Intangible assets and performance. Analysis on manufacturing SMEs
| Published date | 19 April 2011 |
| DOI | https://doi.org/10.1108/14691931111123395 |
| Date | 19 April 2011 |
| Pages | 202-223 |
| Author | Josée St‐Pierre,Josée Audet |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Intangible assets and
performance
Analysis on manufacturing SMEs
Jose
´e St-Pierre
Institut de recherche sur les PME, Universite
´du Que
´bec a
`Trois-Rivie
`res,
Trois-Rivie
`res, Canada, and
Jose
´e Audet
De
´partement de management, Universite
´Laval, Que
´bec, Canada
Abstract
Purpose – The purpose of this paper is to shed light on the nature of intellectual capital in small to
medium-sized enterprises (SMEs) and how it is linked to strategy and performance.
Design/methodology/approach – Using structural equations, a multivariate model is presented
where multiple relations are tested between different components of intellectual capital and
performance. The model is tested first on a unique sample of 267 SMEs and second on two subsamples
where SMEs are grouped according to their strategic profile.
Findings – Findings confirm that SMEs that adopt different strategies organize their intellectual
capital in a particular and adapted way. When an attempt is made to link intellectual capital
components to performance, it is noticed that the latter is strategy specific, just as the variables that
influence performance. Prospectors dominate defenders on most intellectual capital components.
Research limitations/implications – Use of secondary data may provide less precise results that
could make an incentive to conduct other studies with specific determinants of intellectual capital and
try to make clear definition and measurement of this concept and its components.
Practical implications – Even if the results have an exploratory nature, they confirm that SMEs
organize and develop their intellectual capital in conjunction with their needs and strategic profile,
revealing their heterogeneity. This hasimplications on the ability to generalizespecific behaviors to all
SMEs, and could preventgovernment from developing publicpolicies that are supposed to fit all SMEs.
Originality/value – Most research on intellectual in capital SMEs is conducted on specific sectors
linked to activities requiring high levels of knowledge or technology. But these results concern a small
proportion of SMEs. This study expands those analyses to a much broader variety of sectors,
revealing some links between specific components and performance taking into account strategic
orientation. This is the first study on manufacturing SMEs that considers various non-technological
sectors and strategic profiles.
Keywords Intangible assets,Strategic management, Manufacturing industries,
Small to medium-sizedenterprises, Performance management
Paper type Research paper
Introduction
In today’s knowledge economy, investments in intellectual assets are considered mo re
and more to be key strategic elements to maintain a business’ growth, profitability and
competitiveness (Bose and Oh, 2003; Cohen and Kaimenakis, 2007; Kaufmann and
Schneider, 2004). Yet, although the strategic role of these assets is well accepted, little is
known on how businesses, let alone small to medium-sized enterprises (SMEs), use and
structure them, on how their interaction affects the organization and its performance,
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1469-1930.htm
JIC
12,2
202
Journal of Intellectual Capital
Vol. 12 No. 2, 2011
pp. 202-223
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691931111123395
as well as the dimensions of performance affected, whether directly or indirectly. This
knowledge gap contributes to an inefficient management of these assets for it is
difficult to understand how a company can develop them.
Many studies have focused on identifying and measuring compon ents of
intellectual capital (IC), without a consensus ever emerging on the definition of this
complex concept. Also, many authors have tried to establish a link between IC and
business performance (Cater and Cater, 2009; Cohen and Kaimenakis, 2007; Ittner,
2008; Mavridis and Kyrmizoglou, 2005; Tovstiga and Tulugurova, 2009; Wang and
Chang, 2005). However, these studies do not identify, in the absolute, which eleme nts of
IC contribute most to performance and how they are able to create value.
Moreover, analyzing a company’s performance as well as what induces it must take
into account the context in which it operates such as proposed by contingency theory
(Ittner, 2008) or the various strategies that managers implemented (Arago
´n-Sa
´nchez
and Sa
´nchez-Marı
´n, 2005; Grasenick and Low, 2004; Raymond and St-Pierre, 2005). In
fact, SME heterogeneity, context diversity, and the difference in strategy proposed by
owner-managers make each business configuration specific. It is thus plausible to
expect that IC components, as well as the related performance indicators, vary from
business to business (Auh and Menguc, 2005).
The purpose of this exploratory study will be to shed light on the nature of IC in
SMEs and how it is linked to specific performance. Components of IC present in SMEs
will be identified and it will be verified if these vary according to strategy. Finally,
existing relationships between components of IC and SME performance will be
highlighted. The study is based on a sample of Canadian and French manufacturing
SMEs from sectors not necessarily linked to activities requiring high levels of
knowledge. This contrasts with many studies conducted on the subject where authors
favored knowledge- and technology-intensive sectors, which in turn increases the
presence of IC.
In the following sections a review of the research on IC will be presented, together
with the existing links between this concept and SMEs’ performance and strategy.
Doing so will allow to define the conceptual framework for this study. Then, the
methodological design will be presented, followed by the study’s findings and a
discussion on implications. Finally, the paper will conclude with the study’s main
contribution and limits, as well as express a few avenues for further research.
Research review
Definition of IC
In a recent literature review Choong (2008) reports on the confusion surrounding the
definition of IC, as well as the numerous denominations associated with it. These
definitions are often particular to each discipline or are related to the accounting
systems used in each country. However, most definitions do converge on the
“immaterial” aspect of these assets, they have neither physical substance nor specific
monetary value, yet they significantly contribute to value creation for a business.
Furthermore, three components are generally recognized: human capital, relational
capital, and structural capital (Edvinsson and Malone, 1999; Gallego and Rodrı
´guez,
2005; Green and Ryan, 2005; Sveiby, 1997).
Human capital is the individual abilities, knowledge, know-how, talent, and
experience of both employees and managers of a firm (Edvinsson and Malone, 1999).
Intangible assets
and performance
203
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