Intellectual capital as a driver of value creation in Serbian entrepreneurial firms

Purpose - This paper analyses the role of intellectual capital (IC) as a factor of the financial performance of entrepreneurial firms, which are recognized as the main drivers of economic growth and employment. Design/methodology/approach - The sample consists of 188 business owners from Serbia. The primary data are collected using the questionnaire, while the secondary data come from the annual financial statements of their companies. The elements of IC as independent variables are grouped into three components: human, structural and relational capital; sales revenue and operating profit CAGR (5y) are used as dependent variables, while company size and industry type are used as control variables. Statistical analysis involves factor and regression analyses. Findings - The results reveal that IC components contribute to the long-term financial performance of entrepreneurial firms. Specifically, the following elements have positive effects on financial performance: knowledge of the entrepreneur, process improvement and organisational culture. On the other hand, entrepreneurs’ social skills and tenacity were found to have a negative impact on revenue and operating profit growth, while support from informal networks had a negative effect on the growth of sales revenue. Originality/value - This study aims to fill a gap in the literature on the impact of IC on the financial performance of entrepreneurial firms.