An Empirical Study of the Impact of Intellectual Capital on Business Performance

2011 ◽  
Vol 10 (01) ◽  
pp. 11-21 ◽  
Author(s):  
Samuel Kai Wah Chu ◽  
Kin Hang Chan ◽  
Ka Yin Yu ◽  
Hing Tai Ng ◽  
Wai Kwan Wong
Keyword(s):  
Hong Kong ◽  
Empirical Study ◽  
Intellectual Capital ◽  
Business Performance ◽  
Value Added ◽  
Business Success ◽  
Financial Indicators ◽  
Structural Capital ◽  
Capital Efficiency ◽  
The Impact

This empirical study examines the intellectual capital (IC) performance of Hong Kong companies and its association with business performance. Data were collected from constituent companies of the Hang Seng Index listed on the Hong Kong Stock Exchange (2005–2008). An IC measurement, Value Added Intellectual Coefficient (VAICTM), was utilised to evaluate the IC investment of the companies. Four accounting ratios: market-to-book value (MB), return on assets (ROA), asset turnover (ATO) and return on equity (ROE) were used as the indicators of business performance. Regression analyses were conducted to test the ability of IC and its components in order to explain the variance in business performance measures. No conclusive evidence was found to support the associations between VAICTM as an aggregate measure and the four financial indicators. However, components of VAICTM were found to predict a substantial variance in business performance. Capital Employed Efficiency (CEE) was found to be a key factor in predicting business financial performance. Structural Capital Efficiency (SCE) was found to have a significant effect on businesses' market valuation, as measured by MB, and on profitability, as measured by ROE. Negative correlations were found between Human Capital Efficiency (HCE) and the financial indicators. The findings indicate a gap between the traditional accounting perspective and the value creation perspective, which is central to the VAICTM methodology in measuring IC. It is believed that the findings of this research provide insights for business stakeholders of Hong Kong companies in utilising IC, particularly the noted impact of structural capital. While our findings indicate the importance of IC for corporations, as shown by the significant effect of SCE on ROE, physical and financial assets may still be considered as the key resources in delivering business success.

The Relationship between Intellectual Capital and Banks' Productivity in Pakistan

2021 ◽  
pp. 158-169
Author(s):  
Muhammad Asim Afridi ◽  
Imran Khan ◽  
Muddassar Khan
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Productivity Growth ◽  
Banking Sector ◽  
Value Added ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Structural Capital ◽  
Capital Efficiency ◽  
The Impact

The performance of banks has been widely researched using accounting ratios, Tobin�s Q and market returns and less emphasis has been given to productivity measures. The productivity growth of banks is captured through Malmquist Productivity Index (MPI). The study then investigates the impact of intellectual capital on the productivity of banks in Pakistan. Value-added The intellectual Coefficient (VAIC) approach is employed to examine the intellectual capital of banks. Data is obtained from annual reports of 20 banks listed on the Pakistan Stock Exchange for 10 years (2007-2016). The panel corrected standard error approach is used for estimating the panel regression model. The findings provide evidence that the VAIC, human capital efficiency (HCE) and structural capital efficiency (SCE) has a positive impact on productivity growth (MPI). On the other hand, capital employed efficiency (CEE) has no significant impact on productivity growth. The VAIC approach may be useful for the banks and policymakers in a knowledge economy to integrate the intellectual capital in the decision-making process. Our results also suggest that banks in Pakistan shall increase spending on intellectual capital particularly on human capital and structural capital to elevate the intellectual capital of banks and subsequently get benefits in terms of increased productivity Keywords: Intellectual capital; Value added intellectual coefficient (VAIC); Malmquist productivity Index; Pakistan banking sector

THE IMPACT OF INTELLECTUAL CAPITAL ON CORPORATE PERFORMANCE: EVIDENCE FROM THE EGYPTIAN INSURANCE MARKET

2016 ◽  
Vol 20 (03) ◽  
pp. 1650034 ◽  
Author(s):  
MOHAMED SHERIF ◽  
MAHMOUD ELSAYED
Keyword(s):  
Intellectual Capital ◽  
Corporate Performance ◽  
Value Added ◽  
Financial Capital ◽  
Insurance Companies ◽  
Structural Capital ◽  
Capital Efficiency ◽  
And Performance ◽  
The Impact ◽  
Unobservable Heterogeneity

