Abstract
This study sheds light on the differences in intellectual capital (IC) efficiencies across non-financial sectors in Pakistan and determines the relationship between IC and firm performance. The study used sample of 155 non-financial firms from the manufacturing and service industries of Pakistan for the period 2009-2018. This study contributes to IC research by applying modified value-added intellectual capital (MVAIC) model with relationship to firm performance (return on assets and Tobin’s Q) of Pakistani non-financial firms which was overlooked by the previous researchers. In addition, to deal with endogeneity, the dynamic panel generalized methods of moments regression is applied to test the relationship between IC and performance. Findings provide evidence that different sectors in non-financial industries manage IC components differently. IC increases both market-based performance and accounting-based performance of Pakistani firms. Among all IC components, human capital efficiency is an important determinant of firm performance. The implication can provide help managers and investors to understand the IC to increase the firm performance.
Highlights
Intellectual Capital (IC) is a valuable resource that provides competitive advantage and contributes in the firm performance (Chen et al, 2005)
This study contributes to IC research by applying modified value-added intellectual capital (MVAIC) model with relationship to firm performance of Pakistani non-financial firms which was overlooked by the previous researchers
IC is an intangible strategic resource and directly related with high firm performance (Riahi-Belkaoui, 2003). This is consistent with the resource-based view where it suggests that efficient management of strategic resources like intangible assets enables firms to achieve competitive advantage and high performance (Hsu & Wang, 2012)
Summary
Intellectual Capital (IC) is a valuable resource that provides competitive advantage and contributes in the firm performance (Chen et al, 2005). In developing countries, the concept and application of IC are still at an early stage (Khalique et al, 2013). All of these attributes of strategic resources are described in the IC literature. IC is an intangible strategic resource and directly related with high firm performance (Riahi-Belkaoui, 2003). This is consistent with the resource-based view where it suggests that efficient management of strategic resources like intangible assets enables firms to achieve competitive advantage and high performance (Hsu & Wang, 2012). Strategic resources are more valuable, unreplaceable, untransferable, inimitable ensure the competitiveness and high-level performance
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
