Interrelationships between intellectual capital and performance

Abstract

– The aim of this paper is to raise an awareness of intangible assets among large manufacturing firms in Thailand. As a result, the research is to examine empirically the effects of intellectual capital (IC), and its key components (e.g. human capital, structural capital, and innovation capital) on a manufacturing firm's industrial operations and performance., – The required data for this research are collected from leading manufacturing firms' annual reports. These firms are listed in stock exchange of Thailand 100. The value added intellectual coefficient (VAIC) is adapted to measure IC. Then, the co‐relation analysis and multi‐regression model are applied to learn more about the roles of VAIC and its impacts on a manufacturing firm's performance., – IC positively and significantly affects a manufacturing firm's performance. It impacts all four performance indicators under study, i.e. return on equity, return on assets, revenue growth, and employee productivity. In addition, based on the relatively high adjusted R2, human capital exhibits the relationships with employee productivity., – The findings highlight the role of IC in strengthening a manufacturing firm's long‐term competitiveness advantage. The results from the paper have helped develop policy initiatives for Department of Industrial Work in Thailand such as tax scheme and incentives for R&D spending, promotion of university partnerships for R&D, and training for more effective knowledge management practices.