Intellectual Capital, Innovation and Performance: Empirical Evidence from SMEs

This research paper examines the relationship between intellectual capital, product innovation and performance based on a study of Austrian firms covering a 10-year period. It is argued that intellectual capital enhances a firms ability to successfully realise innovations and thus contributes positively to its performance. Our study found that human capital and structural capital were both significantly associated with performance in product innovating firms, but that each had a different impact on this performance. While human capital had a positive impact on profitability and growth in the long run, contrary to expectations, structural capital had a negative effect on profitability and growth indicating that apparent strength can turn into a weakness over time. In addition, the study found that human capital and structural capital had no joint effect on the performance of product innovating firms. Intellectual Capital, Innovation, and Performance: Empirical Evidence from SMEs.