Intellectual Capital Efficiency Research Articles

Improving Profitability Measurement: Impact of Intellectual Capital Efficiency on Return on Total Employed Resources in Smart and Knowledge-Intensive Companies

This paper aims to emphasize the quantification of intellectual capital, not disclosed on the assets side of the balance sheet in the smart and knowledge-based enterprise, because it is very important for the more precise quantification of the profitability ratio, such as the return on assets (ROA). For this purpose, the paper suggests the EIC (efficiency of intellectual capital) methodology. It points out the necessity for the new profitability formula, gives methodological solutions for it, and investigates the impacts of intellectual capital (IC) efficiency indicators on traditional and new formulas of profitability in the case of knowledge-intensive and smart companies. The research confirms the importance of improving the profitability measurement in the knowledge economy era, where exists the dominance of intangible assets. It emphasizes the need for the correction of the denominator of the traditional ROA indicator. The comprehensive measurement of the total intellectual capital, especially its non-disclosed component in the balance sheet, provides information for more precise and accurate profitability measurements. The paper points out the issue of improving the traditional financial ratio, such as the ROA. This can be achieved by incorporating the value of intellectual resources, which are undisclosed in the balance sheet, in its denominator. This solution results in creating a new profitability indicator—return on total employed resources (EOR). This EOR indicator is more successful in capturing the enterprise’s intellectual performance compared with traditional profitability ROA indicators. This fact leads to the conclusion that EOR is better profitability indicator especially for smart and knowledge-intensive companies.

Do ex-bureaucrats on boards improve efficiency in intellectual capital? Evidence from an emerging country

Relying on the resource dependence theory, this study investigates the effect on intellectual capital efficiency and its components of having board members who are former bureaucrats, using a sample of banks in Turkiye. The study uses a sample of 344 fırm-year observations of banks in Turkiye between 2005 and 2018 to investigate the relationship between ex-bureaucrat board members and intellectual capital efficiency. In addition to ordinary least squares (OLS), the curret study employs instrumental variables with a two-stage least squares model to mitigate potential endogeneity concerns. Our findings show that ex-bureaucrat board members have a significantly positive association with intellectual capital efficiency at banks in Turkiye.

Intellectual Capital Efficiency and Risk-Taking Behaviour of Insurance Companies in Ghana

ABSTRACT Our study focused on the link between intellectual capital efficiency (ICE) and its individual components and underwriting risk. It examined the effect of ICE, and structural (SCE) and human capital (HCE) efficiency on the underwriting risk of Ghanaian life and non-life insurers. It used panel data of 31 insurance firms in Ghana, of which 14 and 17 were life and non-life insurers, respectively, from 2008 to 2019. A generalized least squares estimation technique was used to examine the relationship between ICE and underwriting risk in life, non-life, and the entire insurance sector. The results suggest that there is a significant negative relationship between HCE and underwriting risk in the Ghanaian insurance sector. However, there was no relationship between ICE and underwriting risk and between SCE and underwriting risk. As the first to examine ICE and risk-taking behavior in any African country, our study is significant in managerial decision-making and insurance policy formulation to reduce risk in the insurance industry.

Female directors' representation and intellectual capital efficiency: does institutional ownership matter?

PurposeThis study examines the impact of female directors' representation in the boardroom and the role of institutional ownership (IO) on intellectual capital efficiency (ICE) and its three efficiency components: human capital efficiency (HCE); innovation capital efficiency (INCE) and capital employed efficiency (CEE).Design/methodology/approachA sample of non-financial French firms listed within the Société des Bourses Françaises-120 (SBF-120) was employed for the period from 2011 to 2020 using the generalized method of moments (GMM) approach to test the set of hypotheses.FindingsGrounded in agency and resource dependence theories, this study found that female directors play a vital role in enhancing ICE. IO also has a significant role to play. Active institutional investors tend to push toward gender-balanced boardrooms and play an external supervisory role to improve efficiency. Moreover, female financial experts on audit committees also contribute to the ICE decision-making process within firms with high IO levels.Research limitations/implicationsThis study focused only on IO. Future research may use other forms of ownership, such as foreign or family ownership.Practical implicationsThe findings may serve as a reference for managers and policymakers to enhance IC management and make appropriate investment decisions. Managers and policymakers may rely on strategic and effective decisions regarding the efficient use of IC for value creation through the judgments of female directors.Originality/valueThe current study adds significant insights to the accounting and intellectual capital literature.

