The aim of the current study is to measure the dynamic relationship between intellectual capital (IC) and firm performance in Brazil, Russia, India, China and South Africa (BRICS) economies.
The current study applies dynamic panel system generalized method of moments estimator to investigate the dynamic relationship between IC and firm performance of 6,045 publically listed firms in BRICS economies for the period of 2005-2014.
The results revealed that IC efficiency is significantly associated with return on assets and return on equity. Furthermore, human, structural and physical capitals have a positive and significant impact on firm performance. The results, while endorsing resource-based, resource-dependency and learning organization theories, emphasize the importance of IC for firm performance.
The current study does not only provides new direction for future research to analyze dynamic nature of IC and firm performance relationship but also emphasizes the importance of intangibles because of their contribution toward value added. The current study does provide cross-country comparison of top five emerging economies which is useful for the policy makers to evaluate investments in intangibles.
The current study is the first study to use dynamic ordinary least square (OLS) and Wooldridge strict exogeneity test to test the dynamic nature of the relationship between IC and firm performance. Moreover, unlike previous studies which ignore South Africa, this study covers all BRICS economies.
