Does Intellectual Capital Improve On The Performance Of SMEâ€™s ?
Keywords:Human Capital, Structural Capital, Relational Capital, Competitive Advantage, and Performance
AbstractThe purpose of this study is to analyze the affect of intellectual capital on performance for SMEs through competitive advantage. This is important, because intellectual capital is a strategic resource for SMEs. The study was conducted on two biggest clusters of batik industry in Central Java namely Pekalongan and Laweyan Solo. The sample consists of 149 SMEs with respond rate 74,5%. The results show that all dimensions of intellectual capital directly affect the competitive advantage, human capital directly affects the performance. Meanwhile structural capital and relational capital indirectly affect the performance. Sobel test shows that the affect of structural capital Â and relational capital toward performance through competitive advantage, it means that competitive advantage of perfect mediates. This finding is in line with the Knowledge based view, which states that intellectual capital as an intangible capital that can create value and enhance competitive advantage that will lead to organizational performance. Limitations of this study that the concept of intellectual capital was a relatively new concept, especially for SMEs, so that subjectivity perceptions of respondents are still very strong so it needs to be studied more in the factors that build intellectual capital in order to obtain other capital that characteristic of SMEs. For further research, it is necessary to include another capital such spritual capital and social capital in order to develop a intellectual capital for SMEs
AkgÃ¼n, A. E., Keskin, H., & Byrne, J. (2012). Antecedents and contingent effects of organizational adaptive capability on firm product innovativeness. Journal of Product Innovation Management, 29, 171â€“189.
AkgÃ¼n, A. E., KoÃ§oÄŸlu, Ä°., Halit Keskin, H. Ä°., & Ä°mamoÄŸlu, S. Z. (2009). The Relationship between Intellectual Capital and innovation. Procedia - Social and Behavioral Sciences, 40(September 2015), 537â€“541.
Barney, J. (2001). Resource-based theories of competitive advantage : A ten- year retrospective on the resource-based view. Journal of Management, 27, 643â€“650.
Barney Jay B. (1991). Firm resources and competitive advantage. Journal of Management, 17(99).
Bontis, N. (1998). Intellectual capital : an exploratory study that develops measures and models. Management Decision, 36(2), 63â€“76.
Bontis, N. (1999). Managing organisational knowledge by diagnosing intellectual capital: framing and advancing the state of the field. International Journal of Technology Management, 18(5/6/7/8), 433.
Bontis, N. (2004). National Intellectual Capital Index. Journal of Intellectual Capital, 5(1), 13â€“39.
Bontis, N., & Fitz-enz, J. (2002). Intellectual capital ROI: a causal map of human capital antecedents and consequents. Journal of Intellectual Capital, 3(3), 223â€“247.
Bontis, N., Keow, W. C. C., & Richardson, S. (2000). Intellectual capital and business performance in Malaysian industries. Journal of Intellectual Capital, 1(1), 85â€“100.
Bontis, N., Ph, D., & West, M. S. (2000) Assessing Knowledge Assets : A Review of the Models Used to Measure Intellectual Capital, Michael G. DeGroote School of Business, McMaster University 1280 Main Street West, MGD #207 Hamilton, Canada L8S 4M4.
Cabrita, R., & Vaz, J. L. (2006). Intellectual Capital and Value Creation : Evidence from the Portuguese Banking Industry. In Electronic Journal of Knowledge Management (Vol. 4, pp. 11â€“20).
Castro, G. M., & Delgado-verde, M. (2012). Assessing Knowledge Assets in Technology-Intensive Firms : Proposing a Model of Intellectual Capital. Journal of Centru, 5(1), 43â€“59.
Castro, G. M. de, LÃ³pez, J. E. N., & SÃ¡ez, P. L. (2004). The role of corporate reputation in developing relational capital. Journal of Intellectual Capital, 5(4), 575â€“585.
Chahal, H., & Bakshi, P. (2014). Effect of intellectual capital on competitive advantage and business performance: Role of innovation and learning culture. International Journal of Learning and Intellectual Capital, 11(1), 52â€“70.
Cohen, S., & Kaimenakis, N. (2007). Intellectual capital and corporate performance in knowledge-intensive SMEs. The Learning Organization, 14(3), 241â€“262.
Curado, C. and Bontis, N. (2007), Managing intellectual capital: the MIC matrix, International Journal of Knowledge and Learning, Vol. 3 No. 3, pp. 316-328
Daou, A., Karuranga, E., & Su, Z. (2013). Intellectual capital in Mexican SMEs from the perspective of the resource-based and dynamic capabilities views. Journal of Applied Business Research, 29(6), 1673â€“1688.
Dawes, J. (1999). The Relationship between Subjective and Objective Company Performance Measures in Market Orientation Research : Further Empirical Evidence. Marketing Bulletin, 10(1996), 65â€“75.
Dess, G. G., & Robinson, R. B. (1984). Measuring Organizational Performance in the Absence of Objective Measures: The Case of the Privately-Held Firm and Conglomerate Business Unit. Strategic Management Journal, 5(3), 265â€“273.
Durst, S. (2011). Small And Medium-Sized Enterprises ' Succession Process : Do Intangible Assets Matter ? A Study Conducted In Germany. The European Chair on Intellectual Capital Management Working Paper Series No.2011-IB.
Fahy, J., Farrelly, F., & Quester, P. (2004). Competitive advantage through sponsorship: A conceptual model and research propositions. European Journal of Marketing, 38(8), 1013â€“1030. https://doi.org/10.1108/03090560410539140
Fathi, S., Farahmand, S., & Khorasani, M. (2013). Impact of intellectual capital on financial performance in the pharmaceutical industry in Iran. International Journal of Accounting and Economics Studies, 1(1), 1â€“8.
Fitz-enz, J. (2009). The ROI of Human Capital: Measuring the Economic Value of Employee Performance (Second Edi). New York: Amacom.
Grant, R. M. (1991). The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation. California Management Review. https://doi.org/10.1016/S0149-2063(99)00037-9
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2014). A primer on partial least squares structural equation modeling (PLS-SEM). Los Angeles: Sage.
Harris, L. C. (2001). Market Orientation and Performance: Objective and Subjective Empirical Evidence from UK Companies. Journal of Management Studies, 38(1), 17â€“43.
Henry, L. (2013). Intellectual capital in a recession : evidence from UK SMEs. Journal of Intellectual Capital, 14(1), 84â€“101.
Hermawan, S. (2013). Business Batik and Win Competition at CAFTA. Journal of Business and Strategy, 1(2).
Ireland, R. D., Hitt, M. A., Camp, S. M. 3, & Sexton, D. L. (2001). Integrating entrepreneurship and strategic management actions to create firm wealth. Academy of Management Executive, 15(1), 49â€“63.
Jardon, C. M., & Martos, M. S. (2012). Intellectual capital as a competitive advantage in emerging clusters in Latin America. Journal of Intellectual Capital, 13(4), 462â€“481.
Khalique, M., Bontis, N., bin Shaari, J. A. N., & Isa, A. H. B. M. (2015). Intellectual capital in small and medium enterprises in Pakistan. Journal of Intellectual Capital, 16(1), 224â€“238.
Kijek, T., & Kijek, A. (2008). Relational Capital And Its Impact On Firms â€™ Performance : The Case Of Polish Enterprises. Journal of Intellectual Capital, 48((1)), 105â€“131.
Kong, E. (2008). The development of strategic management in the non-profit context : Intellectual capital in social service non-profit organizations. International Journal of Management Reviews, 10(3), 281â€“299.
Lo, Y.-H. (2012). Managerial capabilities, organizational culture and organizational performance: The resource-based perspective in Chinese lodging industry. Journal of International Management Studies, 7(1), 151â€“157.
Mahmood, R., & Hanafi, N. (2013). Entrepreneurial orientation and business performance of women-owned small and medium enterprises in Malaysia : Competitive advantage as a mediator. International Journal of Business and Social Science, 4(1), 82â€“90.
Mahmood Ghorbani, Baratali Mofaredi and Somayeh Bashiriyan (2012). Study of the relationship between intellectual capital management and organizational innovation in the banks. African Journal of Business Management. Vol. 6(15), pp.5208-5217
Marr, B. (2005). Strategic Management of Intangible Value drivers. Handbook of Business Strategy. Emerald Publishing.
Newbold, P., Carlson, W. and Thorne, B. (2002), Statistics for Business and Economics, 5th ed., Prentice Hall, New York, NY.
Ngah, R., & Ibrahim, A. R. (2009). The Relationship of Intellectual Capital, Innovation, and Organizational Performance : a Preliminary Study in Malaysian SMEs. International Journal of Management Innovation Systems, 1(1), 1â€“13.
Ornek, A. S., & Ayas, S. (2015). The Relationship Between Intellectual Capital, Innovative Work Behavior, and Business Performance Reflection. Procedia - Social and Behavioral Sciences, 195, 1387â€“1395.
Pablos, P. O. De. (2004). Measuring and reporting structural capital: Lessons from European learning firms. Journal of Intellectual Capital, 5(4), 629â€“647.
Prahalad, C. K., & Hamel, G. (1990). The Core Competence of the Corporation. In Harvard Business Review (pp. 1â€“15).
Roos, G., & Roos, J. (1997). Measuring your Company â€™ s Intellectual Performance. International Journal of Strategic Management, 30(3), 413â€“426.
Sekhar, C., Patwardhan, M., & Vyas, V. (2015). A Delphi-AHP-TOPSIS based framework for the prioritization of intellectual capital indicators : A SMEs perspective. Procedia - Social and Behavioral Sciences, 189, 275â€“284. https://doi.org/10.1016/j.sbspro.2015.03.223
Sharabati, A., Jawad, S. and Bontis, N. (2010), Intellectual capital and business performance in the pharmaceutical sector of Jordan, Management Decision, Vol. 48 No. 1, pp. 105-131.
Srivihok, A., & Intrapairote, A. (2004). Measuring Intellectual Capital : Web Sites Analysis of Thai SMEs. In The Fifth European Conference on Organizational Knowledge, Learning and Capabilities. University of Innsbruck Austria.
St-Pierre, J., & Audet, J. (2011). Intangible assets and performance: Analysis on manufacturing SMEs. Journal of Intellectual Capital, 12(2), 202â€“223.
Stewart, T. A. (1997). Intellectual Capital: The New Wealth of Organizations. In New York: Doubleday (pp. 1â€“4).
Suraj, O. A., & Bontis, N. (2012). Managing intellectual capital in Nigerian telecommunications companies. Journal of Intellectual Capital, 13(2), 262â€“282.
Sureshchandar, G. S. (2002). Determinants of quality : a confirmatory factor analysis approach. Journal of Service Marketing, 16(1), 9â€“34.
Sveiby, K.-E. (2001), A knowledge-based theory of the firm to guide in strategy formulation, Journal of Intellectual Capital, Vol. 2 No. 4, pp. 344-58.
Taie, E. S. (2014). The Effect of Intellectual Capital Management on Organizational Competitive Advantage in Egyptian Hospitals Head of Nursing Administration Department. International Journal of Business and Social Science, 5(2), 160â€“167.
Tan, Hong P., Plowman, D. and Hancock, P. (2008) The evolving research on intellectual capital, Journal of Intelectual Capital, Vol.9, No.4, pp.585-608.
Thom, R. R. (2008). Beyond the Number: a Phenomenological Study of Intangible Assets for Small Manufacturing Business Valuation. University of Phoenix.
Tovstiga, G., & Tulugurova, E. (2007). Intellectual capital practices and performance in Russian enterprises. Journal of Intellectual Capital, 8(4), 695â€“707.
Uadiale, O. M., & Uwuigbe, U. (2011). Intellectual Capital and Business Performance : Evidence from Nigeria. Interdisciplinary Journal of Research in Business, 1(10), 49â€“56.
Wang, W., & Chang, C. (2005). Intellectual capital and performance in causal models. Journal of Intellectual Capital, 6(2), 222â€“236.
Widiastuti, E., & Sulistyandari. (2013). Increased competitiveness of SME's through the role of intellectual capital and financial performance. In Proceeding Seminar Nasional & Call For Papers (SCA-3).
Wimba, I. G. A., Budhi, I. made K. S., Yasa, I. G. W. M., & Saskara, A. A. N. (2015). Effect Of Social Capital On Entrepreneurial Orientation And Transaction Cost To Improve Firm Performance In Wooden Craft SMEs In Bali Province â€“ Indonesia. International Journal of Economics, Commerce, and Management, III(10), 240â€“256.
Youndt, M. A., Subramaniam, M., & Snell, S. A. (2004). Intellectual Capital Profiles : An Examination of Investments and Returns. Journal of Management Studies, 41. https://doi.org/10.1111/j.1467-6486.2004.00435.x
Yu-shan, C. (2007). The Positive Effect of Green Intellectual Capital on Competitive Advantages of Firms. Journal of Business Ethics (2008), 271â€“286.
LicenseAuthors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).