The Impact of Intellectual Capital Efficiency on Financial Performance and Market Value: Finance Sector Companies Listed on Colombo Stock Exchange

The study aims to find how efficient intellectual capital is by comparing valuations and financial performances of listed companies on the Colombo Stock Exchange. This research follows a positivist approach to understanding this issue and employs a deductive method. The study includes the commercial banking sector of all financial institutions operating within Sri Lanka. 46 companies were selected for the sample. This sample is comprised of specified numbers from twenty-six licensed financial firms, ten listed commercial banks, and one listed specialized bank. The remaining are eight listed insurance companies and one special-purpose leasing company. All of which belong to the main board of the Colombo Stock Exchange; From 2017 to 2021, secondary data from annual institutional reports were used to focus on a certain domain. That was otherwise neglected by the previous researchers and scholars. Statistical observations that can be observed through observations are such as Mean, and standard deviation to perform multivariate linear regression analysis. The output of the study is analyzed according to different criteria to make sense and draw a conclusion from it. The results indicated that the effectiveness of structural assets is less than human assets and overall assets. This study revealed that the market value of financial institutions is not affected by the intellectual capital in Sri Lanka. There is more evidence that for financial growth to happen, intellectual abilities are the prime requisite in underdeveloped countries. Research gives a clear view of how it works. While new technologies have an impact on the value of intellectual capital, there is a need to understand potential outcomes.

Intellectual Capital Efficiency and Performance of Banks in India

The aim of this paper is to examine the impact of intellectual capital efficiency on the performance of commercial banks in India for twotime periods, viz. 2018-19 and 2020-21 representing the pre and post-merger periods. The IC efficiency (ICE) of the banks is measuredusing the standard Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE). The performance is measured in terms ofReturn on Assets (ROA), Return on Equity (ROE), Net Interest Margin (NIM), and Return on Investments (ROI). The results show thatsub-components of IC have impacted the performance of banks variedly, but not consistently. The ICE of private sector banks hasincreased over the period of study. The impact of merger on the ICE performance of the individual public sector banks has been mixed,though on the average, there is no immediate statistically significant impact of the mergers on the ICE performance of all the public sectorbanks in India.Key words: Intellectual Capital Performance, Human Capital, Banking, Productivity, Profitability, Mergers

Does intellectual capital drive bank's performance in Bangladesh? Evidence from static and dynamic approach

This paper investigates the relationship between measures of intellectual capital efficiency and the performance of the listed banks in Bangladesh. We have collected data from the listed bank's published annual reports for seven years (2015–2021). We have primarily used standard panel data analysis techniques to assess the static relationships. In addition, to the static models, we have also checked the dynamic models for robustness in the context of Bangladesh. Following the RBV (Resource Based theory), we have found that the MVAIC (Modified Value-Added Intellectual Coefficient) significantly and positively determines firm performance in both static and dynamic methods. However, various components of MVAIC show differing relationships, which indicates that the two-step system GMM (Generalized Method of Moments) is superior to static models. The moderating role of MEETING (Company Meetings) is significant with respect to MVAIC. In addition, the moderating role of corporate governance variables at the component level remained the same in both methods. Our further analysis of the association with respect to the before and during pandemic periods suggests that the relationship remains the same irrespective of the period under study. Future research can use this paper to understand the significance of dynamic modeling while studying IC (Intellectual Capital) in an emerging economy context. This is among a few studies that have applied both static and dynamic models to assess the relationship between IC and firm performance in the context of emerging economies. Policymakers and bank managers in Bangladesh could use the findings of this study to realize that IC is much more valuable than other available tangible assets in creating a sustainable competitive advantage.

