Author(s): Nagwan AlQershi,Zakaria Bin Abas and Sany Sanuri Mohd Mokhtar
The importance of Intellectual Capital (IC) in affecting firm performance has attracted global attention. The current study fills the existing gaps in theory and practice by investigating the nature of the relationship between IC and SMEs’ performance in the manufacturing industry of Yemen. The survey method was used to collect data from 284 SMEs in the manufacturing industry of Yemen. Results indicate that only two dimensions of IC namely Human Capital (HC) and Structural Capital (SC) have a significant effect on SMEs’ performance, but not that between Relational Capital (RC) and SME performance. The findings of this study offer important insights for owners and managers of SMEs, researchers and policymakers to further understand the effects of IC on SMEs’ performance. SMEs should also be encouraged to develop their IC to improve their performance.