Search results

This study examines the effect of value-added (VA) intellectual capital on business performance from the perspective of productive efficiency, which is derived from its main contributors, namely, profitability and marketability efficiencies in two stages.

First, this study applies a dynamic network slacks-based measure in a data envelopment analysis (DEA) approach to estimate productive efficiency and its components of 766 Taiwan listed electronics companies over the period of 2010–2018. Second, this study performs regression analyses of the association between intellectual capital (IC), which is proxied by VA intellectual coefficient (VAIC^TM) and estimated DEA efficiency scores through various regression techniques.

Empirical evidence shows a significantly positive association between VAIC^TM and productive efficiency. This study finds the same result from the IC components after splitting VAIC^TM into (1) IC efficiency, which comprises human capital efficiency (HCE) and structural capital efficiency and (2) capital employed efficiency. Further examination reveals that HCE is the sole main contributor of the productive efficiency, and profitability and marketability efficiencies of a company.

The findings of this study highlight the need to discuss the values of intellectual coefficient (IC) from the perspective of productive efficiency for better comprehensiveness.

Although previous studies have shown that IC is a contributor of business performance, this study further zooms in VAIC and examines its effect on the efficiency of a company in transforming its inputs into outputs.

The 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.

Data 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.

Empirical 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.

This 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.

This 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.