Intellectual Capital and Shareholders’ Wealth. The Economic Value Added Approach

The role of intangible assets such as intellectual capital promoting corporate competitiveness and further shareholders’ value has attracted attention in the finance literature. This study investigated intellectual capital efficiency as a source of creating shareholders’ wealth in Nigeria. To achieve the study's aim, correlational research design was adopted. The study’s data were collected from content analysis of financial statements of listed service companies in Nigeria. The sample used in this study includes 17 service firms listed on the Nigeria Exchange Group from 2011 to 2022. The VAIC model was utilized to estimate intellectual capital. Descriptive statistics were conducted while some diagnostic tests were piloted before the regression analysis. The random effect regression model was used to verify whether the studied variables impact shareholders’ wealth of listed service companies in Nigeria. Findings indicated that value added intellectual coefficient as a measure of intellectual capital has a significant positive association with shareholders’ wealth. Results further revealed that human capital efficiency, relational capital efficiency and capital employed efficiency (as components of intellectual capital) are significantly and positively associated with shareholders’ wealth while structural capital efficiency has a positive but not significant relationship with shareholders’ wealth creation. The study concludes that efficient management of intellectual capital can enhance shareholders’ wealth in listed service companies in Nigeria and recommends amongst others that firms should make strategic plans regarding intellectual capital and intangible assets as it can increase corporate competitive advantage.

Does intellectual capital in Islamic banks outperform conventional banks? Evidence from GCC countries

PurposeThis study explores, first, the performance effect (accounting- and market-based performance) of intellectual capital (IC), measured using the value-added intellectual coefficient (VAIC) and its modified version (MVAIC), on Islamic and conventional listed banks in Gulf Cooperation Council (GCC) countries and, second, whether Islamic banks outperform conventional banks in utilising IC.Design/methodology/approachUsing resource-based view theory and literature reviews, regression analyses are conducted on data for the period 2012–2019 on 26 Islamic and 42 conventional banks. For hypothesis testing, the generalised method of moments panel data regression analysis is applied after addressing endogeneity issues.FindingsResults, after controlling for corporate governance, indicate that the performance effects of IC (VAIC and MVAIC) on both bank types largely converge and Islamic banks do not outperform conventional banks in IC use. IC has a stronger effect on accounting performance measures for conventional banks than for Islamic banks, but IC has some effect on market performance measures for Islamic banks alone. Corporate governance variables do not play a significant role in the presence of VAIC and MVAIC although there are differences in corporate governance between the two bank types.Originality/valueThis study bridges the gap in GCC banking sector literature on the association between IC efficiency and performance measures of Islamic and conventional banks, from a comparative perspective. It enhances understanding, about the IC–financial performance nexus, of policymakers, regulators, bank managers and other stakeholders interested in the influence of different business models, financing/investment methods and governance structure on the performance of both bank types.

UNRAVELING THE LINK BETWEEN OWNERSHIP STRUCTURE AND INTELLECTUAL CAPITAL EFFICIENCY: A STUDY OF NON-FINANCIAL FIRMS IN PAKISTAN

This study examined the effect of ownership structure on intellectual capital efficiency of nonfinancial firms listed on PSX 100 in Pakistan. This research has covered the data of non-financial firms from period 2010 to 2018 from the official website of Pakistan Stock Exchange and furthermore from the companies‟ financial statements. The independent variable of this research is ownership structure which is divided into five different categories family ownership, government ownership, institutional ownership, individual ownership and foreign ownership while the dependent variable of the research is value added capital efficiency which is divided into three components human capital efficiency, structural capital efficiency and capital employed efficiency which is calculated by using Public’s model Intellectual Capital Efficiency. The results of this study have shown that family ownership have a positive significant relationship with intellectual capital efficiency, government ownership a negative significant relationship with intellectual capital efficiency, institutional ownership a positive significant relationship with intellectual capital efficiency and foreign ownership structures have a positive significant impact on intellectual capital efficiency, while individual ownership, firm age, firm size and firm leverage have an insignificant impact on intellectual capital efficiency. The purpose of this study is to add to existing literature of ownership structure and intellectual capital efficiency in regard to Pakistan. Keywords: Ownership structure, intellectual capital efficiency, agency theory, resource-based theory.

