The impacts of intellectual capital on financial performance and value-added of the production evidence from Chile.
| Autor | Acuña-Opazo, Christian |
| Cargo | Impacts of intellectual capital |
-
Introduction
The interest in the study and support of intellectual capital has increased, from its definition (Edvinson and Malone, 1997), the proposal of models with financing approach (Brooking, 1996), with corporative strategic approach (Atkinson et al., 1997; Bontis, 1998; Bueno, 2002) and even the consensus of its main components: human capital, structural capital and relational capital (Bontis, 1998; Edvinsson and Sullivan, 1996; Edvinson and Malone, 1997; Stewart, 1997; Sveiby, 1997; Roos et al., 1998; Bueno-CIC, 2003; Mondal and Ghosh, 2012; Joshi et al., 2013), as well as the interrelation among its elements (Chen et al., 2004; Nazari and Herremans, 2007; Iazzolino and Laise, 2013).
The study of intellectual capital has considered the measurement of the impact on the financial performance of companies (Yalama and Coskun, 2007; Pew Tan et al., 2007; Chu et al., 2011), on the return on investments (Makki and Lodhi, 2009), as well as the performance of companies (Jin and Wu, 2008; Clarke et al., 2011; Maditinos et al., 2011; Mehri et al., 2013). Only some authors have developed studies to determine the relationship, impact and/or effects on the added value of the company. Specifically, Gan and Saleh (2008), tried to explain if efficiency in value creation can be explained by market valuation, profitability and productivity in technology-intensive companies, finding that VAIC (TM ) components have different impacts on performance compared to the aggregate indicator. A special case is a study by Britto et al. (2014) on real estate companies, who analysed whether the value created by real estate companies can be better evaluated using elements of intellectual capital or traditional performance measures, finding that CI has a significant inverse relationship with the market value of companies. Despite the great evidence of studies on performance and scarce studies on the value-added of companies, there are no records of studies on family businesses (FB), where the impact and/or effects of intellectual capital on the performance of EF, an important issue that this research proposes to analyse.
For some authors, the IC, and the relationship with the groups of interest have an important role in the creation of value (Powell, 2003; Chen et al., 2005) and in a special way in family businesses (Kammerlander et al., 2015), becoming a source of competitive advantages and, therefore, ensures better performance of companies (Razafindrambinina and Kariodimedjo, 2010; Wang, 2012).
In Chile, family businesses represent 90% of all participating companies in the national economy (Torres et al., 2017), with an approximate contribution of 50% to GDP and 63% of employment (Vesna et al., 2015).
Despite the abundant literature on studies about family businesses (FB), that mainly discuss the heterogeneity of FB (Barbera and Moores, 2013) and the differences with nonfamily business (NFB) (Dawson and Mussolino, 2014; Deephouse, and Jaskiewicz, 2013), covering specific areas such as socio-emotional wealth (Berrone et al., 2012; Chua et al., 2015), psychological and social (Jiang et al., 2018), generational succession (Fang et al., 2018), governance (Nordqvist et al., 2014; Le Breton-Miller and Miller, 2018) and financial factors (Kotlar et al., 2018). These are the most studied areas, and few explore the role of intellectual capital in this type of businesses (Grimaldi et al., 2016) and even less focus on its measure and impact on the performance of FB.
Given that intellectual capital has become the strategic factor under the paradigm of competitiveness and has been considered as one of the flexible factors in production, which is relevant when measuring its contribution and efficiency against business production and competitiveness (Dzinkowski, 2000; Marr et al., 2003; Chu et al., 2011). The purpose of this study is to analyse the impact that intellectual capital has on financial performance and the added value of production, through calculations of the VAIC (TM) index, in family businesses in the industrial manufacturing sector of Chile. The foregoing is per the proposal by Andreeva and Garanina (2016), who consider more empirical research in emerging markets important and necessary, given that the empirical evidence on the role of the IC in financial performance and organizational competitiveness is still extremely limited. Using a linear econometric model, the impact of the efficiency coefficient of intellectual capital on ROA financial performance and value-added in family businesses will be analysed. The results of this research allow us to reduce the gap in the literature on intellectual capital management and studies on family businesses, providing evidence of the impact of this asset on the financial performance and on the added value of family and non-family businesses in Chile.
