Intellectual capital and technical efficiency of banks in an emerging market: a slack-based measure

2020 ◽  
Vol 47 (7) ◽  
pp. 1711-1732 ◽  
Author(s):  
King Carl Tornam Duho
Keyword(s):  
Technical Efficiency ◽  
Intellectual Capital ◽  
Economies Of Scale ◽  
Positive Impact ◽  
Emerging Market ◽  
Value Added ◽  
Content Type ◽  
Sigma Convergence ◽  
The Impact ◽  
Beta Convergence

PurposeThis paper investigates the impact of intellectual capital and its components on slack-based technical efficiency (SBM-TE) of banks.Design/methodology/approachData envelopment analysis is used to compute SBM-TE scores and the Value-Added Intellectual Coefficient (VAIC™) model is used to measure intellectual capital. An unbalanced panel of 32 banks that operated from 2000 to 2017 has been used.FindingsOverall, the efficiency scores are averaged at 79%, suggesting that an inefficient bank needs to enhance technical efficiency by 21% to be at par with the best performing banks. Beta-convergence and sigma-convergence exist among banks with faster speed evident among listed and local banks. Intellectual capital has a positive impact on SBM-TE and human capital is the main driver of technical efficiency among banks. This result is specifically evident among non-listed banks and foreign banks. Economies of scale property are also evident among the banks. Competition and asset tangibility inhibit technical efficiency among banks.Practical implicationsBanks are advised to invest in value-adding emerging technologies and their employees so as to enhance their efficiency. The study offers insights for policymakers, practitioners and researchers in emerging markets.Originality/valueThe study is premier in employing the SBM-TE to explain the intellectual capital and efficiency nexus, as well as, testing for both beta-convergence and sigma-convergence.

scholarly journals The association between intellectual capital and financial performance in the Islamic banking industry

2019 ◽  
Vol 13 (1) ◽  
pp. 75-93 ◽  
Author(s):  
A.A. Ousama ◽  
Helmi Hammami ◽  
Mustafa Abdulkarim
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Positive Impact ◽  
Value Added ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Gcc Countries ◽  
The Impact

Purpose The purpose of this study is to empirically investigate the impact of intellectual capital (IC) on the financial performance of Islamic banks operating in the Gulf Cooperation Council (GCC) countries. Design/methodology/approach The study measures IC by the value added intellectual coefficient model. A regression analysis was used to assess the impact of IC on financial performance. The research sample consisted of Islamic banks operating in the GCC countries during the years 2011, 2012 and 2013. Data originated from the annual reports of Islamic banks. Findings The results support the thesis that IC has a positive impact on the financial performance of Islamic banks. Even though the average IC is lower than that reported in other studies, the positive effect on financial performance is obvious. The findings also show that human capital (HC) is higher than capital employed (CE) and structural capital (SC). The study reveals that SC has an insignificant impact on the financial performance of the Islamic banks compared to CE and HC. Practical implications The findings provide empirical evidence that IC affects the Islamic banks’ financial performance. It helps Islamic banks in the GCC countries to understand how to use their IC efficiently, especially SC as it is yet to be used efficiently. Also, the findings benefit the relevant authorities (e.g. legislators and central banks) who could use them to emphasise strategic policy reforms whenever required. Originality/value The current research adds to the empirical studies in the GCC countries as it views the region as a collective as opposed to individual countries. It also extends the IC and performance measurement literature of Islamic banks in the GCC countries. Moreover, the current study enriches the limited literature on IC in the context of Islamic banking.

Value-added intellectual capital and financial performance: evidence from Mauritian companies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Reena Bhattu-Babajee ◽  
Boopen Seetanah
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Positive Impact ◽  
Value Added ◽  
Dynamic Panel Data ◽  
Dynamic Panel ◽  
Content Type ◽  
Data Framework ◽  
Long Run ◽  
The Impact

PurposeThe purpose of this paper is to empirically assess the impact of value-added intellectual capital (VAIC) on the financial performance (FP) of companies in Mauritius.Design/methodology/approachThe research uses a dynamic panel vector error correction model (PVECM) which simultaneously allows for endogeneity and causality issues among the variables used.FindingsThe results show that VAIC enhances corporate FP, with a reported lower effect in the short run as compared to the long run. Other important determinants of firm’s performance are asset turnover, capital turnover and firm’s size. Leverage, on the other hand, is observed to be performance reducing in nature. FP of the companies is also a significant determinant of VAIC, implying reverse causal effects exist between the two variables of interest, namely, VAIC and FP.Research limitations/implicationsThe study can be enhanced by doing an industry-specific comparison of the impact of VAIC on FP for more insights.Practical implicationsIt is recommended that managers pay more attention to the role of firms’ stock of tangible and intangible assets, as this has a positive impact on firms’ FP. Also, the results may help to increase awareness of the importance of effective intellectual capital (IC) management within an organization. More so, as demonstrated by Ståhle et al. (2011), VAIC indicates the efficiency of the company’s labor and capital investments within firms in Mauritius. This study may, therefore, enable Mauritian firms to measure their IC efficiency and develop policies to promote and improve upon their intellectual potential to enhance firm’s performance.Originality/valueThe main theoretical contribution of this paper relates to the assessment and conceptualization of the bi-directional relationship between VAIC and FP. It confirmed that there are self-reinforcing feedback effects between VAIC and FP. Methodologically speaking, this paper investigates the VAIC–FP nexus in a dynamic setting using a dynamic panel data framework, namely, a PVECM which also allows for additional insights into the short- and long-run effects.

