ISSN 1392–3730 print / ISSN 1822–3605 online
JOURNAL OF CIVIL ENGINEERING AND MANAGEMENT
http:/www.jcem.vgtu.lt 2007, Vol XIII, No 4, 265–271
A STUDY ON THE RELATIONSHIP BETWEEN INTELLECTUAL CAPITAL
AND BUSINESS PERFORMANCE IN THE ENGINEERING CONSULTING
INDUSTRY: A PATH ANALYSIS
Chung-Fah Huang1, Sung-Lin Hsueh2
1Dept of Civil Engineering, National Kaohsiung University of Applied Sciences, No 415,
Chien-Kung Rd., Kaohsiung City, Taiwan. E-mail: jeffrey@cc.kuas.edu.tw
2Dept of Arts and Crafts, Tung Fang Institute of Technology, No 110, Tung-Fang Rd.,
Kaohsiung County, Taiwan. E-mail: hsueh.sl@msa.hinet.net Received 13 July 2007; accepted 08 Oct 2007
Abstract. Engineering consulting firms, like other knowledge-based enterprises, take intellectual capital as their most important asset embedded in the organisation. This research aims to analyse the correlation between intellectual capital and business performance. The questionnaire was sent to all Taiwan’s engineering consulting firms, and 101 copies were collected. It was found that, among these engineering consulting firms, the structural capital and relational capital show better performance, while human capital has poorer performance. This is especially true for staff education and training. This indicates that there is still room for improving human resource management by engineering consulting firms. It is observed by path analysis that, among the three dimensions of engineering consulting firms’ intellectual capital, the human capital has a great influence on structural capital and relational capital. However, only relational capital has a direct influence on business performance. Human capital has an influence upon the business performance via the rela-tional capital.
Keywords: engineering consulting, intellectual capital, business performance, path analysis. 1. Introduction
Unlike other labour-intensive companies, engineer-ing consultengineer-ing firms often provide professional knowl-edge and technologies, and the engineering consultants are also knowledge-based professionals. Thus the engi-neering consulting industry belongs to the knowledge-intensive business, for which the most important asset is intellectual capital, which is beyond the range of the bal-ance sheet [1]. Knowledge is a close concern of engineer-ing consultengineer-ing firms, and proper management of intellectual capital might have an immediate effect on the business operation and management.
With the advent of the knowledge economy, the fo-cus of enterprises has gradually shifted from tangible assets to intellectual capital [2]. Previous research has shown that business performance was established on intangible resources and capabilities. Drucker (1965) stressed that the most valuable asset of an enterprise was production equipment in the 20th century, rather than knowledge workers and their productivity as in the 21st century. Since knowledge has become the most important ingredient of modern production, how to manage prop-erly the internal affairs of an enterprise, especially the intellectual capital, is one of the crucial subjects for busi-ness management [3].
Like other knowledge-intensive companies, the en-gineering consulting firms also have many intangible
assets not reflected on the balance sheet. Even though it is difficult to analyse and manage knowledge of engineering consulting firms, the knowledge management activities, such as acquisition, innovation, storage, sharing and re-utilisation, are closely related to enterprises’ competitive-ness and performance. Thus it is worthwhile to discuss if proper management of intellectual capital can improve business operation and performance.
At present there is a lack of attention devoted to study of intellectual capital in engineering consulting firms. So the questionnaire investigation in Taiwan’s engineering consulting firms was conducted extensively for the purpose of: (1) understanding the acquisition and development status of intellectual capital in the engineer-ing consultengineer-ing industry; (2) explorengineer-ing the influence of intellectual capital on business performance.
2. Literature review
2.1. Engineering consulting industry
As a knowledge-intensive business, the engineering consulting industry has developed into a multidisciplinary industry featuring professional and collective activities, in tune with increasingly growing complexity and demands of engineering technology. The characteristics of this industry include:
