ANALYZING THE RELATIONS BETWEEN INTELLECTUAL CAPITAL AND PERFORMANCE IN LOCAL GOVERNMENTS

This paper examines the relation between intellectual capital (IC) and organizational performance in local governments (LGs) in Greece. Existing research literature argues that public organizations seem to be more intellectual capital idiosyncratic than private sector organizations. Therefore, it is expected that effective intellectual capital management would have a positive effect on their performance. However, empirical evidence in this field is lacking. We address this issue within the context of two intellectual capital epistemological views proposed by Mouritsen (2006); the IC1-ostensive view and the IC2-performative view. We employ a dual approach in our research by combining published and survey data. We have gathered financial information through accrual accounting financial statements in order to measure inferred intellectual capital (according to IC1-ostensive view). Additionally, we have collected data suitable for analyzing the perceived intellectual capital through a structured questionnaire addressed to a sample of Greek LGs (according to IC2-performative view). Our sample refers to 92 LGs. Our empirical evidence advocates the existence of significant positive relations among the sub categories of intellectual capital. Further, data analysis reveals that the sub categories of intellectual capital are related with improved performance measured both with financial ratios and perceptions of performance. Therefore, our empirical findings hold irrespectively of the intellectual capital epistemological view and offer corroborating evidence that LGs with high IC perform better that low IC LGs.