Intellectual, Human and Structural Capital Effects on Firm Performance as Measured by Tobin's Q

• Author: Mohammad Alipour,Rezvan Hejazi,Mehrdad Ghanbari
• Published date: 01 October 2016
• DOI: http://doi.org/10.1002/kpm.1529
• Date: 01 October 2016

■Research Article

Intellectual, Human and Structural

Capital Effects on Firm Performance

as Measured by Tobin’sQ

Rezvan Hejazi

1

, Mehrdad Ghanbari

2

and Mohammad Alipour

3,4

*

1

Faculty of Social Science and Economics, Alzahra University, Tehran, Iran

2

Department of Accounting, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran

3

Young Researchers and Elite Club, Khalkhal Branch, Islamic Azad University, Khalkhal, Iran

4

Department of Accounting, Khalkhal Branch, Islamic Azad University, Khalkhal, Iran

Today, competitive advantage and success are achieved by strategic management of intellectual capital rather than al-

location of physical and financial resources. Although intellectual capital is not a tangible and objective factor, it is of-

ten measured in order to compare the market value and development of firms and improve their performance. This

paper examines the relationship between intellectual capital and firm performance in Iran using the Pulic’s model. In

this model, value added intellectual coefficient is used to evaluate firms’intellectual capital. Also, the relationship be-

tween intellectual capital and firms’market value is examined. In addition to intellectual capital, the relationship be-

tween the components of intellectual capital—that is, human and structural capital—and performance is also

investigated. The empirical data is collected from 100 firms listed on Tehran Stock Exchange (TSE) during the period

2000–2006. The results support the hypothesis that human and intellectual capital are positively related to perfor-

mance (Tobin’s Q), and intellectual capital can be taken into consideration for improving the performance of

Iranian firms. Also, value added intellectual coefficient proves to be an effective tool that can be used by current

decision-makers in Iran’s capital market. The findings and discussions provided in this paper can be of interest to

managers and capital market stakeholders. We emphasize that intellectual capital is the main source of value creation

in the modern economy. Copyright © 2016 John Wiley & Sons, Ltd.

INTRODUCTION

The shift toward knowledge-based societies is a

widely discussed issue. In this environment, man-

agers must know the main resources that drive the

performance and value of their organizations. Be-

fore the shift toward knowledge-based economy,

the main sources of value creation for firms were

tangible assets such as property, plant, equipment,

and raw materials (Carson et al., 2004). Recently,

however, tangible assets, organizational knowledge,

and intellectual capital (IC) are recognized as the

driving factors in competitive advantage and value

creation (Delios and Beamish, 2001; Conner and

Prahalad, 1996; Grant, 1996a; Quinn, 1992; Spender,

1996; Carmeli and Tishler, 2004).

In the knowledge-based economy, organizations

mainly rely on knowledge and IC rather than phys-

ical and financial resources (Stewart, 1997; Hayton,

2005). Wu et al. (2006) claim that, IC has replaced

physical and financial resources. That is because

IC does not decrease in value with usage (Kong,

2008). One of the disadvantages of traditional

reporting systems is that they overlook IC. Research

has shown that firm value in the knowledge econ-

omy lies largely in IC rather than production and

sales (Sullivan and Sullivan, 2000).Companies that

accumulate, share, and effectively use their IC and

organizational knowledge can be more successful.

However, a review of the literature on IC shows that

measuring IC is difficult and challenging. Accord-

ing to Martinez-Torres (2006), “it is important for a

learning organization to identify its IC, as it is a

key factor to generate future value to the organiza-

tion”. Bontis (1998) provided a conceptual frame-

work for measuring IC and explaining its

relationship with firm performance. Today, the

*Correspondence to: Mohammad Alipour, Young Researchers

and Elite Club, Khalkhal Branch, Islamic Azad University,

Khalkhal, Iran.

Ardebil state, Khalkhal city,Valiye asr street, P.O.Box 5681733476

E-mail: uniclass.alipoor@gmail.com; uniclass.alipoor@aukh.ac.ir

Knowledge and Process Management

Volume 23 Number 4 pp 259–273 (2016)

Published online in Wiley Online Library

(www.wileyonlinelibrary.com) DOI: 10.1002/kpm.1529

Copyright © 2016 John Wiley & Sons, Ltd.