Determinants of Enterprise Performance in Small Technology-Intensive Enterprises: Intellectual Capital and Innovation Capability in the Firm

The findings of an empirical study that examines the impact of intellectual capital on enterprise performance in small innovative enterprises (SIEs) are presented in this developmental paper. The study examines the impact of effective intellectual capital exploitation against the background of key external (socio-political, technological, and economic) factors. This research reported in this study is part of a greater effort that is examining intellectual capital practices in regions of high-technology clusters including St. Petersburg (Russia), the so-called "Medicon Valley" of Denmark, the Silicon Valley in the USA, and German and Swiss "Mittelstand" clusters in Southern Germany and the Zurich region are compared and analysed for patterns, similarities and differences. This paper focuses on the findings of the Russian part of the study. The key questions of this research address the relative impact of intellectual capital practices (internal factors) and prevailing socio-political, economic, and technological factors on the performance of small innovative enterprises. This work seeks to provide new insights in several areas: (1) While a number of studies have looked at the impact of intellectual capital on enterprise performance per se, relatively little work to date has focused on the specific case of intellectual capital deployment in small innovative enterprises (SIEs); (2) Very little, if any, work has focused on the impact of intellectual capital and its implications for private enterprise performance in transitional economies. This study provides empirical evidence suggesting that internal factors have a greater impact on enterprise performance than external ones - even in the transitional economy of Russia. In this paper the notion of the knowledge-based theory of the firm forms the conceptual basis of a framework that is developed to relate intellectual capital (human capital and structural capital) and key external factors (socio-political, economic and technological) to enterprise performance in SIEs. A survey instrument designed on the basis of this model was applied in the field research involving SIEs in the various regions. The research data was subjected to exploratory and confirmatory factor analysis using standard and advanced statistical analysis based on regression, correlation analysis. In a final step, structural equation modelling on the basis of a partial least squares technique was used for examining the validity of the hypothesis in view of the research findings.