Probing the impact of intellectual capital on SME efficiency: the role of business model innovation

Abstract

Purpose

This study explores the mechanism by which intellectual capital (IC) [i.e. human capital (HC), structural capital (SC) and relational capital (RC)] influences small and medium-sized enterprise (SME) efficiency in the presence of business model innovation (BMI) as a mediator.

Design/methodology/approach

Data collection is conducted through a survey completed by 319 owners and top managers of SMEs operating in the manufacturing sector in three cities in Pakistan. A simple random sampling method is used. A structural equation modeling artificial neural network (SEM-ANN)-based approach is applied to evaluate the role of IC predictors. The mediation results are authenticated using PROCESS.

Findings

The results indicate that HC, SC and RC significantly influence SME efficiency and BMI. Furthermore, BMI fully mediates the relationship between human capital and SME efficiency, while partially mediating the relationship between structural capital and SME efficiency, as well as between SC and SME efficiency.

Originality/value

This study pioneers research into the link between IC and SME efficiency. It contributes to the literature by defining IC as an antecedent of SME efficiency. It further contributes to the literature by defining IC as an antecedent and BMI as an intervening variable of SME efficiency.