engleski

Does Intellectual Capital Lead to Higher Firm Growth?

Intellectual capital (IC) is undoubtedly one of the vital elements of firm success especially in a competitive business environment. Firm growth has been perceived as key driver of economic development, competitiveness and employment. Therefore, numerous research studies are devoted to investigation of relationship between IC and firm performance. However, only few studies focused on a relationship between firm growth and IC. The aim of this research is to examine whether the SMEs that invest in IC have higher potential for growth. Data set for this research consists of 271 SMEs from Croatia (with 31.4% of them being high growth SMEs). Enterprise is defined as high growth if it has an average annualized growth in sales greater than 20% a year, over a three-year period. Empirical analysis of a relationship between IC and a firm growth has been conducted in two stages. First part included a comparison of high growth SMEs that have IC reported in their financial statements and those without IC in financial statements, based on main financial indicators, entrepreneur’s characteristics, firm’s characteristics and environment. Second stage covered a development of high growth prediction model by using logistic regression to: (i) predict probability of SME to achieve high growth, (ii) identify factors that influence growth, and (iii) investigate how intellectual capital influences growth. The results point to a positive relationship between human and organizational capital and firm’s growth and confirm that specific elements of human and organizational capital can be considered as one of the key determinants in high growth prediction model. Besides, the study showed that SMEs that have some elements of IC recorded in their financial statements significantly differ from SMEs without IC in financial statements in terms of human capital measured by entrepreneur’s experience, education, skills, networks and personality traits. Implications of this study are of value to business owners, managers as well as policy makers.

intellectual capital, human capital, high growth SMEs, logistic regression prediction model, high growth potential

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