Comparing Impact of Intellectual Capital on Firm Performance Before and After Crisis

The recent economic crisis has caused a significant discontinuity in the world of business. Companies and researchers are constantly trying to understand the key drivers that caused significant impact on companies' performance and how to challenge them in future. One still not sufficiently covered research issue is the role that intellectual capital has played in the performance of small and medium-sized enterprises, and how this role has changed after the crisis. Intellectual capital has become a key value creation driver in the new economy. Its positive influence on firm performance has been proved by numerous empirical studies worldwide. Several of them also investigated how the economic crisis affected this paradigm. However, such an investigation is still missing in Slovakia. The purpose of our study is to examine the relationship between intellectual capital (IC) and firm performance before the recent economic crisis and in the period of recovery, among SMEs in different industries in Slovakia. To measure the level of IC and its respective components we applied the Value added intellectual coefficient (VAIC (TM)) indicator developed by Pulic. This measure, however being criticized by some authors, is the most frequent metric used to evaluate IC and its components using financial data. It provides information about the efficiency of tangible and intangible assets that can be used to generate value to a firm. As far as performance measurement is concerned, we deployed ROA as firm performance metric. Our analysis also accounted for firm size and financial leverage while investigating the effect of IC on SME performance. We based our analysis on panel data comprising of 2008 and 2011 financial statements of 1983 Slovak SMEs operating in 11 industries (sections according to SK NACE rev. 2 classifications). These data have been obtained from business information portal Universal Register Plus operated by CRIF - Slovak Credit Bureau. As far as methods are concerned, to compare the influence of IC on firm performance we constructed pre-crisis (2008) and post-crisis (2011) regression models and analyzed the observed differences. Our findings suggest a rather consistent pattern across almost all investigated industry sections showing that the role of intellectual capital performance in predicting firm's financial performance has increased in post-crisis period comparing to the pre-crisis situation.