Abstract
The purpose of this study is to investigate empirically the effect of intellectual capital (IC) on high IC firm financial performance with moderating role of dynamic capability (DC). The period covered is from 2000 to 2011. Secondary data were collected from financial statements of high IC firms of Malaysia (technology sector, consumer products sector, trading and service sector, and industrial products) obtained from their websites. Regression models were developed to test the relationship among firm financial performance and IC. The analysis findings indicate that, the impact of IC on firm financial performance increases when DC is included as moderator. In addition, there is positive and significant relationship between humane capital efficiency (HCE), structural capital efficiency (SCE), and capital employed efficiency (CEE) with firm financial performance.
Highlights
IntroductionTangible assets, labor and financial capital were considered the organization’s resources of wealth (Gan & Saleh, 2008)
During the industrial age, tangible assets, labor and financial capital were considered the organization’s resources of wealth (Gan & Saleh, 2008)
Findings of this study based on the association among intellectual capital (IC) and high IC firm financial performance demonstrated that there exists no association among IC and firm financial performance
Summary
Tangible assets, labor and financial capital were considered the organization’s resources of wealth (Gan & Saleh, 2008). After the shift of market environment from the industrial period to the information period (Hsu & Wang, 2012), IC which is known as intangible assets, is considered as the fourth factor of production, in addition to financial capital, labor and land (Lev & Daum, 2004). Latent intangibles, for instance, skills and experience of employees, relationships, databases and information and administration system do not have formal categorization for recognition. They strongly contribute to organization’s market value. Balance sheet (now is known as statement of financial position) only discloses physical assets of firms with historical and book value, and it does not indicate IC as a significant part of firms’ total value. Disclosing and identifying IC is one of the important issues that firms attempt to depict in their financial statement beyond traditional financial accounting standards (Mouritsen, 2003)
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