Intellectual capital and the efficiency of SMEs in the transition economy China; Do financial resources strengthen the routes?

Abstract

Intellectual capital has been grabbed the attention of researchers due to its momentous role in sustainable competitive advantage and organizational success. There is a growing catalog of related assessments, publications and reviews that display the direct and indirect role of intellectual capital in business success and profitability. Despite the bourgeoning literature, studies have not yet unleashed the influence of each dimension of intellectual capital; human capital, structural capital and customer capital on SMEs' efficiency with financial resources as a moderator. The present study fills the gap and assesses if financial resources strengthen the paths between the dimensions of intellectual capital and SMEs' efficiency. A survey method was used and collected evidence from 264 Chinese SMEs. The findings exhibit that human capital directly enhances SMEs' efficiency but the presence of financial resources as a moderator weakens the influence. However, social capital and customer capital do not directly improve SMEs' efficiency but financial resources reinforce the paths social and customer capital and SMEs efficiency. This research recommends that owners and managers of SMEs need to use their financial resources complementary with structural and customer capital while human capital should be used exclusively.

The role of entrepreneurial orientation in tangible and intangible resource acquisition and new venture growth

“…Especially in the initial stage, ventures need financial capital for operational activities. Hence, firms' managerial capabilities assist them in acquiring external financial resources (Ko & McKelvie, 2018; Li et al, 2020). In a turbulent market, all the firms are not able to access valuable resources.…”

“…When the initial process is finished and a venture shape is completed, the entrepreneurs' next step is to acquire valuable resources by using their entrepreneurial plan and skills (Yin, Hughes, & Hu, 2020). As discussed earlier, there are several types of entrepreneurial resources essential for NVG (Li et al, 2020; Memon, Yong An, & Memon, 2020) and need to be obtained through EO. For instance, common resources that are necessary for new ventures' growth are categorized into tangible (finance, technology, manpower, and land) and intangible (information, skills, and competencies).…”

“…The expansion, development, and growth of newly born ventures are habitually based on individual resources (Brush, Greene, & Hart, 2001; Chandler & Hanks, 1994). The individual resources include tangible (financial capital) and intangible (human and social capital) that can spur firm performance (Anwar & Li, 2020; Li et al, 2020). In general, top managers' human capital, skills, and network ties enable them to acquire the external resources needed for successful operation (Lee, Tuselmann, Jayawarna, & Rouse, 2019).…”

The Effects of Structural Capital on Organisational Efficiency

“…The underpinning theory of this study is knowledge-based theory of firm propounded by Spender (1996) and adopted by Pendo (2020). This theory holds that the knowledge is the most strategic competitive and significant intangible resources of the firm which distinguishes one organisation from another (Li et al, 2020). Knowledge based theory holds view that since intangible resources are not easy to imitate due to its complex nature; heterogeneous knowledge base and capabilities among firms are determinant of sustained competitive edge and superior corporate performance (Alavi & Leidner 2001).…”

“…The validated Structural Capital Questionnaire (SCQ) comprising of 9-items by Liu (2017) and evidenced in Li et al (2020) was adopted and Organisational Efficiency Questionnaire containing 9-items by Edeh et al, (2020) was adopted and modified in line with current study environment. The variables were scaled on the 5-point Likert scales which ranges from 5= VGE to 1= Very Low Extent.…”