Intellectual capital and working capital management: the mediating role of R&D capitalization in Indonesian family firms

Purpose This study aims to examine research and development (R&D) capitalization as a mediating mechanism linking intellectual capital (IC) to working capital management (WCM) efficiency in Indonesian family firms. Design/methodology/approach Using 448 firm-year observations from 64 Indonesian Stock Exchange-listed family firms (2017–2023), the study measures IC via modified value added intellectual coefficient (M-VAIC) across five dimensions, use System Generalized Method of Moments to address endogeneity, and apply Hayes PROCESS Model 4 bootstrapped mediation analysis to decompose IC effects into direct and indirect pathways. Findings M-VAIC reduces cash conversion cycles by 10.25 days. R&D capitalization functions as a partial complementary mediator, transmitting 17.21% of total IC effects through formalization channels while 83% operates through direct tacit pathways. Mediation is 65% stronger for smaller firms (21.78%) than larger firms (13.42%), validating information asymmetry reduction as the operative mechanism. Foreign ownership attenuates IC effects by 40%–50%, indicating international governance disrupts tacit coordination advantages. Originality/value This study provides empirical quantification of knowledge formalization boundaries (17% explicit, 83% tacit) and position R&D capitalization as an operational efficiency mediator between IC and WCM in family firm contexts, a relationship not previously examined in the literature.