Performance measurement, intellectual capital and financial sustainability

• Published in: Journal of intellectual capital Vol. 18; no. 3; pp. 643 - 666
• Main Authors: Jordão, Ricardo Vinícius Dias, Almeida, Vander Ribeiro de
• Format: Journal Article
• Language: English
• Published: Bradford Emerald Publishing Limited 10.07.2017; Emerald Group Publishing Limited
• Subjects: Accounting; Benchmarks; Brand loyalty; Business; Competition; Differentiation; Economic value added; Empirical analysis; Equity; Explicit knowledge; Finance; Financial performance; Indicators; Intellectual capital; Knowledge economy; Knowledge management; Management methods; Management theory; Markets; Performance evaluation; Performance measurement; Profitability; Statistical tests; Statistics; Sustainability; Brazil; Accounting and finance; Intellectual capital; Knowledge management; Performance measurement; Financial sustainability; Competitiveness
• ISSN: 1469-1930; 1758-7468
• DOI: 10.1108/JIC-11-2016-0115

Purpose One of the main contemporary challenges in organisations is finding ways of measuring their intellectual capital (IC), and its effects on competitiveness and financial sustainability. The purpose of this paper is to analyse the influence of IC on the long-term financial performance of Brazilian companies. Design/methodology/approach Considering that previous studies have not been able to explain the role of IC in financial sustainability (measured by long-term corporate performance), this paper attempts to fill this gap by means of a quantitative, descriptive and applied study. Based on the theories of knowledge management, accounting and finance, the authors have undertaken a study of the companies listed on the BM&FBovespa, based on secondary data, using a multi-industrial cut, over the period 2005 to 2014, using descriptive and multivariate statistics. Findings The analysis supports three major conclusions: IC influences positively the profitability and corporate return of these companies; the more intangible-intensive public companies listed on the BM&FBovespa demonstrate higher financial sustainability than the others, in terms of profitability and corporate return, either individually, globally or by industry; and that IC helps increase financial performance, systematically, over time. Research limitations/implications Contributions of the following types were sought: theoretical (increasing an understanding of the effects of IC on business performance from a long-term perspective – an understanding that is still only incipient in the management literature); and empirical (increasing an understanding of the role of IC in the differentiation of companies, in organisational profitability and on the return on applications of resources). Practical implications The original proposal for the measurement of financial performance presented in this paper proved to be valid and consistent, complementing what is known about the subject under examination, contributing to the improvement of management theory and practice and providing a competitive benchmarking process. This can make it possible for company analysts or managers to evaluate their company in relation to its industry or its market as a whole by means of such indicators, individually or combined with other quantitative or qualitative metrics. Originality/value The results of this research reduce a gap in the management and accounting literature, as they shed light on the performance measurement process. In addition to the range and depth of the statistical tests carried out, attention should be drawn to the originality of the proposal presented in this paper. This facilitates the measurement of the effects of IC on financial performance through the selection and application of specific indicators for the assessment of the contribution of IC to organisational results.