Intellectual Capital, Financial Performance and Companies’ Sustainable Growth: Evidence from the Korean Manufacturing Industry

Abstract

Intellectual capital (IC) is considered to be a wealth generator and driver of financial performance thus creating competitive advantage and sustainability in business. This paper empirically investigates the impact of IC on financial performance and sustainable growth in the Korean manufacturing industry. Multiple regression models are applied with data collected from 390 manufacturing companies listed on the Korean Stock Exchange during 2012–2016. The results of the analysis show that IC has a positive impact on financial performance and companies’ sustainable growth. In addition, companies’ performance and sustainable growth are positively related to physical capital, human capital (HC), and relational capital (RC). RC is found to be the most influencing factor. Finally, innovative capital captures additional information on structural capital (SC) which negatively affects the performance of Korean manufacturing companies. The results extend the understanding of IC in creating corporate value and building sustainable advantages in emerging economies.