A great number of economists all around the world research theories of life cycle models. PMBOK and literature on project management have lack of information about the influence of project management on the management of the whole company at different life cycle stages. During 1990-s project management instruments in Russian companies were not used almost at all, but in 2003–2007 these instruments were in high demand. What were the reasons of these changes? The answer to this question is based on information about differences between goals of companies at various life cycle stages.
Purpose. Investments in intellectual capital (IC) are often linked to competitive advantages that improve economic profit and increase the value of a company. However, this effect is reciprocal: Companies that generate higher cash flow can invest more in intellectual capital. The aim of this study is to analyze a dynamic relationship between IC components and economic profit, with a special emphasis on industry specific effects in pharmaceutical, retail, steel, telecommunications, and service sectors.
Design/methodology/approach. Panel vector autoregression (VAR) was used to deal with the mutual influence of intellectual capital components, the lag effect, and heterogeneity. The data was taken from Compustat database and covers the period from 2001 to 2010.
Findings. This research proves that there is interaction between investments in the IC components and company performance. However there are sectoral differences: there is a positive impact of economic profit on human capital in retail; in the steel industry a mutual influence is revealed. Moreover, interaction between different IC components is detected in telecommunication and steel industries.
Originality/value. This is the first study to present clear evidence of the effects of performance on IC investment decisions. The time lag in the effects of IC investments was estimated and compared for different industries. On the methodological side, the paper presents a rather simple method capable of yielding results consistent with other studies and yet rich enough to be applied to an analysis of sectoral differences in dynamic IC investment decisions.
This paper develops an idea regarding value-based management model creation that conjoins financial and nonfinancial indicators of a company’s performance, with an accent on intellectual capital elements assessment and their contribution to financial performance. A system of leverage-based indicators is proposed. The results of the regression analysis confirm that intellectual assets should be analysed separately in the context of their influence on financial performance. Based on the model, the consequence of managerial decisions is suggested.