Non-optimality of intellectual capital inputs: a new avenue for research
Journal of Intellectual Capital
ISSN: 1469-1930
Article publication date: 11 October 2024
Issue publication date: 8 November 2024
Abstract
Purpose
This paper aims to initiate new avenues of research by examining optimal intellectual capital (IC) inputs, introducing three theories into the discussion: diminishing returns to scale, transaction costs economics and efficiency wage theory. In the second part, it advocates for demonstrating the existence of such non-optimality through empirical tests.
Design/methodology/approach
This paper is divided into two parts. The first part provides a theoretical justification for the necessity of observing nonlinear relationships between IC inputs and firm performance. In the empirical section, the research design follows a four-step process, each progressively building on insights gained from the preceding phase: (1) establishing a baseline linear regression model; (2) introducing the logarithm of the IC inputs; (3) incorporating the square terms of the IC inputs and (4) investigating the phenomena of over- and under-input in IC.
Findings
The background theories and the obtained results highlight the necessity for firms to adopt a strategic approach to IC, acknowledging the diverse effects of IC components on different outcomes. They emphasize the nonlinear nature of IC returns, underscoring the importance of investing up to an optimal level to maximize benefits.
Practical implications
The study’s discovery of optimal levels for the components of IC highlights the importance for practitioners to identify and invest up to these optimal levels. This ensures that IC initiatives are strategically aligned to maximize their positive impact on firm performance.
Originality/value
The integration of theories such as diminishing returns to scale, transaction costs economics and efficiency wage theory, alongside traditional frameworks like the resource-based view, the theory of dynamic capabilities and the knowledge-based theory of the firm, opens up new avenues for research on IC. The proposed methodology and measures – from financial reports – provide opportunities for replicating this type of study.
Keywords
Acknowledgements
This article is an output of a research project implemented as part of the Basic Research Program at HSE University. The authors thank the Editor, Associate Editor and reviewers for their invaluable feedback and dedication throughout the review process. Their insightful comments and careful revisions have significantly contributed to enhancing the quality of this manuscript.
Citation
Barajas, A. and Shakina, E. (2024), "Non-optimality of intellectual capital inputs: a new avenue for research", Journal of Intellectual Capital, Vol. 25 No. 5/6, pp. 1210-1236. https://doi.org/10.1108/JIC-03-2024-0094
Publisher
:Emerald Publishing Limited
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