This paper examines, using various econometric techniques, the impact of intellectual capital (IC) on the performance of Egyptian insurance companies listed between 2006 and 2011. We measure IC using the value added intellectual coefficient (VAIC) approach and its components developed by Pulic (2000), and both a direct and a moderating relationship between VAIC and corporate performance are investigated. Our results show a direct relationship between (IC-VAIC) and the performance of Egyptian insurance companies, particularly with capital employed efficiency (CEE), and to a lesser extent with human capital efficiency. In addition, a positive relationship between IC (capital employed and structural capital) and performance in the prior and current years is found. Evidence also suggests the possibility of a moderating relationship between IC and physical and financial capital, which in turn impacts on corporate performance. Our study also reveals the importance of taking into account any unobservable heterogeneity and endogeneity issues when analysing corporate performance.

scholarly journals Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan

2019 ◽  
Vol 12 (2) ◽  
pp. 56 ◽  
Author(s):  
Muhammad Haris ◽  
HongXing Yao ◽  
Gulzara Tariq ◽  
Ali Malik ◽  
Hafiz Javaid
Keyword(s):  
Intellectual Capital ◽  
Negative Impact ◽  
Positive Impact ◽  
Value Added ◽  
Bank Profitability ◽  
Policy Makers ◽  
Structural Capital ◽  
Capital Efficiency ◽  
The Impact ◽  
Country Specific

The study contributes to the existing literature on intellectual capital (IC) performance and profitability by extending evidence from Pakistan. The study examines the impact of IC performance on the profitability of Pakistani financial institutions. It further examines how corporate governance, bank specific, industry specific, and country specific indicators effect Pakistani banks’ profitability. The result reports both the linear and non-linear impact of IC performance on profitability, which affirms an inverted U–shaped relationship. Among the three value added intellectual coefficient (VAIC) components, capital employed efficiency (CEE), and human capital efficiency (HCE) are found to have a significantly positive and structural capital efficiency (SCE) is found to have a significantly negative impact on bank profitability. The study notes a positive impact on profitability of factors like board independence, directors’ compensation, and higher capitalization. It reports a negative impact on profitability of factors like board size, board meetings, credit risk, industry concentration and economic growth. The results also indicate low profitability of banks during the period of government transition. The study provides insights into the important profitability drives and suggests that the impact of investment in IC on profitability is limited to an extent. The findings of this study are likely to be useful for policy makers, management, and academics.

scholarly journals The Impact of Intellectual Capital on Firms’ Performance: Evidence from Saudi Arabia

2020 ◽  
Vol 9 (4) ◽  
pp. 44
Author(s):  
Afnan Alturiqi ◽  
Khamoussi Halioui
Keyword(s):  
Human Capital ◽  
Saudi Arabia ◽  
Intellectual Capital ◽  
Market Performance ◽  
Value Added ◽  
Positive Association ◽  
Structural Capital ◽  
Capital Efficiency ◽  
The Impact ◽  
The Relationship

The purpose of this study is to empirically investigate the relationship between intellectual capital (IC) measured by the value-added intellectual coefficient (VAIC) and firms’ performance (FP) in the Saudi context. Data are drawn from a sample of 25 Saudi firms listed on the Saudi Stock Exchange (Tadawul) for the period 2015-2018. Using the VAIC model, the multiple linear regression models were constructed to examine the relationship between intellectual capital (IC) and firms’ performance (measured in terms of financial and market performance). The findings indicate that there is a positive association between overall intellectual capital efficiency as well as each of its three components (human capital efficiency, structural capital efficiency, capital employed efficiency) and the firms’ financial performance. Additionally, there is a positive association between human capital efficiency(HCE), structural capital efficiency (SCE), and the firms’ market performance. Overall, the findings suggest that human capital efficiency (HCE) has a significant and positive impact on firms’ financial and market performance in Saudi Arabia. The VAIC method may be a useful tool for managers and investors in their decision process. This is the first study about the impact of intellectual capital on firms’ performance in four industry groups in Saudi Arabia using the VAIC model.

scholarly journals The Impact of Intellectual Capital on Corporate Performance of IT Companies: Evidence from Bursa Istanbul

2018 ◽  
Vol 1 (3) ◽  
pp. 1-10
Author(s):  
Sedeaq Nassar
Keyword(s):  
Intellectual Capital ◽  
Value Creation ◽  
Corporate Performance ◽  
Value Added ◽  
Structural Capital ◽  
Effective Factor ◽  
Before And After ◽  
Capital Efficiency ◽  
The Impact

This study aims to investigate the impact of intellectual capital (IC) on corporate performance of IT companies listed on Borsa Istanbul for the period of 2004-2015. Value Added Intellectual Coefficient (VAIC) approach was applied to measure Intellectual Capital Efficiency (ICE). Corporate performance was calculated using traditional accounting tools involving; Market, Productivity, and Financial performance. The findings showed that human capital efficiency is the most effective factor in the issue of value creation than structural capital and capital employed for the study period before and after the crisis 2008. Structural capital efficiency does not play a considerable role in value creation before and after the crisis. While Capital employed efficiency was not considered as an engine to value creation before the crisis, but it played a key role of value creation after the crisis.    

