Strategy, Intellectual Capital, and Operating Performance

This study explores the relationship between intellectual capital (IC) and future operating performance under the prism of different strategic orientations (i.e., prospectors versus defender) and explanations (i.e., investing versus signaling). Our data sample consists of 11,085 firm-year observations of US listed firms for the period 2000–2019. We employed organizational capital and R&D capital as measures of a firm’s IC intensity. It seems that strategy affects the likelihood of a firm to be classified as a low or high IC intensive. Organizational capital improves future operating performance across firms with the same or with different strategic orientations. R&D capital affects primarily prospectors’ future operating performance. Depending on the measure of IC intensity or operating performance, the positive relationship between IC and future operating performance can be explained because either the IC expenditures operate as investments that improve future performance or expectations for improved future operating performance trigger increased IC expenditures.