Debt financing as moderator in the relationship between intellectual capital and SMEs performance

Purpose This study aims to analyze the moderating role of debt financing in the relationship between intellectual capital (IC) and small and medium enterprise (SME) performance in high-tech and low-tech industries. Design/methodology/approach This longitudinal study uses a balanced panel sample of 7,293 (3,563 high-tech and 3,730 low-tech) SMEs in Southwestern European countries from 2013 to 2020. The data are analyzed using a fixed-effect model as baseline estimation, and a generalized method of moments estimation is used for robustness checks. Findings The results show strong positive effects of human capital (HC) and structural capital (SC) and a weak effect of capital employed (CE), on the performance of high-tech SMEs. Debt financing is negatively and significantly associated with SME performance, and the moderating effect of debt financing is more significant in low-tech industries. Specifically, debt financing accentuates (attenuates) the positive effect of HC (SC and CE) on the performance of low-tech SMEs. Practical implications This study offers a valuable framework for managers and policymakers when considering the role of debt financing in the IC components – SME performance relationship in distinctive industrial environments. Originality/value This study provides new insights into the close and complex relationships between IC components, debt financing and SME performance.