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.

scholarly journals The Impact of Intellectual Capital on Financial Performance: A Study of Sri Lankan Financial Institution

2021 ◽  
Vol 04 (09) ◽  
Author(s):  
A. Nishanthini ◽  
Keyword(s):  
Human Capital ◽  
Financial Performance ◽  
Intellectual Capital ◽  
Negative Impact ◽  
Financial Institution ◽  
Value Added ◽  
Sri Lankan ◽  
Structural Capital ◽  
Capital Efficiency ◽  
The Impact

Intellectual Capital is essential in every economical activity. The aim of this study how intellectual capital impact on financial performance in Sri Lankan financial institution. To achieve objective of this research banking institution has been selected from Colombo Stock Exchange financial directory for the period from 2016 to 2020. Random sampling technique were used to analysis the data. MVIAC model used for the measurement of independent variable in this study. This model is a composite sum of two indicators these are Capital Employed Efficiency (CEE) - indicator of VA efficiency of capital employed and Intellectual Capital Efficiency (ICE) – indicator of value-added efficiency ofcompany’s Intellectual Capital base. Intellectual Capital Efficiency is composed of (a) Human Capital Efficiency (HCE) – indicator of value-added efficiency of human capital; and (b) Structural Capital Efficiency (SCE) – indicator of value-added efficiency of structural capital (c) Rational Capital Efficiency (RCE). Finding represent that intellectual capital has significant impact on financial performance of Sri Lankan financial institution, specially banking industry. SCE and CEE has negative impact while RCE impact positively on financial performance.

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.

Intellectual capital efficiency and market-based financial performance: Evidence from listed conglomerate companies

2021 ◽  
Vol 2 (2) ◽  
pp. 31-42
Author(s):  
Eniola Ayisat Sulaiman ◽  
Abubakar Sadiq Kasum ◽  
Wasiu Ajani Musa
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Fixed Effects ◽  
Value Added ◽  
Secondary Data ◽  
Lagrangian Multiplier ◽  
Fixed Effects Model ◽  
Analysis Technique ◽  
Capital Efficiency ◽  
The Impact

Having observed the rate at which dissimilarity occurs between market and book value, and management ignorance concerning the impact intellectual capital disclosure has on companies’ values spurred the interest to probe the association between the efficiency of value-added intellectual coefficient (VAIC) and market-based financial performance of listed Nigerian conglomerate companies. To accomplish the purpose of this study, secondary data were employed and extracted from annual audited reports of listed conglomerate companies in Nigeria from the period of 2010–2018. The data obtained were subjected to static panel data regression analysis technique. The random-effects model was adopted because the empirical result from Breusch and Pagan Lagrangian multiplier (BP-LM) and Hausman tests chose it over the fixed-effects model to produce better results. This study revealed that the value-added efficiency of capital employed (VACA), value-added efficiency of human capital (VAHU), and value-added efficiency of structural capital (STVA) are the drivers of intellectual capital in the conglomerate sector. This study concluded that elements of intellectual capital have a strong power on market-based financial performance. This study recommends that information on intellectual capital components should be reported in ways they deem fit by developing a model of intellectual capital disclosure that complies with the International Accounting Standard Board (IASB)

scholarly journals Intellectual Capital and Corporate Performance: Evidence From Banking Industry of Bangladesh

2020 ◽  
Vol 10 (1) ◽  
pp. 234
Author(s):  
Md Nur Nabi ◽  
Qijie Gao ◽  
Md Takibur Rahman ◽  
Shaun O. Britton ◽  
Mohammad Muzahidul Islam
Keyword(s):  
Organizational Development ◽  
Intellectual Capital ◽  
Significant Relationship ◽  
Banking Industry ◽  
Corporate Performance ◽  
Value Added ◽  
Economic Life ◽  
Structural Capital ◽  
Capital Efficiency ◽  
High Degree

Intellectual capital (IC) is about the greatest competitive weapon for an organizational development. It becomes the most significant factor in the organization’s economic life. Therefore, the purpose of this paper is to examine the relationship between intellectual capital (IC) and corporate performance of the banking industry. This study used econometric models against five years of panel data from 2012 to 2016 of commercial banks in Bangladesh. The empirical study revealed a positive and significant relationship between value added intellectual capital (VAIC) and banks’ performances. Further, only capital employed efficiency (CEE) as a component of VAIC has a significant relationship with banks’ performance. In addition, structural capital efficiency (SCE) has a very high degree of moderating power on CEE which can be transformed into corporate performance. This study enriches the existing literature of IC and corporate performance and it may be beneficial for the sustainable economic performances of banking industry of Bangladesh.

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