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Intellectual capital, digital transformation and firms’ financial performance: Evidence from ecological protection and environmental governance industry in China

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  • Jian Yin
  • Jian Xu

Abstract

As the pace of enterprise digital transformation accelerates, intellectual capital (IC) has become a core driving force of gaining market competitive advantages and enhancing value creation capabilities. The paper aims to investigate the impact of IC and its components on financial performance of Chinese ecological protection and environmental governance companies during 2018–2021. In addition, the moderating effect of digital transformation between them is examined. IC is measured by the modified value added intellectual coefficient (MVAIC) model, and the measurement of digital transformation is based on text mining. The results suggest that IC can improve firm financial performance, especially during COVID-19. Physical capital, human capital (HC), and relational capital (RC) positively affect financial performance, while structural and innovation capitals have no significant impact. In addition, digital transformation strengthens the positive relationship between IC and its two elements (HC and RC) and financial performance. Heterogeneous analysis finds that the relationship between RC and innovation capital and financial performance is positive before COVID-19, and it is not significant during COVID-19. For highly leveraged companies, structural capital negatively affects financial performance, and RC has a positive impact. These impacts are not significant for low leveraged companies. This paper provides some new insights for managers who seek new ways to improve firm performance in the process of digital transformation.

Suggested Citation

  • Jian Yin & Jian Xu, 2025. "Intellectual capital, digital transformation and firms’ financial performance: Evidence from ecological protection and environmental governance industry in China," PLOS ONE, Public Library of Science, vol. 20(1), pages 1-22, January.
    • Handle: RePEc:plo:pone00:0316724
    DOI: 10.1371/journal.pone.0316724
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    References listed on IDEAS

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    1. Liang Zhang & Qi Yu & Zhenji Jin & Jian Xu, 2021. "Do Intellectual Capital Elements Spur Firm Performance? Evidence from the Textile and Apparel Industry in China," Mathematical Problems in Engineering, Hindawi, vol. 2021, pages 1-12, May.
    2. Xiaoxu Zhang & Linchao Yang & Tianyu Gao & Wenyong Zhou, 2024. "The coordination mechanism of value co-creation between developers and users in digital innovation ecosystems," Electronic Markets, Springer;IIM University of St. Gallen, vol. 34(1), pages 1-18, December.
    3. Jian Xu & Binghan Wang, 2018. "Intellectual Capital, Financial Performance and Companies’ Sustainable Growth: Evidence from the Korean Manufacturing Industry," Sustainability, MDPI, vol. 10(12), pages 1-15, December.
    4. Jian Xu & Jae-Woo Sim, 2018. "Characteristics of Corporate R&D Investment in Emerging Markets: Evidence from Manufacturing Industry in China and South Korea," Sustainability, MDPI, vol. 10(9), pages 1-18, August.
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