The relevance of intellectual capital in Serbian ICT industry

Abstract

Knowledge economy is mainly based on intellectual capital (IC), which plays a key role in contemporary enterprise's value creation. The basic components of IC are human, structural, and relational capital. The substance of IC is made of intangible resources of an enterprise. There is empirical evidence of increased investments in IC that reveals the true nature of relationship between IC and financial performance. Knowledge-intensive industries are given special treatment in this field of research. This is why the objective of this study is to find out whether Serbian enterprises in the information and communication technology (ICT) industry rely more on tangible or intangible resources in their quest for improving financial performance. The paper analyzed financial performance of 594 enterprises that operate within the ICT industry in Serbia in the period of five years (2009-2013) and their dependence on IC efficiency. Three main hypotheses were tested in the paper regarding the relationship between human, structural, and physical capital, on one side, and financial performance (measured by net profit, operating profit, return on equity, return on assets, profitability, and return on invested capital), on the other. The results indicated that human capital and physical capital partially affect financial performance, which is consistent with empirical findings from other developing countries. When compared to other industries in Serbia, ICT industry demonstrated more significant impact of human capital.