Deriving Intellectual Capital Bottom-Line in Professional Service Firms

Abstract

The contribution of professional service firms (PSFs) has always been phenomenal in the knowledge economies. Given the ever-increasing focus on achieving knowledge-based trans-formations, the effectiveness of these firms is highly attributed to the knowledge capabilities embedded in their staff and how efficiently they are utilized in firm's optimal benefit. In view of growing services sector, it is vital for these firms to implement high performance work practices (HPWPs) so as to maintain high-quality services and meet competing client needs. However, the systematic implementation of these practices in the intellectual capital (IC) context is not fully developed. Hence, this research suggests a linkage mechanism on how HPWPs support IC development in the professional service firms. By operationalizing these practices as ability-, motivation-, and opportunity-enhancing bundles, the results indicate a positive effect on intellectual capital and the findings offer practical insights to the managers in service firms on building their knowledge capital and deriving competitive advantage.