Can intellectual capital of SMEs help in their sustainability efforts

Abstract

Small and medium enterprises due to their smaller size and resources face numerous challenges to sustain themselves. In the face of mounting pressures from the competitors, SMEs need to position themselves in such a way so as to cater for the changing customer needs and expectations of their customers. To achieve this, developing the internal knowledge and knowing capabilities becomes imperative. The present study is an attempt to investigate the role of intellectual capital towards sustainability. Sample consisted of SMEs selected from the database of Federation of Malaysian Manufacturers. Self-administered questionnaires were distributed to 335 respondents with a response rate of 51%. The results of the study indicate that intellectual capital is having a significant relationship as well as influence on sustainability of SMEs. Further, multiple regression results reveal that knowledge and innovativeness dimensions of intellectual capital are more influential in creating sustainability for small enterprises. However, employee competences, intellectual agility and skills have been found to insignificant in Malaysian context. The results reveal that if intellectual capital of the employees is not optimally harnessed, it would lead to failure. The study is significant not only for the owners/managers of SMEs but also for the policy makers. Future directions are also provided for researchers interested in the area.