This study is organized as followed: first, it presents a theoretical framework based on an intentional review of literature about intellectual capital and its measurements in businesses. Then, the methodology is described, showing the data, the variables defined and the models; and, in the following sections, the results and discussion are presented to finally end with the main conclusions.
-
Theoretical framework
2.1 Coefficient of value-added of intellectual capital
Undoubtedly, the development of competitive advantages is based, among other factors, on the resources of intangible nature (Bontis, 1996; Bueno, 2002), so the generation of wealth and better business performance would be related to the possession and management of these types of resources (Polo and Rodríguez, 2014). In the past few years, the set of tools to measure business performance has increased and all of them have the same goal: the creation of value, so the ultimate goal of business performance analysis and evaluation is the determination of the added value of the companies.
The studies related to the concept of intellectual capital have shown heterogeneity, which can be seen in the studies carried out by Bueno et al. (2008), Monagas-Docasal (2012) and Volkov (2012). Nevertheless, a consensual element of this concept, is that it contributes to improving the performance of businesses (Bueno, 2002) and to the generation of value (Brooking, 1996; Bontis, 1996; Firer and Williams, 2003; Pew Tan et al, 2007; Chu et al., 2011). For Bueno et al (2008), intellectual capital is an indicator of the organization's wealth derived from the knowledge managed. This will allow the creation of new knowledge and thus the accumulation of greater wealth, creating value to the organization through this intangible asset.
Pulic (1998, 2004) developed a model that allows measuring intellectual capital of a business (VAIC (TM) ) based on the efficiency of three components:
(1) Human capital efficiency (HCE), which represents the costs generated by the business employees;
(2) Capital employed efficiency (CEE), which is understood as the financial capital, as to say, the accounting patrimony; and
(3) Structural capital efficiency (SCE), which is understood as the difference between the added value (VA) and the human capital (CH).
Table 1 shows the equations that allow measuring this VAIC (TM) index.
The VAIC (TM) model has been used by several authors (Dzinkowski, 2000; Marr et al, 2003; Chen et al, 2005; Ghosh and Mondal, 2009; Chu et al, 2011; Joshi et al, 2013; Mehri et al, 2013; Dzenopoljac et al, 2016) in determining the impact or/and effects on the performance of companies or businesses, whose motives can be summarized in the following:
* The model VAIC (TM) is based on the determination of a low number of variables and simple calculations.
* Despite criticism, the VAIC (TM) model delivers consistent information on intellectual capital in organizations.
* The information used to determine the VAIC (TM) coefficient is reliable because it is data present in the financial documents submitted to audits.
On the other hand, several authors have carried out research under the methodology of systematic review and bibliometrics (Volkov, 2012; Iazzolino and Laise, 2013), showing limited contribution on the study of intellectual capital about the performance of family businesses (Lunardi et al., 2017).
2.2 Intellectual capital and financial performance
According to García (2009, 2003), performance is defined as a measure of productivity, where the resources committed to a business guarantee its permanence and growth, thus, generating value for investors. Growing these resources, which allows increasing the assets of investors, is the purpose of any company (Ittner and Larcker, 2003). Therefore, the measurement of the company's performance becomes relevant, with several indicators for this.
A group of indicators used in most studies (Molina-Parra et al., 2017), correspond to those of effectiveness or productivity, such as, return on assets (ROA) and Return on Equity (ROE) (Rivera and Ruiz, 2011). These indicators measure the ability to generate profits, considering three important factors: the number of assets, their nature (operational or total) and the right to own the resource (equity) (Rivera and Ruiz, 2011; Stern et al., 1995).
However, the intangible nature of some resources or assets makes it difficult to measure the performance of the company using these resources, with intellectual capital being one of them. Given that this asset is not reflected in the financial reports of the businesses (Brooking, 1996; Edvinson and Malone, 1997; Sveiby, 1997; Bueno, 2002), its measurement is essential to analyse its effect on the performance of the businesses (Puntillo, 2009). In this sense, the models developed to measure the intangibles are focused on the economic performance of the business (Sveiby, 2007), showing a shortage of studies that analyse the effect or the impact of the intellectual capital in the business financial performance (Stern et al., 1995; Stewart, 1997; Pulic, 1998...
Para continuar leyendo
Solicita tu pruebaCOPYRIGHT GALE, Cengage Learning. All rights reserved.
