The role of Intellectual Capital on firm performance a case of Telecom sector of Pakistan.

Abstract

This study investigates the impact of various dimensions of intellectual capital including Human Capital, Innovation Capital, Relational Capital, and Structural Capital on Firm Performance, with Dynamic Capability examined as a mediating variable. Using Structural Equation Modeling (SEM), the results reveal that Human Capital significantly influences both Dynamic Capability and Firm Performance directly and indirectly, highlighting its crucial role in organizational success. Relational Capital also shows a positive effect on Dynamic Capability but lacks a significant direct or indirect impact on performance. Conversely, Innovation Capital and Structural Capital do not demonstrate significant effects on either Dynamic Capability or Firm Performance, suggesting a more complex or context-dependent role. The mediation analysis confirms that Dynamic Capability serves as an effective conduit through which Human Capital enhances performance outcomes. Based on these findings, the study recommends prioritizing human capital development and external relationship management to foster adaptability and improve performance. Future research directions include exploring moderating factors, adopting longitudinal and industry-specific approaches, and examining broader performance metrics to deepen understanding of intellectual capital’s strategic role.