الفهرس 
Conceptual FrameworkOnly 14 pages are availabe for public view
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Abstract
Introduction
Traditionally, tangible assets like real estate, manufacturing facilities, machinery, inventory, and raw materials have been the main drivers for improving enterprise performance in traditional corporate management techniques. However, managerial techniques changed as the availability of these physical assets shrank and became more difficult to get. Business executives started looking for competitive advantages other than only expanding their physical capital by maximizing utilization of resources and efficiency. This change signaled the arrival of the knowledge-based economy, an approach in which an enterprise’s capacity to develop, deploy, and effectively use intangible assets is crucial to its ability to generate wealth.
Intangible assets are often believed to play a key role in enterprise performance, particularly for small and medium-sized firms (SMEs). In the process of valuing an enterprise, intangible assets have outweighed tangible assets in importance over time. These intangible assets, which also include human capital, relational capital, and structural capital, are frequently referred to as intellectual capital (Wang and Chen, 2020).
Intellectual capital stands out among these intangible assets as having the greatest impact on SME performance. It has consistently been acknowledged as a vital asset with a significant impact on business performance. contributing significantly to maintaining competitive advantages. Intellectual capital has many advantages, such as influencing an enterprise’s future earnings potential, fostering innovation, having a significant impact on financial performance, and enhancing the organization’s ability to compete in the market. Additionally, intellectual capital improves customer attraction and retention, staff recruiting and keeping, business competitiveness, resource allocation, and enterprise management (Bontis 2016). Three dimensions of intellectual capital have been consistently identified by prior research: human capital, structural capital, and relational capital (Edvinsson, 1997).
The linkages between each of these components of intellectual capital are strong and advantageous to numerous researchers. According to Chen and Wang (2020), structural and human capital together have a significant impact on financial performance, particularly in highly competitive industries. Relational capital may have varying effects on financial results, nevertheless (Du et al., 2021). Furthermore, several researchers have confirmed a significant and positive association between the components of intellectual capital and financial performance.
The main point of the existing study is the importance of Intellectual capital (IC), measured by the value-added intellectual capital approach (VAIC), and all of its components (Human capital efficiency, structural capital efficiency, and capital employed efficiency) on the financial performance of SMEs in Egypt.
2. Statement of the problem
According to prior studies, intellectual capital is more important for small and medium-sized enterprises (SMEs) than for large firms. This is due to the significant challenges that face SMEs in Egypt in achieving financial success and sustainability in a market that is becoming more and more competitive. Understanding how intangible components, such as intellectual capital, affect small businesses’ financial success is of critical importance. The need to provide a thorough analysis of this impact and provide strategies to improve the innovative capacity and financial performance of SMEs in Egypt constitutes the study’s statement of problems. Understanding this issue can help to enhance the business environment and promote Egypt’s economic growth.
So, the main question of the research is:
How does each one of the intellectual capital components impact the financial performance of the Egyptian stock market of SMEs? Taking the performance of SMEs from three dependent measurements, Economic value added (EVA), Employment productivity (EP), and Growth rate (GR).
Sub-questions can be extended as follows:
1) What is intellectual capital, and how is it defined and measured in the context of Egyptian SMEs?
2) What are the key components of intellectual capital relevant to Egyptian SMEs (e.g., human capital, structural capital, relational capital)?
3) How do Egyptian SMEs utilize intellectual capital to enhance their financial performance?
4) What are the challenges and barriers faced by Egyptian SMEs in effectively managing and leveraging their intellectual capital?
5) How does intellectual capital impact the revenue generation and profitability of Egyptian SMEs?
6) To what extent does intellectual capital contribute to the innovation and competitiveness of Egyptian SMEs?
3. Objectives of the Study
The main objective of the study is to investigate the impact of Intellectual capital components efficiency on an enterprise’s financial performance of Egyptian SMEs. Specifically, this study investigates whether intellectual capital enhances an enterprise’s financial performance or not.
