Intellectual capital and firm performance in the global agribusiness industry. The moderating role of human capital
| Pages | 530-552 |
| DOI | https://doi.org/10.1108/JIC-11-2015-0096 |
| Date | 11 July 2016 |
| Published date | 11 July 2016 |
| Author | Vincenzo Scafarto,Federica Ricci,Francesco Scafarto |
| Subject Matter | Information & knowledge management,Knowledge management |
Intellectual capital and firm
performance in the global
agribusiness industry
The moderating role of human capital
Vincenzo Scafarto
Department of Human, Social and Health Sciences,
University of Cassino and Southern Lazio, Cassino, Italy
Federica Ricci
Department of Economics and Law,
University of Cassino and Southern Lazio, Cassino, Italy, and
Francesco Scafarto
Management and Law Department, University of Rome Tor Vergata,
Rome, Italy
Abstract
Purpose –The purpose of this paper is to investigate the relationship between intellectual capital (IC),
categorized in terms of four sub-constructs –namely, human capital (HC), relational capital (RC), innovation
capital (InnC) and process capital (PrC) –and business performance in the agribusiness industry.
Design/methodology/approach –Based on a sample of international agribusiness companies
observed over a five-year period, this paper uses correlation and multiple regression analysis to test for
the existence of a positive relationship between each IC component and conventional business
performance metrics.
Findings –The empirical results support the hypotheses that RC and PrC have a positive impact on
corporate performance. Counter to the expectations, InnC by itself is negatively associated with
performance. Results also failed to confirm the hypothesis that HC directly and positively affects
performance. However HC positively moderates the relation between InnC and performance, which
suggests that firms that heavily invest in HC are better placed to gain returns from their research and
development (R&D) investments.
Originality/value –This study expands the existing research on the link between IC and
performance by adding fresh evidence from a highly knowledge-intensive sector which has been
under-researched thus far. It may also contribute to the specific literature on R&D and performance as
it uncovers that the value-generating effect associated with R&D investments is contingent on the
levels of HC.
Keywords Innovation, Firm performance, Human capital, Intellectual capital, Agribusiness
Paper type Research paper
1. Introduction
The rise of the knowledge economy has led to a growing reliance on intellectual or
knowledge-based assets as the new source of competitiveness for firms, countries and
regions (Ordóñez de Pablos and Edvinsson, 2015; Schiuma and Lerro, 2015).
According to the resource-based view of the firm (Barney, 1991), only resources that
are valuable, rare, non-substitutable and hard-to-imitate –which are referred to as
“strategic assets”(Hall, 1992) –would provide sustainable competitive advantage and
superior financial performance. Both tangible and intangible resources may qualify as
strategic assets. However, in the current “knowledge era”the only resource that seems
Journal of Intellectual Capital
Vol. 17 No. 3, 2016
pp. 530-552
©Emerald Group Publishing Limited
1469-1930
DOI 10.1108/JIC-11-2015-0096
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to strictly meet the above criteria is intangible (knowledge-based) capital, due to
circumstance that physical tangible assets such as property, plant and equipment
and physical technologies are increasingly easy-to-imitate, substitutable and can be
purchased and sold on the open market (Riahi-Belkaoui, 2003; Roos and Roos, 19 97).
Further, not all intangibles become intellectual capital (IC) assets but only those
which possess the necessary requisites of strategic resources (Riahi-Belkaoui, 2003).
Ante Pulic (2008, p. 5), an influential IC theorist, clarifies that IC consists of knowledge
that serves the purpose of creating “value identifiable on the market”or “benefits the
customer pays for”. This implies that are excluded all intangibles that have no impact
on the value-generating potential of the firm. In a similar vein, Riahi-Belkaoui (2003,
p. 215) affirms that the strategic significance of IC rests on a “potential link between
intellectual capital on one hand and firm performance on the other hand”.
Many scholars have endorsed the view that IC is a primary source of sustainable
competitive advantage and superior performance (Bontis, 1996, 1998, 2001; Edvinsson
and Malone, 1997; Roos et al., 1998; Stewart, 1997; Sveiby, 1997). Scholars have also
consistently observed that the traditional financial and accounting instruments fail to
capture all the relevant dimensions of IC and report them to organizational managers
and stakeholders (Nazari and Herremans, 2007). Thus the need has become clear for a
systematic approach to visualize and measure IC (Roos and Roos, 1997).
Over the past decades IC researchers have been striving to provide reliable
measures of IC and test their relationship with business performance. As a result, a
surge of writings and empirical studies has accumulated (e.g. Bassi and Van Buren,
1999; Bontis et al., 2000; Chan, 2009; Chen et al., 2005; Firer and Stainbank, 2003;
Maditinos et al., 2011; Pulic, 2000; Riahi-Belkaoui, 2003). By now a good deal of evidence
exists supporting the positive causal linkage between IC dimensions and firm
performance (for the most recent review of the empirical literature see Inkinen, 2015).
The extant IC research has covered a range of industry contexts and particularly
knowledge-intensive industries such as banking (e.g. Cabrita and Bontis, 2008;
El-Bannany, 2008; Mention and Bontis, 2013; Mondal and Ghosh, 2012), financial
(e.g. Appuhami, 2007; Joshi et al., 2013), insurance (e.g. Alipour, 2012), information
technology (IT) (e.g. Wang and Chang, 2005), pharmaceutical (e.g. Mehralian et al., 2012;
Sharabati et al., 2010) and hotel industry (e.g. Engström et al., 2003; Zeglat and Zigan,
2014). This paper extends these prior investigations by using the agribusiness industry
as a research setting.
Agribusiness industry can be defined as a set of interconnected vertical markets
with firms operating in the production, processing and wholesale marketing of
agricultural products. For the purposes of this paper, we narrow the scope of the
agricultural context by considering only seed and agrochemical companies. It is to be
outlined that top international agrochemical companies are also seed industry giants.
Indeed, the global seed industry is presently dominated by multinational chemical
enterprises which over recent decades have been increasingly interested in investment
in agro biotechnology-related sectors, thus evolving into “life sciences”giants for the
development and production of such products as agricultural chemicals, seeds, foods
and food ingredients (Fernandez-Cornejo, 2004).
A study of IC in this industry context appears to be both appealing and appropriate,
first because global agribusiness is heavily reliant on IC notably in terms of research
and development (R&D)-related activities and intellectual property rights. Second the
process of marketing seed varieties and chemical companion is also knowledge
intensive and thus provides a fruitful setting for IC assessment. Nevertheless, this
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