Abstract
Research background: Intellectual capital (IC) is given an increasing importance in the context of companies’ activities in the knowledge – oriented economy and is thought to be a key factor of competitiveness and financial performance enhancement in modern globalized world. Many methods have been introduced over time to measure IC with value added intellectual capital (VAIC) proposed by Pulic (1998) playing an important role. Purpose of the article: The aim of this paper is to investigate the relationship between the intellectual capital and its components, specifically, human capital, capital employed and structural efficiency on corporate performance of Croatian companies listed on Zagreb Stock Exchange (ZSE) in the period 2016 – 2020. Methods: The performance is expressed with profitability, specifically ROA, and market valuation, i.e. Tobin’s Q while the value added intellectual capital (VAIC) is used to measure IC as well as its components. A set of control variables comprising of firm size, leverage and age is also covered in the research while static panel analysis is performed to identify variables that might contribute to firm performance. Findings & Value added: The statistically significant and positive influence of VAIC and its components indicate that an enhancement in the efficiency of firms’ resources and employees’ knowledge leads to creation of new economic value.
Highlights
In the context of companies’ activities in the knowledge – oriented economy intellectual capital is given an increasing importance (e. g. Xu and Wang, 2018 and Xu and Liu, 2020) and is thought to be a key factor of competitiveness and financial performance enhancement
Since the results reveal that variables value added intellectual capital (VAIC), structural capital efficiency (SCE), capital employed efficiency (CEE), leverage and size are not stationary, after calculating the first difference for these non-stationary variables, the same unit-root test is conducted again finding that the first differences of variables VAIC (D_VAIC), SCE (D_SCE), CEE (D_CEE), leverage (D_lev) and size (D_size) are stationary
For the purpose of empirical analysis, we examine how composite VAIC as well as its individual components human capital efficiency (HCE), CEE and SCE affect performance of Croatian listed nonfinancial companies
Summary
In the context of companies’ activities in the knowledge – oriented economy intellectual capital is given an increasing importance (e. g. Xu and Wang, 2018 and Xu and Liu, 2020) and is thought to be a key factor of competitiveness and financial performance enhancement. The value added capital efficiency presents a measure of intellectual capital efficiency suggested with pioneering work by Pulic (1998) and is in accordance with knowledge-based economy. It considers efficiency of three categories of capital including human, structural and physical and financial capital employed. It indicates an enhancement in the efficiency of firms’ resources and employees’ knowledge and the ability of the company to create new economic value (Pulic, 1998). Though investments in intangible assets including human resources might adversely impact companies’ financial results, they can definitely improve the long-term profits of the firm (Fijałkowska, 2014)
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