Understanding the Relationship Between Intellectual Capital and Organizational Performance: The Role of e-HRM and Performance Pay

While the bulk of the literature on intellectual capital focuses on its role as a source of competitive advantage, fewer studies have analyzed the mechanisms through which human, social and organizational capital translate into high organizational performance. Drawing on the resource-based view and intellectual capital research, this paper aims to analyze how the adoption of eHRM tools and performance pay affects the contribution of intellectual capital to organizational performance. The analysis performed on a sample of 168 Italian large organizations from the CRANET survey (2015) shows that, while intellectual capital is positively related to organizational performance, such relationship is weakened in presence of high levels of e-HRM. Moreover, in contexts of high intellectual capital, the combined presence of high level of performance pay and e-HRM nullifies the positive impact of intellectual capital on performance, whereas in contexts of low intellectual capital they lead to higher performance. Implications of these findings for theory and practice are discussed.