Debt financing as moderator in the relationship between intellectual capital and SMEs performance

Purpose – This study aims to analyze the moderating role of debt financing in the relationship between intellectual capital (IC) and small and medium enterprise (SME) performance in high-tech and low-tech industries. Design/methodology/approach – This longitudinal study uses a balanced panel sample of 7,293 (3,563 high-tech and 3,730 low-tech) SMEs in Southwestern European countries from 2013 to 2020. The data are analyzed using a fixed-effect model as baseline estimation, and a generalized method of moments estimation is used for robustness checks. Findings – The results show strong positive effects of human capital (HC) and structural capital (SC) and a weak effect of capital employed (CE), on the performance of high-tech SMEs. Debt financing is negatively and significantly associated with SME performance, and the moderating effect of debt financing is more significant in low-tech industries. Specifically, debt financing accentuates (attenuates) the positive effect of HC (SC and CE) on the performance of low-tech SMEs. Practical implications – This study offers a valuable framework for managers and policymakers when considering the role of debt financing in the IC components – SME performance relationship in distinctive industrial environments. Originality/value – This study provides new insights into the close and complex relationships between IC components, debt financing and SME performance.