RETHINKING INTELLECTUAL CAPITAL: DOES IT TRULY ENHANCE FIRM PERFORMANCE? A LITERATURE REVIEW PERSPECTIVE

Abstract

This study explores the evolving discourse surrounding the role of intellectual capital in enhancing firm performance, emphasizing the shifting dynamics from tangible to intangible resources in the modern knowledge economy. Drawing on a wide array of scholarly literature, this study presents a comprehensive review of theoretical and empirical perspectives to examine whether intellectual capital genuinely contributes to organizational success. The study identifies three key components to include human, structural, and relational capital as central to the intellectual capital construct and critically examines the diversity of frameworks used to measure their impact. While numerous studies highlight a positive relationship between intellectual capital and firm performance, a significant number reveal contradictory findings, including negative correlations, often due to industry-specific variations, measurement methods, and differing performance indicators. By categorizing studies into positive and negative perspectives, the review sheds light on the ongoing debates and the complex interplay of mediating and moderating variables that influence outcomes. Moreover, it addresses methodological inconsistencies such as the widespread use of the Value-Added Intellectual Coefficient (VAIC) and its limitations in capturing the full spectrum of intellectual capital’s contribution. This study concludes that although intellectual capital is generally acknowledged as a critical driver of competitive advantage, a universal understanding of its mechanisms and accurate assessment tools remains elusive. Consequently, it calls for future research to refine measurement approaches, broaden performance evaluation metrics beyond financial indicators, and explore strategic-level impacts of intellectual capital. The findings highlight the necessity for dynamic and industry-specific analyses to truly capture the value intellectual capital brings to firms in diverse economic landscapes.