To achieve the main objective, the sub-objective can be extended as follows:
1) Illustrate the component of Intellectual capital.
2) Investigate how SMEs use Intellectual capital to improve their financial performance.
3) Investigate the different effects of Intellectual capital components on the financial performance measurements of SMES.
4. Importance of the Study
This research expands the accounting literature in many ways. First, by examining the effects of intellectual capital and its components on the financial performance of small and medium-sized enterprises (SMEs), its application to SMEs contributes to accounting studies. In published studies in Egypt, this component has not gotten much consideration. Second, this study’s use in developing countries is significant because prior research has mostly concentrated on corporate environments in advanced countries. However, the entrepreneurial environment in Egypt is where this study is conducted. In light of the modern era’s increasing emphasis on innovation and information, intellectual capital and property can be essential sources of innovation and increased competitiveness for small and medium-sized enterprises.
5. Variables
5.1 Independent variables
Intellectual Capital (IC): Intellectual capital is defined as the ownership of knowledge, practical experience, organizational innovation, customer relationships, and professional skills that create respect and value for organizations (Xu and Wang 2019).
Value-added Intellectual coefficient (VAIC): It’s a methodological accounting principle, introduced by Pulic as a measure of Intellectual capital efficiency (ICE) and used by most researchers.
5.2 Dependent variables
Financial performance: Financial performance is ”a measure of a company’s ability to generate profits and create value for its shareholders over time, and is typically assessed through various financial metrics, including profitability ratios, liquidity ratios, and efficiency ratios (Pandey, 2020).
6. Hypotheses
Main hypothesis
There is a significant relationship between the Intellectual capital component’s efficiency and the financial performance of SMEs.
H1 There is a significant relationship between intellectual capital components’ efficiency and the economic value added (EVA) of SMEs.
H1a There is a significant relationship between human capital efficiency (HCE) and the economic value added (EVA) of SMEs.
H1b There is a significant relationship between structural capital efficiency (SCE) and the economic value added (EVA) of SMEs.
H1c There is a significant relationship between Capital employed efficiency (CEE) and economic value added (EVA) of SMEs.
H2: There is a significant relationship between intellectual capital components’ efficiency and the Employment productivity (EP) of SMEs.
H2a There is a significant relationship between human capital efficiency (HCE) and the Employment productivity (EP) of SMEs.
H2b There is a significant relationship between structural capital efficiency (SCE) and Employment productivity (EP) of SMEs.
H2c There is a significant relationship between Capital employed efficiency (CEE) and Employment productivity (EP) of SMEs.
H3 There is a significant relationship between intellectual capital components’ efficiency and the Growth rate (GR) of SMEs.
H3a There is a significant relationship between the human capital efficiency (HCE) and the Growth rate (GR) of SMEs.
H3b There is a significant relationship between structural capital efficiency (SCE) and the Growth rate (GR) of SMEs.
H3c There is a significant relationship between the Capital employed efficiency (CEE) and the Growth rate (GR) of SMEs.
7. Results
To examine the key hypotheses, three different models were created. Results confirmed hypotheses (1) and (2), indicating a positive relationship between intellectual capital and an enterprise’s economic value added and employee productivity. Though it was rejected, hypothesis (3), which suggested a similar impact on a firm’s growth rate, was not substantially supported by the study.
8. Recommendations
The researcher recommends the following points based on the study findings:
a. Future studies should examine the idea of relational capital in Egyptian SMEs to learn more about how various kinds of relationships (with clients, suppliers, partners, etc.) might affect business success.
b. It is important to make an effort to convince SMEs to include relational capital in their financial reporting.
c. Future research can benefit from qualitative techniques including interviews, questionnaires, and case studies in addition to quantitative analysis. These methods can offer subtle insights into the value of relationships in SME operations and their impact on intellectual capital.
Together, these suggestions offer future academics a road map for addressing the issues and advancing our knowledge of intellectual capital in Egyptian SMEs in both theoretical and practical ways.