Intellectual Capital and Financial Performance of Chinese Manufacturing SMEs: An Analysis from the Perspective of Different Industry Types

Abstract

In the knowledge era, intellectual capital (IC) has been recognized as the determinant of firm performance. The main goal of the current study is to analyze the relationship between IC and its elements and financial performance of Chinese manufacturing small and medium-sized enterprises (SMEs). We also examine whether industry type has an impact on this relationship. This study uses the data of 588 Chinese listed SMEs in the manufacturing industry between 2015 and 2020 and employs the modified value-added intellectual coefficient (MVAIC) model to assess IC. The results show that IC improves SMEs’ financial performance, and physical and human capitals are the main contributor. In addition, the impact of IC and its elements on the financial performance of Chinese manufacturing SMEs is different in different types of industries. Specifically, capital-intensive SMEs have a greater impact of IC on financial performance than labor- and technology-intensive SMEs; labor-intensive SMEs have a higher efficiency of physical capital, while technology-intensive SMEs have higher human capital efficiency. The findings could help SMEs’ managers improve corporate performance by the effective utilization of their IC.

Modified VAIC model: measuring missing components information and treatment of exogenous factors

“…Empirical studies also document similar results and suggest that exogenous factors such as business cycle and cross-sector variations significantly affect ICE (e.g. Firer and Williams, 2003; Liu et al. , 2022).…”

“…Empirical studies also document similar results and suggest that exogenous factors such as business cycle and cross-sector variations significantly affect ICE (e.g. Firer and Williams, 2003;Liu et al, 2022). Therefore, comparing firm aggregate or components value creation efficiency across different sectors and its past performance is difficult.…”

“…(2019) concluded that higher FP depends on IC Liu et al (2022). andXu and Li (2020) documented the positive impact of IC on FP for Chinese and Korean manufacturing firms.…”

Intellectual Capital and Financial Performance in Small Manufacturing Companies: The Moderating Effect of Managerial Ambidexterity

“…A widely used theory in research related to the management of intangible company resources is the Resource-Based View Theory (RBV) [3]. The RBV provides a conceptual framework that helps organisations take advantage of their internal resources and capabilities, such as human and structural capital, in order to obtain good financial performance [1], [4], [5], [6], [7]. The RBV includes all assets, capabilities, organisational processes, company characteristics, information, and knowledge controlled by the same company, enabling it to develop strategies to increase its effectiveness and efficiency [1], [8], [3].…”

“…Inconsistencies in the results regarding the relationship between IC and FP can be attributed to several factors: variations in the selected samples [7], unclear definitions of IC [36], [37], [7], the use of various terms with similar meaning [22] the dimensions that comprise IC [15], [19], [38], and unclear measurement methods [39], [36], [37], [6], [40], [41], [7]. However, inconsistencies or contradictions in the results of previous studies offer opportunities for further research [42], [5], [32], [43]. The existing literature suggests that the inconsistencies in studies concerning the two variables can be addressed by using moderating variables [44], [45], [46].…”