Abstract
This study aims to examine the effect of intellectual capital on firm value through corporate reputation as a mediating variable. Intellectual capital is proxied by human capital, structural capital, and customer capital. Using the resource-based theory and signaling theory, this paper analyzes how the corporate reputation will be mediating intellectual capital to firm value. This study used 340 observations of companies that received an excellent category on the Indonesian Corporate Image Award (IMAC) which was listed on the Indonesia Stock Exchange in 2013 to 2017 with Partial Least Square (PLS) test processed with warpPLS version 5.0 software. This study shows that the first human capital, structural capital, customer capital, and corporate reputation have a significant effect on firm value. Second, structural capital has a significant effect on corporate reputation. Third, corporate reputation variables are able to mediate the influence of intellectual capital proxied by human capital, structural capital, and customer capital on firm value. This study is the first empirical investigation on the contribution of Intellectual Capital in generating value for corporate reputation. Furthermore, the study contributes to the literature on the link between Intellectual Capital and firm value by examining a sample of firms no yet explored in prior research and this study also uses the cost-based approach.
Highlights
In business competition at this time, the management of intellectual capital has an important role in the objectives of production activities
The results of this study prove that the first, human capital, structural capital, customer capital, and corporate reputation have a significant effect on firm value
The independent variable used in this study is intellectual capital, which is proxied into three as follows human capital (VAHU), structural capital (STVA), and customer capital (VACA) obtained through equations
Summary
In business competition at this time, the management of intellectual capital has an important role in the objectives of production activities. The purpose of production activities in business competition has begun to shift, previously the main production activities were only focused on the creation of finished goods, but at present the main focus of production activities in the process of creating finished goods in line with knowledge, and the creation of goods and services (Pulic, 2000; Petrenko et al, 2019). The change in a labor-based business strategy to a knowledge-based business strategy that can later create value in new business processes (Sawarjuwono and Kadir, 2003; Mingaleva et al, 2019). Accordance with Barney (1991) in a knowledge based business which states that if the knowledge held by the company is managed properly, it can be used as a means to increase income which later affects the value of the company.
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