Hranidbena i mesna svojstva mladih svinja različitog intenziteta formiranja u ranoj ontogenezi i unutarpasminske diferencijacije prema genu za melanokortin 4 (Mc4r) receptor

The aim of this study was to investigate young pig fattening and meat quality due to the varying formation intensities in early on- togenesis and two genotypes based on the mel- anocortin receptor 4 (Mc4r) gene. To calculate the correlations between traits and the econom- ic efficiency of using animals of experimental groups in industrial complex conditions, the assessment of animals for fattening and meat quality examined the following characteris- tics: average daily live weight gain during the control fattening period in grams; age of reaching 100 kg live weight in days, chilled car- cass length in centimetres; length of the bacon half of the cooled carcass in centimetres; lard thickness at the thoracic vertebrae T6-T7 in millimetres. Further, the biometric processing of research results and calculation of the eco- nomic efficiency was performed. Young pigs of the controlled population met the requirements of the 1st class and the elite class for fattening and meat qualities. In examining the interbreed differentiation of large white breed animals, the melanocortin 4 receptor (Mc4r) gene determined that the Mc4rAG genotype outperformed the Mc4r AA genotype for average daily live weight gain, age at live weight of 100 kg, lard thickness at T6-T7, and chilled carcass length by an average of 4.50%. The difference between groups for the Tyler B's index was 11.82 points, and according to the average daily increase in live weight, the disparity between young pigs of interbreed differentiation according to the formation intensity index was 4.69%, the age of reaching 100 kg live weight was 3.10%, and the chilled carcass length was 1.23%. The num- ber of reliable connections between fattening and meat qualities, and the formation inten- sity and Tyler B indices was 75.0%, indicating their promise for use in selection and breeding work. The maximum increase in additional production was obtained from young pigs of the Mc4r AG genotype (+2.71%) and of group I, in which the formation intensity index ranged from 0.935 to 1.087 points (+2.65%).

The influence of corporate governance factors on intellectual capital performance: Panel data evidence from the Indian banking sector

This study empirically examined the relationship between corporate governance factors, namely CEO duality, independent directors, board meeting frequency, board size, gender diversity, audit committee size and audit committee meetings, and intellectual capital performance. The above premise is studied using data of 26 commercial banks listed on the Indian Stock Exchange (NSE) from 2010 to 2020. The study used purposive sampling as the methodology and multiple regression models with VAIC and ROA as attributes. VAIC measures the efficiency of intellectual capital. ROA is used to determine financial performance. The results of the study reveal that the use of observational data, independent directors, frequency of board meetings and audit committee size has a positive and significant effect on intellectual performance at a 10% significance level. According to the study’s findings, audit committee meetings have a positive impact on intellectual capital performance at a 1% significance level, while board size has a negative impact at a 5% significance level. Among the study results, CEO duality, board meeting frequency and board size have a positive and significant effect on financial performance with 1% significance. Board gender diversity has a negative impact on financial performance. The study’s findings indicate that there is no single best way to design corporate governance that applies to all corporate situations, and that good corporate governance factors have a significant impact on improved intellectual capital performance.

Intellectual capital and financial performance of industrial firms in emerging countries: Empirical evidence from Vietnam

