) efficiency. Design/methodology/approach The methodology was a pooled data for three years (2012-2014) for 171 listed firms, resulting in 489 observations. Findings The findings revealed that the inclusion of firm size as a moderating variable has influenced positively only the relationship between CG principles and capital employed efficiency (CEE). Further, the finding showed that the two IC components namely, human capital efficiency and structural capital efficiency, tend to be higher with firms that high level of CG adoption. However, CEE tends to be higher with firms that have lower level of CG adoption. Other finding shows that CG index was significant with the three IC components. Originality/value Such information will help the stakeholders, investors, decision-makers, regulators, policymakers and scholars to improve their knowledge about IC. Furthermore, it will be useful for firms to place their priorities regarding the internal system and financial plans for effective and efficient use of CG and IC.

How does intellectual capital efficiency affect firm performance? The moderating role of family management

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yolanda Ramírez ◽  
Julio Dieguez-Soto ◽  
Montserrat Manzaneque
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Family Management ◽  
Content Type ◽  
Intangible Resources ◽  
Structural Capital ◽  
Capital Efficiency ◽  
The Impact ◽  
Moderating Role

PurposeThe purpose of this paper is twofold: to know whether those firms that achieve greater efficiency from their intangible resources (intellectual capital) also obtain greater performance; and to analyze the moderating role of family management on that relationship in small to medium-sized enterprises (SMEs).Design/methodology/approachThis paper conducts an empirical study with different econometric models using a panel data sample of 6,132 paired firm-year observations from Spanish manufacturing SMEs in the period 2000–2013.FindingsThe findings suggest that intellectual capital efficiency is a key factor that allows the firm to achieve and maintain competitive advantages, obtaining greater performance. Additionally, this research also shows that the moderating role of family management can be a double-edged sword depending on the type of intangible resources.Practical implicationsThis paper may give managers an insight in how to better utilize and manage intangible resources available in their firms to improve competitive advantage and ultimately firm performance. Additionally, on the basis of the Socioemotional Wealth perspective (SEW), this article argues that family-managed firms that focus on SEW preservation can enhance the impact of structural capital efficiency on performance.Originality/valueThis paper extends the prior literature by studying the joint effects of intellectual capital efficiency, distinguishing between human capital and structural capital efficiency, and family management on performance in the context of SMEs.

Audit committee characteristics: an empirical investigation of the contribution to intellectual capital efficiency

2018 ◽  
Vol 22 (2) ◽  
pp. 183-200 ◽  
Author(s):  
Amina Buallay
Keyword(s):  
Intellectual Capital ◽  
Audit Committee ◽  
Positive Impact ◽  
Audit Committees ◽  
Content Type ◽  
Structural Capital ◽  
Capital Efficiency ◽  
Independent Variable ◽  
The Relationship ◽  
Specific Control

Purpose In a knowledge economy, it is generally agreed that audit committees play a significant role in supporting the overall firm’s knowledge, particularly enhancing the reporting process. In this respect, this paper aims to examine the effect of audit committee characteristics on intellectual capital efficiency. Design/methodology/approach This study examined 59 banks for five years (2011-2015), obtaining 295 observations. The study’s independent variable is audit committee characteristics. The dependent variable is intellectual capital components (Human: human capital efficiency [HCE]; Structural: structural capital efficiency [SCE]; Relational: relational capital efficiency [RCE]; and Physical/Financial: capital employed efficiency [CEE]). In addition, the study used four bank-specific control variables. Findings The findings deduced from the empirical results demonstrate that there is a significant positive impact of audit committee characteristics on intellectual capital. Moreover, the relationship between audit committee and intellectual capital components (HCE, SCE, RCE and CEE) also has a significant positive relationship if measured individually. Originality/value The study provides insights about the relationship between audit committee characteristics and the improvement in intellectual capital efficiency, which might be used by firms to re-arrange the roles within audit committee, to reassign internal priorities and to escalate position in their environment.

Intellectual capital efficiency and organisational performance

2019 ◽  
Vol 20 (6) ◽  
pp. 784-806 ◽  
Author(s):  
Leena Afroz Mostofa Chowdhury ◽  
Tarek Rana ◽  
Mohammad Istiaq Azim
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Emerging Economy ◽  
Return On Assets ◽  
Content Type ◽  
Return On Equity ◽  
Structural Capital ◽  
Asset Turnover ◽  
Capital Efficiency ◽  
The Relationship

Purpose The purpose of this paper is to, the first of its kind, investigate the relationship between the intellectual capital efficiency and organisational performance of the pharmaceutical sector in Bangladesh, an emerging economy that enjoys Trade-Related Aspects of Intellectual Property Rights (TRIPS) relaxation. Design/methodology/approach The study used hand-picked data from annual reports for five years. The relationship between efficient use of intellectual capital and corporate performance was examined through the practical use of human capital, structural capital and capital employed. Multiple regressions were used to assess their impact on financial performance – specifically, return on assets, return on equity, asset turnover and market-to-book value. Findings Value-added intellectual coefficient components (i.e. human capital, structural capital and capital employed) significantly explained asset turnover and return on assets but failed to predict the return on equity outcome. Additionally, asset turnover was negatively influenced by structural capital and positively influenced by capital employed. The return on assets was mostly affected by variation in human capital. Intellectual capital did not predict market-to-book value or investment decisions. Practical implications This paper provides useful resources for evaluating the financial performance and value creation of companies in emerging economies that enjoy TRIPS exemptions; this research could also be extended using cross-industry comparisons. The findings have theoretical and practical implications, particularly for the pharmaceutical industry in emerging economy contexts, and for managers globally. Originality/value This study is among only a few that have reported on the relationship between intellectual capital efficiency and value creation in emerging economy contexts.

The relationship between intellectual capital and employees' productivity: evidence from the Gulf Cooperation Council

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amina Buallay ◽  
Ala’a Adden Abuhommous ◽  
Gagan Kukreja
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Value Added ◽  
Gulf Cooperation Council ◽  
Least Square ◽  
Content Type ◽  
Ordinary Least Square ◽  
Structural Capital ◽  
Capital Efficiency ◽  
The Relationship

PurposeThe purpose of this paper is to establish the relationship between intellectual capital (IC) and employees' productivity (EP) in the Gulf Cooperation Council (GCC) region.Design/methodology/approachThe value-added intellectual coefficient (VAIC) is used to measure IC performance in 198 firms listed in Saudi Arabia and Bahrain from 2012 to 2014. The pooled-corrected estimation technique is used to estimate a panel regression model with EP as the dependent variable. Firm size and sectors are controlled for in the regression analysis. The independent variable (IC) has been measured using human capital efficiency (HCE), structural capital efficiency and capital employed efficiency (CEE) in order to measure the value of IC.FindingsBased on the VAIC, the authors found that the values of IC investments are mostly generated from investments in human capital. The results of the panel-corrected ordinary least square indicate that VAIC and its individual components are positive and significantly related to variations in employees' productivity. HCE contributed the highest and CEE contributed lowest VAIC.Originality/valueThe originality of this paper is to show the importance of investment in the human capital as a key contributor of firm's performance. Hence, this study encourages firm's leaders and management in the GCC to invest and focus their management/leadership styles on human capital to achieve their goals. To the best of the knowledge of the coauthors, this is the first study which empirically examines the relationship between IC and EP in the GCC region.

scholarly journals THE IMPACT OF INTELLECTUAL CAPITAL ON FIRM PERFORMANCE IN MALAYSIA

2019 ◽  
Vol 2 (1) ◽  
pp. 9-18 ◽  
Author(s):  
Ahmad Ibn Ibrahimy ◽  
Karthyainee Raman
Keyword(s):  
Human Capital ◽  
Firm Performance ◽  
Intellectual Capital ◽  
Return On Assets ◽  
Structural Capital ◽  
Capital Efficiency ◽  
And Performance ◽  
Using Data ◽  
The Impact ◽  
The Relationship

The purpose of this study is to investigate the relationship between intellectual capital and performance of the companies listed in Bursa Malaysia. Using data drawn from 35 companies listed in Bursa Malaysia for the period of 2008 to 2017, regression model is constructed to examine the relationship between the components of intellectual capital, which are Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE) and Capital Employed Efficiency (CEE), and the performance of the companies measured using the variable Return on Assets (ROA). Data collected are analyzed using statistical software EViews and the outcome has been interpreted according to the statistical rule. As a result, the overall outcome can be concluded that Structural Capital Efficiency (SCE) and Capital Employed Efficiency (CEE) indicate positive relationship for influencing the performance of the companies listed in Bursa Malaysia. Additionally, Human Capital Efficiency (HCE) shows a negatively weak relationship with firm performance.

