The performance effect of intellectual capital in the Russian context. Industry vs company level
| DOI | https://doi.org/10.1108/JIC-10-2018-0190 |
| Pages | 335-354 |
| Published date | 29 March 2019 |
| Date | 29 March 2019 |
| Author | Mariia A. Molodchik,Carlos Maria Jardon,Anna Andreevna Bykova |
| Subject Matter | Information & knowledge management |
The performance effect of
intellectual capital in the
Russian context
Industry vs company level
Mariia A. Molodchik
IdLab, National Research University Higher School of Economics,
Perm, Russian Federation
Carlos Maria Jardon
Department of Applied Economics, Universidade de Vigo, Vigo, Spain and
IdLab, National Research University Higher School of Economics,
Perm, Russian Federation, and
Anna Andreevna Bykova
Department of Financial Management,
National Research University Higher School of Economics,
Perm, Russian Federation
Abstract
Purpose –The purpose of this paper is to present a comparative analysis of the contribution made by
intellectual capital (IC) to company performance at company and industry levels in the Russian context. It
examines the performance effect of IC using a multilevel approach.
Design/methodology/approach –The study combines the resource- and industry-based view. It
decomposes performance determinants into two levels of analysis in such a way that it is assumed that IC at
industry and company levels has a significant simultaneous impact on company performance. The empirical
part of the study uses a database of 1,096 Russian public companies, covering the period of 2004–2014 and
divided into 19 industries. The econometric methodology uses hierarchical linear models to estimate the effect
of IC in the different levels of analysis.
Findings –The study confirms that the strength of the performance effect of IC is contingent on the
industry. Furthermore, the study reveals that industry-level endowment with regard to intangibles
contributes more to company performance in comparison with a company-level endowment, in the context of
the transitional economy.
Originality/value –The study proposes a novel methodological approach to the performance effect of IC in
the Russian context, studying the differences between industry and company effect. The study provides
insights to better understand the importance of the politics of IC at the different levels (industry and
company) and presents a new empirical enquiry into strategic behaviour regarding IC in Russia.
Keywords Intellectual capital, Company performance
Paper type Research paper
Introduction
Intangible-driven performance has been one of the core research focuses in the strategic
management field since Rumelt (1991) uncovered empirical evidence that “the most
important sources of economic rent are business-specific”. The development of a theoretical
foundation of resource-based view (RBV) by Barney et al. (2001), whereby idiosyncratic
resources allow for outperforming rivals added to this. Today, most studies devoted to
intangibles utilise the concept of intellectual capital (IC) (Stewart, 1998). In line with this Journal of Intellectual Capital
Vol. 20 No. 3, 2019
pp. 335-354
© Emerald PublishingLimited
1469-1930
DOI 10.1108/JIC-10-2018-0190
Received 30 October 2018
Revised 18 December 2018
Accepted 20 February 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
This study comprises research findings from the project No. 18-18-00270 supported by the Russian
Science Foundation.
335
The performance
effect of
intellectual
capital
concept, we consider company intangibles as human, process, innovation and relational
capital (Stewart, 1998). During the last 20 years, many studies have been devoted to the
relationship between IC and company performance (Inkinen, 2015), and previous literature
shows a strong bias in favour of the company level of analysis. This, however, could limit
the understanding of factors that might influence the intangible-performance link and,
consequently, restrict managerial decisions and the elaboration of government policy
(Dumay, 2016; Inkinen, 2015; Secundo et al., 2017; Su et al., 2016). One such factor would be
industry environment. Previous papers about IC examine industry effects with the help of
dummy variables (Molodchik et al., 2012; Sydler et al., 2014) or restrict their research to a
particular industry ( Jardon and Dasilva, 2017; Tseng and Goo, 2005). The results of these
studies confirm that the industry matters when transforming intangibles into company
performance, yet it appears important to further examination of the link between the
industry level and the performance effect of IC.
While most studiesconfirm that IC at company level contributessignificantly to company
performance, only a small number (Su et al., 2016) have investigated IC endowment at the
industry levelas being a significant factor of firm performance heterogeneity.Following Chen
and Ma (2017), we can assume that IC endowment at industry level can lead to peer effects’
appearance.This demonstrates a dual role forthe company. On the one hand, there is an effect
of learning; on the other hand, the rival pressure intensifies. Moreover, this prompts an open
question about the simultaneous consideration of IC endowment at company and industry
level. Therefore, this study comparesthe issues relating to the contribution of IC to company
performance at company and industry level. The research question is as follows:
RQ1. What contributes more to company performance, IC endowment at industry level
or IC endowment of a company?
As mentioned above, such a focus can have implications on policymakers and company
managers in the decision-making process.
From a practical point of view, the results of such a comparative analysis should be of
value to transition economies for two reasons. First, the intangible-based competitiveness of
companies in transition economies remains underdeveloped. Therefore, empirical
investigations intended to gain a deeper understanding of intangible-driven performance
will contribute to better IC management and the enhancement of intangible-based
competitiveness. Second, issues concerning the facilitation of an environment for doing
business intend to be most puzzling in transition economies. Consequently, the results of an
industry-level analysis and a comparison of industry and firm-level effects could be of great
interest to policymakers. Considering these arguments, this study focuses on transition
economies and uses the Russian economy as a case study. Additionally, the Russian
business context is an appropriate example of industry heterogeneity and the crucial role
played by intangibles in the overall performance of firms (Andreeva and Garanina, 2016;
Shakina, Barajas and Molodchik, 2017).
To observe the performance effect of IC from a multilevel perspective, i.e. considering
company and industry level simultaneously, we implement hierarchical linear modelling
(HLM). A literature review shows that HLM, as a technique, is widely applied in studies
devoted to firm performance heterogeneity (Aguinis and Molina-Azorín, 2015; Bamiatzi
et al., 2016). It considers the multilevel nature of investigated phenomena, which appear in a
nested data structure. Moreover, HLM allows for an analysis that is more accurate by
providing simultaneous estimations at different levels.
This study contributes to academic discourse about the performance effect of IC from a
multilevel perspective. First, we provide multilevel theorizing at the intersection of
grounded theories, namely, the resource- and industry-based view. We complement these
with the peer effect concept. Second, we propose to expand the list of important industry
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