Intellectual capital and performance in causal models. Evidence from the information technology industry in Taiwan
| Published date | 01 June 2005 |
| Pages | 222-236 |
| DOI | https://doi.org/10.1108/14691930510592816 |
| Date | 01 June 2005 |
| Author | Wen‐Ying Wang,Chingfu Chang |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Intellectual capital and
performance in causal models
Evidence from the information technology
industry in Taiwan
Wen-Ying Wang and Chingfu Chang
Department of Accounting, National Chengchi University, Taipei, Taiwan
Abstract
Purpose – This paper seeks to investigate the impact of intellectual capital elements on business
performance, as well as the relationship among intellectual capital elements from a cause-effect
perspective.
Design/methodology/approach – The partial least squares approach is used to examine the
information technology (IT) industry in Taiwan.
Findings – Results show that intellectual capital elements directly affect business performance, with
the exception of human capital. Human capital indirectly affects performance through the other three
elements: innovation capital, process capital, and customer capital. There also exists a cause-effect
relationship among four elements of intellectual capital. Human capital affects innovation capital and
process capital. Innovation capital affects process capital, which in turn influences customer capital.
Finally, customer capital contributes to performance. The cause-effect relationship between leading
elements and lagged elements provides implications for the management of firms in the IT industry.
Research limitations/implications – The model proposed in this study is applicable to the
high-tech IT industry. Modification of the proposed model may be needed in applying this model to
other industries.
Practical implications – This study helps management identify relevant intellectual capital
elements and their indicators to enhance business performance.
Originality/value – This paper is a seminal work to propose an integrated cause-effect model to
investigate the relationship among elements of intellectual capital for IT in Taiwan.
Keywords Intellectualcapital, Performance appraisal, Taiwan,Communication technologies
Paper type Research paper
Introduction
The information technology (IT) industry in Taiwan has gained a reputatio n of rapid
growth and global competitive capabilities. The literature contends that a firm’s
competitive power and performance are largely influenced by its intellectual capital.
Many researchers recognize that intellectual capital, which contains non-financial
measures and other related information, is the value driver of an enterprise (Amir and
Lev, 1996; Edvinsson and Malone, 1997; Ittner et al., 1997; Stewart, 1997; Bontis, 1999,
2001). They claim that intellectual capital assists enterprises in promoting competitive
advantage and value. Therefore, intellectual capital can be viewed as the most valuable
asset and the most powerful competitive weapon in business. This is especially so in
the IT industry, as its intangible assets are much more important than tangible assets.
The theoretical impact of intellectual capital on firm performance has never been
over emphasized in the literature. However, there is far from enough empirical research
investigating this issue. In particular, studies examining this issue in Taiwan’s IT
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
www.emeraldinsight.com/researchregister www.emeraldinsight.com/1469-1930.htm
JIC
6,2
222
Journal of Intellectual Capital
Vol. 6 No. 2, 2005
pp. 222-236
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930510592816
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