An investigation of the impact of intellectual capital on entrepreneurial performance: A moderated mediation analysis on global firms

The stability of multinational corporations is under threat due to the intensifying turbulence of global competition, which prevents intellectual capital from actively promoting performance. To meet the challenges brought by diverse and tumultuous environmental contexts, multinationals urgently need to develop new approaches that will resolve risks at headquarters and mitigate the adverse effects of the crisis on cross-border business operations. Building on the resource-based theory and dynamic capabilities theory, this research aims to seek possible solutions that would optimize the structure of intellectual capital in various subsidiary regions so as to maximize their effectiveness in sustaining parent company performance in the presence of turmoil. Taking listed multinational corporations (MNCs) as the research subject, this paper explored the impact of intellectual capital of foreign subsidiaries on their parent company performance through the mediating and moderating dynamics of slack resources and institutional distance respectively. Furthermore, we explored the above mechanism by comparing a developed-economy MNC and a developing-economy MNC contexts. Through investigating a dataset of 1237 listed foreign subsidiaries during the period 2012 to 2021, we found that foreign subsidiaries' intellectual capital behaved in largely different mechanisms comparing developed and developing economies such that, subsidiaries' intellectual capital in developed economies was found to be contributing to parent company performance, whereas, subsidiaries' intellectual capital in developing economies fail to play a positive role on parent company performance. Meanwhile, the results showed that, absorbed slack played an indirect-only mediating role on the relationship between subsidiaries' intellectual capital and parent company performance in developing countries, and unabsorbed slack resources played a competitive mediating role for the full sample. Whereas, institutional distance fails to play moderate role in the effect of foreign subsidiaries' intellectual capital on parent company performance. Our study has implications for MNCs in the post-COVID era. It can help them minimize external threat and develop strategies and measures to maximize the structure of intellectual capital in different host locations, thereby enhancing their multinational performance.