The study focuses on determining the influential role of firm’s age on intellectual capital (I-Cap) efficiency of firms and analyzing the moderating role of firm performance on the relationship between firm’s age and the I-Cap efficiency of Indian firms.
The endeavor uses firm-level panel data of listed non-financial Indian firms and performs multiple regression models to validate the relationship and to account for potential endogeneity, the study utilizes vector autoregression approach. Moreover, the study incorporates a one-period lag of independent variables to capture dynamic effects and enhance robustness of the results.
The results suggest that new firms are more prone to better utilizing their I-Cap. However, when the firm age combines with the firm performance, it acts as an instrumental attributed to the I-Cap; it implies that mature firms can focus on the I-Cap only if their performance reaches a certain threshold point.
Managers and decision-makers could use the study’s findings in managing the I-Cap based on the firm’s age and performance. The firm’s performance plays a crucial role, particularly for the old firms, in managing their I-Cap effectively, which renders ground for novel managerial implications and better understanding towards the firm’s age and performance on the I-Cap management.
The study extends the prior literature by assessing the under researched role of firm’s age as the primary determinant for effective management of I-Cap. The study extends the role of firm performance as a moderator, which is again not much explored in the prior studies, to minimize the adverse influence of the firm’s age.
