Dangerous liaisons: human capital and structural capital in the VAIC model

This paper analyses the perverse effects generated by the relationship between human capital efficiency (HCE) and structural capital efficiency (SCE) that lies at the core of the VAIC. First, the VAIC is positive even for negative values of HCE and negative for positive values. This means that a firm’s performance should be positive (negative) when the value added generated by human capital (HC) is negative (positive), which is non-sense from the economic point of view. Second, SCE being a function of HCE, the correlation between the two variables is given by the model and can be predicted in advance. Finally, a nonlinear relationship is hidden in the regression equation used in empirical analysis that dramatically changes the interpretation of the actual results. Some in recent articles’ findings are reframed to demonstrate researchers’ erroneous interpretations and the harmful impact they could have on managerial decision-making.