The impact of intellectual capital on SMEs' performance in China Empirical evidence from non-high-tech vs. high-tech SMEs

Purpose The purpose of this paper is to explore and compare the extent of intellectual capital (IC) and its four components in high-tech and non-high-tech small and medium-sized enterprises (SMEs) operating in China's manufacturing sector, and to examine the relationship between IC and the performance of high-tech and non-high-tech SMEs. Design/methodology/approach The study uses the data of 116 high-tech SMEs and 380 non-high-tech SMEs listed on the Shenzhen stock exchanges during 2012-2016. The modified value added intellectual coefficient (MVAIC) model is used incorporating four components, namely, capital employed, human capital, structural capital and relational capital. Finally, multiple regression analysis is utilized to test the proposed research hypotheses. Findings The findings of this paper reveal that there is significant difference in MVAIC between high-tech and non-high-tech SMEs. The results further indicate a positive relationship between IC and financial performance of high-tech and non-high-tech SMEs. Specifically, IC is positively associated with firms' earnings, profitability and operating efficiency. Additionally, capital employed efficiency, human capital efficiency and structural capital efficiency are found to be the most influential value drivers for the performance of two types of SMEs while relational capital efficiency possesses less importance. Practical implications - This paper will provide a valuable framework for executives, managers and policy makers in managing IC within the Chinese context. Originality/value To the best knowledge of the authors, this is the first empirical study that has been conducted on high-tech and non-high-tech SMEs in the manufacturing sector in China.