Intellectual Capital and Firm Performance Correlation: The Mediation Role of Innovation Capability in Malaysian Manufacturing SMEs Perspective

Abstract

Understanding of intellectual capital’s influence on the firm performance has received immense interest in recent years. In this view, the impact of various intellectual capital components, including human, structural, and relational capital, on the performance of small- and medium-sized Malaysian manufacturing enterprises were examined. A correlation between intellectual capital and firm performance were established based on the mediating role of innovation capability. To achieve this goal, a stratified sampling method was used wherein 262 participants’ responses from the focused manufacturing firms were obtained and analyzed via the structural equation model (SEM) and resource-based view (RBV). Statistical tools like SPSS.v25 and SmartPLS.v3 were used. The results showed that the relationship between intellectual capital and firm performance was strengthened due to the mediation of innovation capability, thereby gaining higher competitive advantages. It was asserted that the present comprehensive analyses may offer a useful information and guidance to the academics, owners/managers, and policymakers involving the impact of intellectual capital development towards improving the Malaysian SMEs performance.

Intellectual capital, sustainable economic and financial performance and value creation in emerging markets: the case of Brazil

“…The results of Aljuboori et al (2022) confirm the relationship between IC and company performance, stressing that this relationship was strengthened by the mediation of innovation capacity – which was fundamental in generating greater competitive advantages for the analyzed Malaysian small- and medium-sized enterprises.…”

“…The quality and efficiency of IC usage enhance the profitability of a firm. Therefore, in the view of Aljuboori et al (2022), the IC components are the most important sources of value, and IC as a whole is the main enabler of VC, above all of sustainable value. Accordingly, companies need to reconnect with the long-term perspective, avoiding the disproportioned focus on shareholder value and seeking to meet the expectations of a broad range of stakeholders.…”

Intellectual Capital Efficiency and Corporate Performance in Jordanian Listed Companies

“…IC has been the focus of intense debate by researchers (e.g., Aljuboori et al, 2022), and is generally understood as an important driver of firm competitiveness and future value generation (Xu et al, 2022;Xu & Feng, 2020). In a knowledge-based economy, the importance of IC in value creation is attributed to its distinctive characteristics as a main driver of long-term corporate success, wealth, financial performance and sustainability (Xu & Li, 2019;Xu & Wang, 2018;Tarigan et al, 2019;Sardo & Serrasqueiro, 2017;Reboredo & Sowaity, 2022).…”

“…Interest in how to measure IC has spurred the development of several metrics (Xu & Li, 2019). On the basis of the financial, physical and human capital in an organization, scholars have achieved a consensus on IC components, i.e., HC, SC and RC (Aljuboori et al, 2022;Xu & Wang, 2018). Thus, whereas financial capital, associated with the productive capacity of an organization, refers to the net value of assets and physical capital, IC refers to the science and knowledge included in SC and HC, respectively (Lee & Lin, 2018); however, SC and HC without employed capital, i.e., RC, fail to capture the value creation process (Bontis, 2004).…”

“…Si (2019) added that "traditional material capital is gradually replaced by intellectual capital and the focus of social attention is no longer the traditional factors of production but the lack of knowledge resources". Human capital in particular, considered to be the most important IC component (Aljuboori et al, 2022), is highly influential in improving corporate profitability, as documented by Xu and Feng (2020), who argue that expenditure on staff should be treated as an investment rather than an expense due to its long-term impact. Pulic (2008) has emphasized a strong link between IC efficiency and organizational success in creating competitive advan-significant positive relationship between IC efficiency and corporate performance for all sectors, independently of the profitability metric used-a result that also holds for the real estate sector, which is a mainly a physical capital-based sector.…”