PURPOSE: The paper aims to investigate the contribution of intellectual capital to banks' competitive and financial performance. METHODOLOGY: The paper uses data retrieved from a research survey. The questionnaire on IC contribution to banks' competitive performance was applied to executive managers of retail banks operating in the Polish banking market. The data collected for the assessment of financial performance were retrieved from banks' annual reports and referred to each year from 2012 to 2019. The data were analyzed by Principal Axis Factor Analysis (PAF) and Partial Least Squares Structural Equation Modelling (PLS-SEM). FINDINGS: The results revealed that banks' competitive and financial performance depends on both the intellectual capital and environmental factors. The relation between financial performance and intellectual capital is positively mediated by competitive performance, and environmental factors can affect the strength of this relationship. The findings show that applying the resource-based theory might not be sufficient to gain a competitive advantage and sustainable market position in the case of banks. IMPLICATIONS: The results develop IC knowledge and prove the necessity to conduct systematic research on their importance for creating value for customers and gaining competitive advantage. They also provide direction for banks' decision-makers concerning factors that should be taken into account to create competitive advantage, market performance, and efficiency. The Polish banking market has transformed from undeveloped and non-competitive into a developed and competitive one during the last few decades. Thus, the results also have implications for other companies operating in transition markets as their competitiveness depends on understanding which factors should be the foundation for their market strategy and their competitiveness and efficiency to become a developed one. ORIGINALITY AND VALUE: The majority of the IC research concentrate on developed countries, and very little is known about developing and transition countries that were successful on their journey. Most of the research has focused on identifying and measuring IC components and the relationship between them. Usually, the research presents the state of the art and it is based on financial reports. However, the extent to which IC impacts competitive and financial performance in banking markets has been relatively rare. To the authors' best knowledge, this is the first study to examine empirically the relationship between intellectual capital, environment, competitive performance, and efficiency in a transformed banking market in Europe, which analyses the IC contribution over a few years' perspectives.
Keywords: intellectual capital; competitive performance; financial performance; IC survey; principal axis factor analysis; partial least squares structural equation modeling