Intellect-Based, Intagibles Sorces of German Small and Medium Sized enterprises-success- ¿The impact of inteññectual Capital on Lasting Competitive Business Performance

Abstract

Abstract: The management of intellectual capital (IC) as a mean of generating and sustaining companies' success is increasingly important in today's knowledge-based economy. Previous research which look into large (listed) companies as well as small and medium sized enterprises (SME) generally confirm this. However, relatively little is known about the actual impact of IC on the performance of German SME which highly differ from other nations' SME. Furthermore, the interaction of IC facets - i.e. human capital (HC), structural capital (SC) and relationship capital (RC) - as well as its comparison among different age segments are still to be explored in the German SME context. Consequently, it is the purpose of this doctoral thesis to report on and discuss the results of an empirical study which investigates German SME's IC as well as the latter's interaction among differently aged firms. Drawing on the theoretical foundations of the resource based view, its outgrowth known as the knowledge based view, IC literature and research on German SME's (sources of) success, a novel conceptual framework with second-order constructs is developed. This new model is validated in a qualitative study with German SME experts as well as German SME and transferred into a higher-order structural equation model (PLS) in order to test relationships as well as to identify key indicators/dimensions which call for management actions. A survey with predominantly hard-fact-orientated questions is distributed among German SME from diverse regions, industry sectors and age classes between end of 2013 and beginning of 2014. Based on about 150 valid responses, interesting insights on German SME¿s IC are gained.

Objective: To explore the actual impact of German SME¿ intellectual capital (IC) on their lasting performance. Moreover, this doctoral thesis aims to discover the influence of company age on SME¿ IC and its strength to drive competitive success.

Prior work: Previous research generally confirms that IC is an important mean to generate and sustain corporate success. However, the majority of these findings rests on international data and may not be applicable to German SME which differ from other nations' enterprises. Furthermore, it can be noticed that the literature on German SME¿ IC is not precise because it evaluates perceptions instead of real conduct, is based on case studies rather than large empirical data and does not statistically analyze the relation between IC and performance. Besides, there is hardly any literature on young German SME¿ IC and its impact on success.

Approach: Drawing on the knowledge-based view, (inter)national IC-literature/-reporting, investigations of German SME¿ (sources of) success and studies on young German firms, a new conceptual framework is developed. This IC-model and its measurement are validated via qualitative interviews with five German SME experts and 16 SME. Subsequently, the framework is transferred into a second-order structural equation model (PLS) in order to test relationships and identify key IC-dimensions which call for management attention. To do so, a questionnaire with hard-fact-orientated questions is distributed among German SME in late 2013 and early 2014.

Results: The findings indicate that IC is a driver of German SME¿ performance. More specifically, it is discovered that stakeholder relationships (RC) are the most important element of German SME¿ IC-mix since they directly influence competitive advantages manifested in above-average performances. Moreover, it is noted that the force, with which RC impacts lasting competitive business performance, increases when RC interacts with HC. This implies that intangible resources related to organizational members (HC) are the origin of IC. Likewise, it is shown that HC only influences success in an indirect manner via RC. Furthermore, the results imply that internal, structural matters deserve attention because the IC-category SC drives competitive performance in both models, too. More to it, it can be seen that SC is independent of HC and RC. Lastly, this doctoral thesis points to the fact that six IC-dimensions are of particular importance: employees¿ attitude (HC), employees' intellectual agility (HC), organizational capital (SC), technological capital (SC), supplier relationships (RC), and informal network relationships (RC). Paying attention to these six issues is shown to positively drive the respective IC-category which, in turn, influence above-average corporate performance.

Implications: This research is intended to improve German SME¿ performance by pointing to relevant IC-based success drivers. Additionally, the findings are expected to inspire future research on individual aspects of German SME¿ IC ¿ potentially in differing industries and age segments. Lastly, the result may guild policy-makers in advancing their IC reporting guidelines.

Values: Since the doctoral thesis is the first to look into the real impact of IC on German SME¿ performance, it contributes to validating prior findings. Furthermore, the tested model is not only aimed at German SME in general, but especially enlarged to include IC-aspect of young firms. Thus, it extends former research and helps to better understand the development of IC along a company¿s life cycle.