Intellectual capital, digital transformation and firms' financial performance: Evidence from ecological protection and environmental governance industry in China
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View abstract on PubMed
Summary
This summary is machine-generated.Intellectual capital (IC) boosts financial performance, especially during COVID-19. Digital transformation enhances the positive impact of human capital (HC) and relational capital (RC) on firm financial success.
Area Of Science
- Business and Management
- Economics
- Information Systems
Background
- Digital transformation accelerates enterprise growth, making intellectual capital (IC) crucial for competitive advantage and value creation.
- Understanding the interplay between IC, digital transformation, and financial performance is vital for modern businesses.
- The study focuses on Chinese ecological protection and environmental governance companies, a sector undergoing significant digital shifts.
Purpose Of The Study
- To investigate the impact of IC and its components on the financial performance of Chinese environmental companies (2018-2021).
- To examine the moderating effect of digital transformation on the IC-financial performance relationship.
- To provide insights for managers navigating digital transformation to enhance firm value.
Main Methods
- Utilized the modified value added intellectual coefficient (MVAIC) model to measure IC.
- Employed text mining techniques to quantify digital transformation.
- Conducted heterogeneous analysis to explore variations based on COVID-19 impact and company leverage.
Main Results
- Intellectual capital (IC) positively impacts firm financial performance, with a notable effect during the COVID-19 pandemic.
- Human capital (HC) and relational capital (RC) significantly enhance financial performance; structural and innovation capital show no significant impact.
- Digital transformation amplifies the positive relationship between IC (specifically HC and RC) and financial performance.
Conclusions
- Digital transformation acts as a catalyst, strengthening the positive effects of key IC components on financial outcomes.
- The impact of relational capital (RC) and innovation capital on financial performance varied pre- and during COVID-19.
- Leverage influences the relationship, with structural capital negatively impacting performance in highly leveraged firms, while RC shows a positive effect.
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