Intellectual capital and performance in causal models

Abstract Purpose – This paper seeks to investigate the impact of intellectual capital elements on business performance, as well as the relationship among intellectual capital elements from a cause‐effect perspective. Design/methodology/approach – The partial least squares approach is used to examine the information technology (IT) industry in Taiwan. Findings – Results show that intellectual capital elements directly affect business performance, with the exception of human capital. Human capital indirectly affects performance through the other three elements: innovation capital, process capital, and customer capital. There also exists a cause‐effect relationship among four elements of intellectual capital. Human capital affects innovation capital and process capital. Innovation capital affects process capital, which in turn influences customer capital. Finally, customer capital contributes to performance. The cause‐effect relationship between leading elements and lagged elements provides implications for the management of firms in the IT industry. Research limitations/implications – The model proposed in this study is applicable to the high‐tech IT industry. Modification of the proposed model may be needed in applying this model to other industries. Practical implications – This study helps management identify relevant intellectual capital elements and their indicators to enhance business performance. Originality/value – This paper is a seminal work to propose an integrated cause‐effect model to investigate the relationship among elements of intellectual capital for IT in Taiwan.