Managerial ability and firm growth: intellectual capital components

Abstract

Purpose

This study analyses the way various components of intellectual capital (IC), namely, human capital (HC), structural capital (SC), relational capital (RC) and innovation capital (INNC), act as mediators in the relationship between managerial ability (MA) and a firm’s ability to achieve growth.

Design/methodology/approach

This study employs data envelopment analysis to quantify the MA of 825 Taiwanese listed electronics companies from 2017 to 2022. The proxies of firm growth are return on asset growth, operating income growth and total asset growth. This study then utilises a three-step mediation analysis methodology to examine the relationships between MA, IC and firm growth.

Findings

Findings indicate that HC, SC, RC and INNC mediate the link between MA and firm growth. This suggests that competent managers can capitalise on the potential benefits of these investments to achieve firm growth.

Practical implications

Competent managers can utilise different IC investments to grow the financial performance and strength of their businesses. Managers should continually scan, secure opportunities and adjust their investments in knowledge assets in accordance with the dynamic capabilities view. That is, managers, in general, and operations managers, in particular, can implement guidelines that prioritise IC investments in the future to expedite firms’ development.

Originality/value

This study extends the existing frameworks that study investment variables as mediators between MA and firm outcomes. Most particularly, this study adopts four components of IC for measurement. Moreover, firm performance is measured using dynamic growth indicators rather than static measures.

Citation

Kweh, Q.L., Ting, I.W.K., Asif, J. and Lu, W.-M. (2024), "Managerial ability and firm growth: intellectual capital components", Management Decision, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MD-01-2024-0183