scholarly journals Intellectual capital and financial performance: Case of the emerging market banks

2021 ◽  
Vol 10 (1) ◽  
pp. 35-41
Author(s):  
Hadeel Yaseen ◽  
Asma’a Al-Amarneh
Keyword(s):  
Intellectual Capital ◽  
Positive Impact ◽  
Stock Exchange ◽  
Emerging Market ◽  
Value Added ◽  
Return On Assets ◽  
Structural Capital ◽  
Amman Stock Exchange ◽  
Capital Efficiency ◽  
The Impact

Using the value added intellectual capital (VAIC) this study aims to investigate the impact of intellectual capital (IC) on the performance of Jordanian banks listed in the Amman Stock Exchange (ASE) during the years 2005-2018. Two empirical models were designed to test the effect of VAIC, and its three components including capital employed efficiency (CEE), human capital efficiency (HCE) and structural capital efficiency (SCE) on banking performance. The results of the study show that there is a significant and positive relationship between VAIC and banks profitability presented by return on assets (ROA). Meanwhile, when VAIC is split into components, SCE, CEE and HCE have a significant and positive impact on banks performance. Yet, CEE has more influence on performance compared to HCE and SCE. This study contributes to the literature as well as practitioners in financial institutions by providing evidence on the influence of intellectual capital on banks performance in an emerging economy, Jordan, in which its national vision and strategy emphasize the importance of intellectual capital in sustaining its economic growth.

The impact of intellectual capital on firm performance: a study of Indian firms listed in COSPI

2018 ◽  
Vol 19 (5) ◽  
pp. 935-964 ◽  
Author(s):  
Neha Smriti ◽  
Niladri Das
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Creation ◽  
Generalized Method Of Moments ◽  
Value Added ◽  
Secondary Data ◽  
Share Price ◽  
Content Type ◽  
Listed Firms ◽  
The Impact

Purpose The purpose of this paper is to examine the effect of intellectual capital (IC) on financial performance (FP) for Indian companies listed on the Centre for Monitoring Indian Economy Overall Share Price Index (COSPI). Design/methodology/approach Hypotheses were developed according to theories and literature review. Secondary data were collected from Indian companies listed on the COSPI between 2001 and 2016, and the value-added intellectual coefficient (VAIC) of Pulic (2000) was used to measure IC and its components. A dynamic system generalized method of moments (SGMM) estimator was employed to identify the variables that significantly contribute to firm performance. Findings Indian listed firms appear to be performing well and efficiently utilizing their IC. Overall, human capital had a major impact on firm productivity during the study period. Furthermore, the empirical analysis showed that structural capital efficiency and capital employed efficiency were equally important contributors to firm’s sales growth and market value. The growing importance of the contribution of IC to value creation was consistently reflected in the FP of these Indian companies. Practical implications This study has robust theoretical grounds and employs a validated methodology. The present study extends knowledge of IC among academicians and managers and highlights its contribution to value creation. The findings may help stakeholders and policymakers in developing countries properly reallocate intellectual resources. Originality/value This study is the first study to evaluate IC and its relationship with traditional measures of firm performance among Indian listed firms using dynamic SGMM and VAIC models.

Intellectual capital: a determinant of firms' operational efficiency

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kanishka Gupta ◽  
T.V. Raman
Keyword(s):  
Intellectual Capital ◽  
Stochastic Frontier Analysis ◽  
Stock Exchange ◽  
Stochastic Frontier ◽  
Value Added ◽  
Financial Sector ◽  
Operational Efficiency ◽  
Content Type ◽  
Frontier Analysis ◽  
The Impact

