The Relationship Between Intellectual Capital in the Fourth Industrial Revolution and Firm Performance in Jordan

Abstract

This paper attempts to determine if intellectual capital (IC) has an impact on firm performance in the industrial companies in Jordan. A quantitative approach was used, with value-added intellectual coefficient (VAICTM) methodology of IC measurement. Secondary data were used in measuring the study variables. The relationship between VAICTM in fourth industrial revolution (IR 4.0) and the ratios of earnings per share (EPS) and return on assets (ROA) were examined. The study sample comprised 50 industrial companies listed on the Amman Stock Exchange (ASE) covering the 2008–2017 period. Multiple Regression analysis was used in data analysis, involving panel data models. The obtained results prove a positive significant influence of VAICTM on EPS and ROA, and a positive significant relationship between human capital efficiency (HCE) and structural capital efficiency (SCE), and EPS and ROA, while no relationship was found between capital employed efficiency (CEE) and EPS and ROA. The results suggest the need for industrial companies in Jordan and in the Middle East to focus on intellectual capital (IC) elements, particularly human capital (HC), which is core to VAICTM. Moreover, this study is valuable to policymakers and managers in determining the industry development for better corporate returns. KeywordsIntellectual capitalEarning per shareReturn on assetsHuman capitalStructural capitalCapital employed