Effects of Intellectual Capital on Firm Performance Using RIM
In today’s socioeconomic world, it is frequently thought that the intellectual capital has an important role in a firm’s performance. Nonetheless, some of the recent findings support this idea whereas some point to the opposite, warranting further research to test the relationship in this context. In this study, we intend to determine the intellectual capital’s (IC) potential effects on a firm’s performance using a sample from a developing country, Turkey and measuring it with the help of Residual Income Model (RIM). For this purpose, nine-year data, obtained after the examination of the financial statements of 85 enterprises from 11 different sectors operating in Istanbul Stock Exchange in the period of 2007-2016, were used. With the purpose of forming an inclusive empirical model, the intellectual capital values were analysed on traditional performance indicators in the form of return on asset (ROA), asset turn-over rate (ATO), market/book value (MB) and return on equity (ROE), using the panel analysis method appropriate to the data set. Moreover, in order to distinguish the intellectual capital effect from the effects of other assets of the firm as well as to determine the existence of the sectoral effect, firm size and leverage ratio and dummy variables representing the sectors were added to our regression models. The results showed that intellectual capital has a positive effect on return on asset and market/book value at firm level and on asset turn-over rate across sectors. When these findings are taken together, it can be inferred that intellectual capital has a significant, although not as strong as expected, impact on firm performance in the context of Turkey. With these outcomes, our study produces significant results in terms of the interaction between intellectual capital and firm performance in a developing country and contributes to understanding of the concept of intellectual capital.
* This study has been prepared from the doctoral thesis "The Effect of Intellectual Capital on Business Performance: An Application in BIST Companies".
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