PurposeIntellectual capital (IC) has been recognized in improving the efficiency of businesses and gaining competitive edge in the developed world. The present study offers perspectives into the effect of IC on the efficiency of the Indian financial sector companies.Design/methodology/approachFor the purpose of evaluating efficiency, the research has used stochastic frontier analysis (SFA). All Indian financial sector companies listed in National Stock Exchange (NSE-500) for the timeframe of ten years (2008–2018) have been considered. The paper has employed modified Pulic's Value Added Intellectual Coefficient (VAICTM) as a proxy to measure IC. Correlation and panel data regression have been used in order to examine the relationship.FindingsThe results of the study indicate positive and significant relationship between IC and efficiency of the firm. The results also show that all the components of IC, that is, human capital, relational capital, process capital and capital employed have a significant impact on firms' efficiency. Additionally, it has been seen that sample companies do not invest in research and development leading to no innovation capital.Practical implicationsThe research will assist managers in managing and controlling the IC, investors in matters related to investment and financial experts in improving the company's IC and value creation.Originality/valueThe current research is one of the pioneering studies in the context of Indian financial sector that examines the impact of modified VAIC on operational efficiency calculated using SFA.

Intellectual capital and firm performance in emerging economies: the case of India

2016 ◽  
Vol 26 (3) ◽  
pp. 410-430 ◽  
Author(s):  
Santi Gopal Maji ◽  
Mitra Goswami
Keyword(s):  
Firm Performance ◽  
Intellectual Capital ◽  
Value Added ◽  
Relative Importance ◽  
Content Type ◽  
Knowledge Based ◽  
Traditional Sector ◽  
Steel Sector ◽  
Capital Efficiency ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of intellectual capital (IC) on Indian traditional sector and compare the relative importance of IC on corporate performance of Indian knowledge-based sector (engineering sector) and traditional sector (steel sector). Design/methodology/approach Secondary data on 100 listed Indian firms, comprising of 44 firms from the engineering sector and 56 from the steel sector, are collected from “Capitaline Plus” Corporate database for a period of 14 years from 1999-2000 to 2012-2013. IC and its components are computed using Pulic’s value-added intellectual coefficient model and firm performance is measured by return on asset. Fixed effect regression model is used to investigate the hypothetical relationship between IC and firm performance. Further, quantile regression is used to check the robustness of the results. Findings The results indicate that IC efficiency and physical capital efficiency are positively and significantly associated with the firm performance for both the sectors. Regarding the components of IC, the coefficient of human capital efficiency is positive and significant, but the present effort fails to disentangle any significant influence of structural capital efficiency on firm performance. However, the results indicate that the influence of IC efficiency on firm performance is significantly greater in case of knowledge-based sector than that of traditional sector. Practical implications The findings of the study are useful for the decision makers, as the results indicate that the IC plays crucial role in value creation not only for knowledge-based firms but also for the firms belonging to the traditional manufacturing sector. Originality/value In the Indian context, this is the first study to examine the relative importance of IC in a knowledge-based sector and a traditional sector using appropriate methodology.

Agency problems and the value of advertising expenditures in an emerging market: role of product market competition

2020 ◽  
Vol 46 (9) ◽  
pp. 1123-1143
Author(s):  
Omar Farooq ◽  
Zakir Pashayev
Keyword(s):  
Positive Impact ◽  
Emerging Market ◽  
Market Competition ◽  
Agency Problems ◽  
Product Market ◽  
Product Market Competition ◽  
Content Type ◽  
Financial Firms ◽  
The Impact

PurposeThis paper documents the impact of product market competition on the value of advertising expenditures.Design/methodology/approachThe authors use the data for non-financial firms from India and the pooled regression procedure to test their arguments during the period between 2009 and 2018.FindingsThe results show that advertising expenditures of firms operating in sectors with relatively high competition are more valuable than advertising expenditures of firms operating in sectors with relatively low competition. The results of the study are robust across various proxies of advertising expenditures and firm performance. Furthermore, the results also show that the positive impact of product market competition on the value of advertising expenditures is confined only to firms that already have lower agency problems.Originality/valueThe results of the study highlight the importance of product market competition on the value of advertising expenditure in the emerging market setting, where agency problems are supposed to be high.

Do banks accumulate a higher level of intellectual capital? Evidence from an emerging market

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ngoc Phu Tran ◽  
Duc Hong Vo
Keyword(s):  
Intellectual Capital ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
Value Added ◽  
Relational Capital ◽  
Content Type ◽  
Financial Firms ◽  
Structural Capital ◽  
Capital Efficiency ◽  
Nonfinancial Firms

