Intellectual capital, strategy and financial crisis from a SMEs perspective

Purpose - The purpose of this paper is to investigate the relationship of intellectual capital (IC) with the strategy of small-medium enterprises (SMEs) and their executive decisions regarding the strategy of their IC portfolio during a financial crisis. Design/methodology/approach - The analysis is informed by the responses of 162 Greek SMEs on a structured questionnaire. Greek SMEs constitute an appropriate research setting since they operate within an environment of economic recession, financial turbulence and operational uncertainty. Findings - Initial analysis indicates that SMEs' strategic position seems to affect the composition of their IC portfolio, especially when a SME is strategically classified as Analytic according to Miles and Snow's (1978) typology. Moreover, Greek SMEs do not seem to follow the suggested by literature executive decisions for the strategic management of their IC portfolio. They apply on their IC components strategies that could be classified as "Act" or "Analyse" under Wissenzbilanz's typology (Bornemann and Alwert, 2007) regardless of the prospects for improvement expected for these IC components. Therefore, while SMEs seem to care about their IC, they do not manage it in a coherent and strategically beneficial way. Research limitations/implications - The study applies a novel methodology. By properly adapting the Wissenzbilanz's typology for IC executive decisions, it provides a research approach for collecting cross sectional firm data for IC executive decisions. A possible limitation but also an area for future research is to examine the implications of the relations between SMEs' strategy and IC portfolio on SMEs' financial performance. Practical implications - The practical implications of this study are twofold. First, managers should take into consideration that IC seems to be a strategic enabler even in periods of financial crisis and, thus, decisions regarding IC investments should not be abandoned. Second, SMEs tend to follow different than the recommended by literature executive decisions for the components of their IC portfolio. This might reduce the potential returns on IC investment. Therefore randomly investing in IC will not result in the expected benefits. Originality/value - The contribution of this study is that explores the relations of SMEs' executive decisions in relation to the strategic management of their IC components as well as the influence that the strategic position of SMEs exerts on the composition of their IC portfolio during a financial crisis.