Intellectual Capital in SMEs of Azad Jammu and Kashmir, Pakistan

Abstract

The objective of this study was to examine the impact of intellectual capital on the financial performance of SMEs operating in pharmaceutical industry in Mirpur Azad Jammu and Kashmir Pakistan. Integrated intellectual capital model (IICM) was used to measure intellectual capital in SMEs. Empirical data were gathered through structured questionnaire survey items and the purposive sampling technique was used to select the targeted respondents. A total of 156 out of 230 useable questionnaire survey forms were involved in the study. Seven research hypotheses were established to get the objective of this study. Multiple regression analysis was used to test the proposed research hypotheses. Findings showed that the technological capital and spiritual capital have significant relationship with financial performance while human capital, structural capital, social capital and customer capital were appeared as insignificant predictors. The findings of this study provide a guideline for the policy makers to streamline their intellectual capital in organisation. Due to limited sample size and cross sectional nature, findings of this study may not be generalised to other organisations. Future researchers can conduct their studies in other knowledge intensive SMEs with larger sample size and longitudinal for the better understanding of the role of intellectual capital.