Clarifying the Effect of Intellectual Capital on Performance: The Mediating Role of Dynamic Capability

Abstract

Recent studies suggest a potential relationship between intellectual capital and dynamic capability in achieving performance. This is unsettling for managers because these studies contain little effort to develop a framework for understanding the relationship. To examine this unnerving potential, we develop and test a theoretical model that explains how dynamic capability mediates the impact of intellectual capital on performance. In this study, the scope of intellectual capital includes human capital, relational capital and structural capital. This study examines the pooled data of 242 high-technology firms from 2001 to 2008. Results from Bayesian regression analysis suggest that the effect of structural capital on performance is completely mediated by dynamic capability. Furthermore, the findings show that dynamic capability does not completely mediate the respective effects of human capital and relational capital on performance, but does so only partially. These results provide convincing support for the importance of dynamic capability through accumulating R&D and marketing capability over time, thereby enhancing firm performance. The empirical findings and the ensuing discussion will be of interest to managers and practitioners.

The Impact of Intellectual Capital on Firm Financial Performance by Moderating of Dynamic Capability

“…This is possible if IC is exploited and developed through DC (Hsu & Wang, 2012). Wang and Ahmad (2007) defined DC as the firm orientation stable behavior to renew, integrate, recreate and reconfigure their capabilities and resources.…”

“…After the shift of market environment from the industrial period to the information period (Hsu & Wang, 2012), IC which is also known as intangible assets, is considered as the fourth factor of production, in addition to financial capital, labor and land (Lev & Daum, 2004).…”

Dynamic capabilities and organizational performance: The mediating role of innovation

“…Dynamic capability plays an important role in an organization as it underscores the accumulation of capabilities embedded in a firm and it is directly associated with its financial performance (Hsu & Wang, 2012). In terms of performance, firms in a dynamic environment need to develop new products to secure their competitive advantages (Blonigen & Taylor, 2000).…”

A Dynamic Capabilities Perspective of High-Growth Firms: Organizational Aspects

“…From a wealth of partially overlapping definitions of DC [see reviews by Hsu-Wang, 2012;Zahra et al, 2006] we formulate ours as capabilities to build, release, and reconfigure a firm's internal resources and integrate external ones, in response to changes in the external and internal business environment. This definition distinguishes DC from a firm's substantive (operational) capabilities needed to perform basic functional firm activities: DC change, extend or reconfigure existing substantive capabilities [Winter, 2003].…”