Interpreting the dynamic performance effect of intellectual capital through a value-added-based perspective

2020 ◽  
Vol 21 (3) ◽  
pp. 381-401 ◽  
Author(s):  
Irene Wei Kiong Ting ◽  
Chunya Ren ◽  
Fu-Chiang Chen ◽  
Qian Long Kweh
Keyword(s):  
Human Capital ◽  
Firm Performance ◽  
Intellectual Capital ◽  
Dynamic Performance ◽  
Value Added ◽  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Content Type ◽  
Capital Efficiency ◽  
The Relationship

PurposeThe question of whether intellectual capital (IC) is beneficial to firm performance is debatable because of the diverse effects of IC and its components on firm performance. Building on the concept of pay–performance relation, this study aims to provide new insights into how changes in IC affect changes in firm performance.Design/methodology/approachData envelopment analysis is employed to measure firm performance, and value-added intellectual coefficient (VAIC™) is selected to evaluate the IC and its components, namely human capital efficiency (HCE), structural capital efficiency (SCE), and capital employed efficiency (CEE). Ordinary least squares regression is applied to study the relationship between changes in IC and changes in firm performance using 6,408 firm-year observations of electronics companies listed in Taiwan from 2006 to 2017.FindingsEmpirical results suggest that IC efficiency and CEE significantly and negatively affect firm performance, thereby suggesting a contradictory common sense with the resource-based view on the beneficial effects of IC. However, changes in IC efficiency and HCE are significantly and positively related to changes in firm performance, including changes in firm efficiency and sales growth.Practical implicationsThis study suggests that managers should continuously pay attention to adjusting their IC, especially human capital (HC) for better decisions that help grow firm performance. Moreover, investors can grasp how sensitive firm performance is to IC.Originality/valueThis study argues the relationship between IC and firm performance in the same vein as a pay-for-performance link, suggesting that future studies should account for increases or decreases in IC.

scholarly journals Intellectual Capital and Firm Performance across Pakistani Industries

2021 ◽  
Vol 11 (4) ◽  
pp. 56
Author(s):  
Muhammad Ahmad ◽  
Rohani Mohd Rus
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Added ◽  
Service Industries ◽  
Financial Firms ◽  
Generalized Methods Of Moments ◽  
Capital Efficiency ◽  
And Performance ◽  
Methods Of Moments ◽  
The Relationship

This study sheds light on the differences in intellectual capital (IC) efficiencies across non-financial sectors in Pakistan and determines the relationship between IC and firm performance. The study used sample of 155 non-financial firms from the manufacturing and service industries of Pakistan for the period 2009-2018. This study contributes to IC research by applying modified value-added intellectual capital (MVAIC) model with relationship to firm performance (return on assets and Tobin’s Q) of Pakistani non-financial firms which was overlooked by the previous researchers. In addition, to deal with endogeneity, the dynamic panel generalized methods of moments regression is applied to test the relationship between IC and performance. Findings provide evidence that different sectors in non-financial industries manage IC components differently. IC increases both market-based performance and accounting-based performance of Pakistani firms. Among all IC components, human capital efficiency is an important determinant of firm performance. The implication can provide help managers and investors to understand the IC to increase the firm performance.

Intellectual capital and firm performance in emerging economies: the case of India

2016 ◽  
Vol 26 (3) ◽  
pp. 410-430 ◽  
Author(s):  
Santi Gopal Maji ◽  
Mitra Goswami
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Added ◽  
Relative Importance ◽  
Content Type ◽  
Knowledge Based ◽  
Traditional Sector ◽  
Steel Sector ◽  
Capital Efficiency ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of intellectual capital (IC) on Indian traditional sector and compare the relative importance of IC on corporate performance of Indian knowledge-based sector (engineering sector) and traditional sector (steel sector). Design/methodology/approach Secondary data on 100 listed Indian firms, comprising of 44 firms from the engineering sector and 56 from the steel sector, are collected from “Capitaline Plus” Corporate database for a period of 14 years from 1999-2000 to 2012-2013. IC and its components are computed using Pulic’s value-added intellectual coefficient model and firm performance is measured by return on asset. Fixed effect regression model is used to investigate the hypothetical relationship between IC and firm performance. Further, quantile regression is used to check the robustness of the results. Findings The results indicate that IC efficiency and physical capital efficiency are positively and significantly associated with the firm performance for both the sectors. Regarding the components of IC, the coefficient of human capital efficiency is positive and significant, but the present effort fails to disentangle any significant influence of structural capital efficiency on firm performance. However, the results indicate that the influence of IC efficiency on firm performance is significantly greater in case of knowledge-based sector than that of traditional sector. Practical implications The findings of the study are useful for the decision makers, as the results indicate that the IC plays crucial role in value creation not only for knowledge-based firms but also for the firms belonging to the traditional manufacturing sector. Originality/value In the Indian context, this is the first study to examine the relative importance of IC in a knowledge-based sector and a traditional sector using appropriate methodology.

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