Intellectual Capital and Economic Value Added: Does Corporate Social Responsibility Mediate the Relationship?

Abstract

Background: Firm value increasingly depends on intangible assets like intellectual capital, encompassing human, structural, and financial resources, which drive innovation, productivity, and future earnings. Corporate social responsibility (CSR) complements this by enhancing transparency and stakeholder trust, though its impact on firm value can vary depending on effectiveness and market context. Aims: This study aims to examine the effect of intellectual capital on firm value, operationalized through human capital performance, structural capital performance, and employee capital performance, both directly and indirectly through corporate social responsibility (CSR) as a mediating variable. Study design:  The study employs a quantitative approach with an explanatory method. The research sample consists of publicly listed companies on the Indonesia Stock Exchange during a specified observation period, selected using a purposive sampling technique. Place and Duration of Study: The research sample consists of publicly listed companies on the Indonesia Stock Exchange during the 2017–2022 observation period. Methodology: The data were analyzed using panel data regression to examine the direct effects among variables, while the mediating effect was tested using a causal step approach and the Sobel test method. Intellectual capital was measured using the Value Added Intellectual Coefficient (VAIC™) approach, which includes Human Capital Performance (HCP), Structural Capital Performance (SCP), and Capital Employed Performance (CEP). Corporate social responsibility (CSR) was measured using the CSR disclosure index, while firm value was proxied by the company’s market value indicator, namely Economic Value Added (EVA). Results: Empirically, the findings indicate that human capital performance, structural capital performance, and capital employed performance have a positive and significant effect on firm value. Furthermore, corporate social responsibility (CSR) has a positive and significant effect on firm value and partially mediates the relationship between each component of intellectual capital and firm value. Conclusion:  These findings suggest that CSR functions as a strategic mechanism that enhances the ability of intellectual capital performance to generate firm value. This study provides empirical evidence that integrating intellectual capital management with effective CSR strategies can improve firm value in the context of emerging markets.