Since returning from virtual obscurity following the demise of apartheid in 1994, South Africa has endured eight years of aggressive transition across nearly all aspects of its social, political and economic infrastructure. Historically recognised for its underlying wealth of natural resources, recent efforts in South Africa have sought to develop the nation's intellectual capabilities and productivity. To establish South Africa's advancement in respect its transition, the primary objective of this research study is to empirically investigate whether a firm 's intellectual capital can explain organisational performance. Findings from this research study will assist to determine if South African companies appear to continue to rely on traditional business practices and perceptions, that is a reliance on natural resources for wealth creation, or are shifting toward a greater reliance on intellectual capital factors of production in determining company performance. The contribution of intellectual capital to company performance in the South African economy was examined using three different models. Model I - part A was designed to establish the decisive business resource in creating wealth in the South African economy? Model I - part B, Model 2 and Model 3 are proposed on the premise of the Resource Based Theory of the Firm in that, company performance is a function of the organisation's ability to acquire and deploy resources (intellectual capital) in such a way to develop a sustainable competitive advantage. Model I - part B, Model 2 and Model 3 were designed to empirically investigate the relationship between a company's intellectual capital and performance. Company performance was examined in three dimensions: productivity, profitability, and market valuation. The primary explanatory independent variable of the analysis was intellectual capital performance. For Model 1 part B and Model 2 a within industry analysis was designed. Two groups of companies were defined for contrasting multiple regression analysis using the different performance measures defined as the dependent variables. Group membership was determined by the company's primary source of value creation. The low-knowledge base group derives its value from raw resource (material) extraction, fixed capital investment and the efforts of physical labour. The high knowledge-base group derives its value exclusively from the efforts of people (human capital) and the collective routine systems, processes and information within the organisation (structural capital). For Model 3 an analysis was carried out across industries and proposed, that certain industries rely more heavily upon the use of knowledge and intellectual capital in producing a company's goods or services. Model 1, empirical results suggested that the dominant business resource in the South African economy is physical and not human capital or structural capital. These results imply that South Africa has not yet manifested the primary characteristics of the Knowledge Economy. Model 2, empirical results indicated only one significant positive relationship, between intellectual capital performance and profitability. This applied to the high and low knowledgebase group. This finding indicated that the appropriate management and measurement of intellectual capital would improve company profitability. Model 3, empirical results did not . support the hypothesis, that the knowledge-base of an industry had a positive effect on the relationship between intellectual capital performance and company performance. Overall, the empirical findings, based on correlation and linear multiple regression analysis indicates, that the contribution of intellectual capital to company performance are informative, but mixed. In general, empirical findings on the one hand suggest that although physical capital is the dominant business resource in the South African economy, the more intensive a company manages and measures its intellectual capital, improved in profitability can result. On the other hand intellectual capital performance does not have a positive influence on productivity in a company nor does it have a positive influence on analysts or investors. As a result, despite efforts to improve its intellectual capital base the business environment and market in South Africa still appears to place greater weight to corporate performance based on physical capital assets.

Thesis (Ph.D.)-University of Natal, Durban, 2003.