DYNAMIC INTERACTIONS BETWEEN INTELLECTUAL CAPITAL ELEMENTS AND PRODUCTIVITY IN THE KOREAN MANUFACTURING INDUSTRY: A PANEL VECTOR AUTOREGRESSIVE APPROACH

From the perspective of a heterogeneous firm framework, intellectual capital is considered one of the predominant driving forces behind the enhancement of productivity and achieving sustained growth. This study investigated the dynamic interactions between the elements of intellectual capital (human, structural and relational capital) and productivity using panel data from Korean manufacturing firms. Considering various diagnostic test results, we established a dynamic panel vector autoregressive (PVAR) model and used a generalized method of moments (GMM) estimator to test the dynamic interactions between intellectual capital components, firm heterogeneity (age, leverage, size and slack), interfirm competition and productivity. The PVAR-based Granger causality test results indicated that among the dynamic interactions, human capital had a central role in mutually reinforcing structural and relational capital and further enhancing productivity. We also revealed a positive bilateral relationship between structural capital and productivity. Relational capital was found to have no significant effect on productivity, but productivity contributed to raising relational capital. Our findings suggested that productivity-based sustained growth requires the strategic formulation and implementation of various policies to develop and fully leverage human resources by establishing an efficient and effective innovation-friendly structure. These foundations should be followed by consideration of various employee configurations to promote the development of human, structural and relational capital.