PurposeIn developed countries, banks are perceived to accumulate a higher level of intellectual capital than firms in other sectors. However, this perception has not been considered or tested in the context of an emerging market such as Vietnam, which has one of the most dynamic economies in the Asian region. This study estimates and compares the level of accumulation of intellectual capital and its four components by financial and nonfinancial firms in Vietnam. Furthermore, this study examines the relationship between intellectual capital and its components and the performance of financial and nonfinancial firms.Design/methodology/approachThis study uses data collected from the annual reports of 75 financial and 75 nonfinancial firms in Vietnam from 2011 to 2018. A modified value-added intellectual coefficient model is adopted to measure the level of intellectual capital at firms. Various aspects of intellectual capital are considered, including the efficiency of human capital, structural capital, capital employed and relational capital. In addition, the generalized method of moments is used to ensure the robustness of the findings.FindingsFindings in this study indicate that financial firms in Vietnam have accumulated a higher level of intellectual capital than nonfinancial firms. In addition, intellectual capital contributes positively to financial firms' performance. Three components of intellectual capital – structural capital efficiency, capital employed efficiency and relational capital efficiency – positively affect performance by financial firms.Research limitations/implicationsThis study is limited to financial and nonfinancial firms in Vietnam. Empirical studies in the future should incorporate the efficiency aspects of these types of firms because different industries might have different characteristics, in particular, their current efficiency level, which might cause differences in relation to the accumulation of intellectual capital.Practical implicationsThe findings of this study provide valuable evidence and implications for executives and policymakers in creating, managing and enhancing intellectual capital within the Vietnamese context, in particular in the financial sector.Originality/valueTo the best of our knowledge, this is the first empirical study conducted in the context of Vietnam, with the following two objectives: (1) to measure and compare the level of accumulation of intellectual capital by financial and nonfinancial firms in Vietnam; and (2) to examine the contribution of intellectual capital and its components to the performance by financial and nonfinancial firms in Vietnam.

Do intellectual capitals matter to firm value enhancement? Evidences from Taiwan

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yensen Ni ◽  
Yi-Rung Cheng ◽  
Paoyu Huang
Keyword(s):  
Intellectual Capital ◽  
Firm Value ◽  
Stock Exchange ◽  
Emerging Market ◽  
Customer Relationship ◽  
Strategic Decisions ◽  
Content Type ◽  
Data Resource ◽  
Customer Capital ◽  
The Impact

PurposeThe purpose of this study is to find evidence of the impact of intellectual capital on firm value, and, in turn, enhance the existing literature which lacks consensus on it. By employing some distinctive proxies for human capital, innovation capital, customer capital and process capital, this study might provide valuable information for firms to make strategic decisions.Design/methodology/approachThis study uses Tobin's Q to represent firm value and various variables to be the proxies for intellectual capitals. By utilizing firm-year observations, this study applies panel data models first, and then Petersen regression models for further investigation to enhance the robustness of the empirical results.FindingsFirm value is affected positively by the average net profit per employee as well as goodwill and intangible assets. This is because firms having employees with abundant knowledge will possess advantage for innovation, and the excellent reputation, a part of goodwill for oriental firms, would encourage people to consume and invest more.Research limitations/implicationsThe constraint of data resource is the main limitation. With the limited scales and as an emerging market of Taiwan Stock Exchange, it is not confirmed whether the results are appropriate for the developed markets. Nevertheless, firms should make efforts on developing intellectual capital and corporate governance for operating businesses with competitiveness and safety.Originality/valueSince capable employees enhance the innovation, innovation improves customer's satisfaction and good customer relationship increases the sales; this study illustrates that for expanding businesses, firms should make more efforts on developing intellectual capital.

How do relational variables affect export performance? Evidence from Malaysian exporters

2019 ◽  
Vol 31 (1) ◽  
pp. 128-156 ◽  
Author(s):  
Abdel Hafiez Ali Hasaballah ◽  
Omer Faruk Genc ◽  
Osman Bin Mohamad ◽  
Zafar U. Ahmed
Keyword(s):  
Design Methodology ◽  
Positive Impact ◽  
Emerging Market ◽  
Export Performance ◽  
Content Type ◽  
Building Trust ◽  
Path Analyses ◽  
The Impact ◽  
Practical Implications ◽  
Shed Light

PurposeThe purpose of this paper is to analyze the influences of relational variables on export performance and the interactions among relational variables in the emerging market context of Malaysia.Design/methodology/approachThe study used a mail questionnaire sent to Malaysian companies that export to Arab-speaking countries and achieved a response rate of 27.92 percent, resulting in a sample of 106 exporters.FindingsThe results of the path analyses indicate a positive impact of relational variables (adaptation, cooperation and communication) on export performance. However, the authors found that the impact was mediated by trust and commitment, rather than being direct.Research limitations/implicationsThe findings suggest that the impact of relational variables on export performance is complex and indirect. Mediators and moderators play important roles in this relationship.Practical implicationsFirms should invest in export relationships with the aim of building trust and commitment, which are the primary factors that affect export performance.Originality/valueThe authors have shed light on the way relational variables affect export performance. Moreover, this study contributes to a better understanding of small emerging markets, which are poorly represented in studies in this field.

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