Effect of intellectual capital and information system capability on effective strategic decision making to achieve financial performance

Abstract

This study analyses the importance of intellectual capital and information system capability applied in state-owned companies in Indonesia, influencing the company’s financial performance through mediating variables. Using the theory of resource-based view (RBV) and bounded rationality to investigate these relations, a series of hypotheses are developed, considering effective strategic decision-making as a mediator variable. The study analyses structural equation modelling (SEM) derived from empirical data from 106 companies in Indonesia. The study attempts to precisely analyse how the impact of intellectual capital and information system capability on established state-owned companies in Indonesia is affected by effective strategic decision-making. The research exposes that information system capability does not influence financial performance, whereas intellectual capital and information system capability indirectly leverages financial performance through effective strategic decision-making.