How does cluster location and intellectual capital impact entrepreneurial success within high-growth firms?
| DOI | https://doi.org/10.1108/JIC-02-2020-0066 |
| Date | 22 December 2020 |
| Published date | 22 December 2020 |
| Pages | 171-189 |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & finance,Accounting/accountancy,Behavioural accounting |
| Author | Yama Temouri,Vijay Pereira,Glenn W. Muschert,Vikash Ramiah,Michael Babula |
How does cluster location and
intellectual capital impact
entrepreneurial success within
high-growth firms?
Yama Temouri
Khalifa University of Science and Technology, Abu Dhabi, United Arab Emirates and
Aston University, Birmingham, UK
Vijay Pereira
NEOMA Business School, Reims Campus, Reims, France
Glenn W. Muschert
Khalifa University of Science and Technology, Abu Dhabi, United Arab Emirates
Vikash Ramiah
University of Wollongong in Dubai, Wollongong, Australia, and
Michael Babula
Khalifa University of Science and Technology, Abu Dhabi, United Arab Emirates
Abstract
Purpose –The purpose of this paper is to examine the role of intellectual capital and knowledge management
in the entrepreneurial success of firms through a research model which is subsequently tested empirically.
Design/methodology/approach –The paper utilises the knowledge-based perspective to formulate three
sets of hypotheses which the authorssubsequently test in the empirical analysis on data derived from the Orbis
database, which includes over 1-million data points from approximately 240,000 firms across 174 geographic
subdivisions of economic regions in 14 European countries, from 2010 to 2013. The analysis utilises probit
model regressions on the likelihood of becoming a high-growth firms (HGF), in the presence of a number of
control factors including firm age, firm size, tangible assets, foreign ownership, competitiveness (via Herfindahl
index), return on assets, industry sector and country location.
Findings –Findings from our analysis suggest that investments in intangible assets and generating patents
from research and development (R&D) efforts is positively related to the likelihood of becoming a HGF. In
addition, cluster membership seems to be a positive influence on becoming a HGF, however the moderating
impact of intangible investments and patents is less clear in clusters.
Research limitations/implications –The authors highlight the mixed effects from cluster membership
and the beneficial impact from intellectual capital and knowledge management in achieving high growthfirm
status.
Originality/value –The authors derive and test our research model, which outlines the interrelationship of
the various factors leading to firms becoming high-growth firms. The results suggest that there may be further
fruitful ground for future investigation in the intersections of knowledge management and intellectual capital
concepts within entrepreneurial contexts.
Keywords Cluster, Intellectual capital, Entrepreneurship, High-growth firms
Paper type Research paper
Introduction
High-growthfirms (HGFs) experiencesignificantly more rapidgrowth in a short period of time
due to successful entrepreneurial efforts within their organizations (Coad and Srhoj, 2019;
Grover Goswami et al., 2019;Henrekson and Johansson, 2010). The EUROSTAT and
Organisationfor Economic Co-operationand Development (OECD) (2007)Manual on Business
DemographyStatistics identifies two keyaspects that defines HGFs. One,a HGF is a firm that
Cluster location
and intellectual
capital
171
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1469-1930.htm
Received 29 February 2020
Revised 28 August 2020
Accepted 4 October 2020
Journal of Intellectual Capital
Vol. 22 No. 1, 2021
pp. 171-189
© Emerald Publishing Limited
1469-1930
DOI 10.1108/JIC-02-2020-0066
initially possesses 10 or more employees or that has at least four times national per capita
incomein annual revenues; Two, HGFs experienceaverage annualized employmentor revenue
growth of greaterthan 20% over a three-year period.HGFs are seen as exhibiting superiorand
more successful entrepreneurial drive, which in turn allows these firms to experience high
growth (Satterthwaite and Haltiwanger, 2017;Moschella et al., 2019). Thereis ample evidence
offeredby the literature on HGFsto show that one of the originsof a rapid growth, regardlessof
firm size, is its ability to generate new ideas and methods of operating (Audretsch, 2012).
Moreover, HGFs are noted as demonstrating comparatively higher knowledge management
(KM) practices, as innovation and entrepreneurial initiatives are in part based on the
concealmentof knowledge, in order to secure a competitive advantage(see Mason and Brown,
2010;Demir et al., 2017;Mishina et al., 2002).
In many industries, there are noted clusters of firms occupying a similar territory or
region, which may contribute to cross-fertilization of ideas and initiatives (Malmberg and
Power, 2005). It is well known that cluster membership allows greater knowledge
linkages, transfers and leakages. However, firms may be more vulnerable in such clusters
as KM becomes more salient to maintain competitive advantage. Recent work on the
influence of regional differences on firm growth has focussed on varying institutional,
economic and social characteristics across regions in additional explanatory factors for
firm growth (Pereira et al., 2020a). Similarly, and more focussed work on exploring
resilient firms in business clusters has shown the role and importance of human capital in
driving more successful organizations in business clusters (Stoj
ci
cet al., 2019)asthey
possess greater resilience during challenging times, such as the recent global financial
crises.
However, what the literature is less clear about is combined and nascent role of cluster
location and intellectual capital [IC] in the entrepreneurial initiatives and KM that contribute
to firms becoming HGFs (see previous attempts by P€
oyh€
onen and Smedlund, 2004;Jardon
and Martos, 2012). Therefore, this paper tries to fill this gap in the literature by synthesizing
and bringing together the impact that cluster location and IC has on the entrepreneurial
initiatives and KM (Paoloni et al., 2020), which ultimately contribute to firms becoming HGFs.
We do this conceptually by deriving a conceptual framework which outlines the
interrelationship of the various factors leading to high-growth. This conceptual framework
is used to formulate three sets of hypotheses which we subsequently test in our empirical
analysis on almost 240,000 firms from 174 NUTS-2 level European regions.
In this paper, we utilize the knowledge-based view (KBV) to theorize and conceptualise.
More specifically, the knowledge-based view posits that organizations or firms possess both
knowledge and IC as key resources so as to gain competitive advantage over others in the
field (Nikolaou, 2019;Dabi
cet al., 2019;Jord~
ao et al., 2019;Prasojo and Hadinata, 2020;Zakery
and Saremi, 2020). In this paper, we argue use patents and other intangible assets as proxies
for knowledge and IC, both of which are known to be components of a firm’s human capital.
Further, we theorize that HGFs located in and operating in certain clusters would be able to
create a situation that is valuable, inimitable, rare and organized [VIRO], so that both
knowledge and IC thrive leading to greater entrepreneurial capacity.
This paper contributes to the literature in three distinct ways. First, we posit, as far as
we understand for the first time, an interaction between IC and cluster-location of firms
leading to competitive advantage. In doing so, we hypothesize that firms located in certain
clusters have a higher level of entrepreneurial success leading to HFGs. Second, we utilize a
previously untapped multicountry dataset in this particularcontext in order to identify the
impact of both patents and intangible assets on HGFs. Third, we investigate across various
industries and sectors, which is noteworthy because it allows for the exploration of
different effects of IC and knowledge management practices leading to entrepreneurial
success in HGFs.
JIC
22,1
172
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