Purpose: This study contributes evidence on the impact of IC and its components for emerging countries, the case of Vietnam.
 Design/methodology/approach: The research measures the value-added intellectual coefficient and applies the two-step system GMM model for the period 2005-2014.
 Findings: Findings imply that IC contributes significantly to the industrial firm performance. Industrial firm performance is positively affected by Human capital efficiency (HCE) and Capital Employed Efficiency (CEE).
 Generally, Structural capital efficiency (SCE) has an insignificant effect on the industrial firm performance. Impact of IC efficiency depends on the internal and external factors. The impacts of IC efficiencies differ among levels of knowledge intensity. Generally, HCE is more important than CEE. The impact of IC on industrial firm outcomes depends on knowledge intensity levels. The more knowledge intensive, the stronger impact of IC is. Only high knowledge intensive firms benefit from all three components of IC efficiency. HCE and CEE are most effective for firms with high knowledge intensity. SCE is strongest for firms at low knowledge intensity. Only CEE contributes to industrial firms at all knowledge intensity levels. HCE is insignificant for firms at low knowledge intensity, while SCE is insignificant for firms at medium level.
 Research limitations/implications: The paper examines only one variable representing for firm financial performance, ROA. Controlled variables are only at industrial level, not at broader levels, such as provincial or national levels.
 Originality/value: Investigating IC will contribute to literature of levels of investment in tangible and intangible assets. It helps firm leaders and policymakers to comprehend the significant role of IC as well as the knowledge economy, then properly reallocate intellectual resources. Firm leaders and policymakers should focus on HCE and CEE which driver significantly value added. The findings suggest firm leaders which component of intellectual capital they should invest corresponding to various level of knowledge intensities.

Intellectual Capital, Firm Performance, and Sustainable Growth: A Study on DSE-Listed Nonfinancial Companies in Bangladesh

Intellectual Capital (IC) stimulates corporate competitive advantages that can enhance firm performance and sustainable growth (SG). This study investigates IC’s affinity with and impact on accounting and market performance and SG of listed nonfinancial companies in Bangladesh. Data were collected from 69 nonfinancial companies for five years during 2017–2021, forming 345 observations. Modified Value Added Intellectual Coefficient (MVAIC) and steady-state models consecutively measured IC efficiency and Sustainable Growth Rate (SGR). The Robust fixed effect model was applied to confirm the highest reliable results. Results of MVAIC, Intellectual Capital Efficiency (ICE), and Human Capital Efficiency (HCE) showed a positive affinity with and impact on firm performance and SGR. Structural Capital Efficiency (SCE) showed an insignificant association with and impact on explained variables, whereas Relational Capital Efficiency (RCE) showed a significant negative relationship with and impact on the same. Tangible capital employed efficiency (CEE) enhanced firm performance but failed to confirm sustainable growth. The findings help business executives, government, and policymakers formulate strategic plans for sustainable resource utilization and can create value, competitive edges, and survival for firms. The study recommends that corporate entities should strive to enhance their efficiency in internal structural resources and relational activities to achieve better firm performance and sustainable growth.

Intellectual capital and firm performance: the moderating effect of auditor characteristics

PurposeThis study aims to examine the impact of intellectual capital (IC) and its three components (human, structural and relational capital) on corporation performance in the Chinese transportation industry. In addition, this study also investigates auditor characteristics (both Big-N and non-Big-N auditors) as a moderating role to examine the relationship between IC and corporate performance.Design/methodology/approachThe data include 398 firm-year observations of transportation companies listed on the Shanghai and Shenzhen Stock Exchange from 2011 to 2020. Value-added intellectual coefficient (VAIC) model and its modified version (MVAIC) are applied to measure IC efficiency. Finally, the fixed effects regression analysis is used to mitigate the endogeneity issue. To investigate the moderating effect of auditor characteristics, the authors divide the samples based on the clients audited by Big-4 and non-Big-4 firms.FindingsThis study reveals that IC can enhance firm performance in China’s transportation sector. Overall, findings indicate that on the whole, IC has a positive and significant impact on corporation profitability and productivity. Human capital and physical and financial assets (capital employed) play highly important roles, but structural capital has no significant impact. The authors also found that auditor characteristics play an important moderating role in the connection between IC and corporate performance. For example, the positive association between IC and corporate performance is more pronounced when Big-4 auditors audit client firms. At the same time, the authors found a negative relationship between IC and firm performance when non-Big-4 auditors audit client firms.Practical implicationsManagers must understand that several components of IC have a total effect on corporate financial performance. Therefore, managers can dedicate more resources to such components based on the performance outcomes to emphasize their business strategies.Originality/valueThis study is the first empirical analysis of the impact of IC and its components on corporation performance in the transportation sector in China, an emerging market. Previous studies mainly focus on developed countries’ high technology and financial industries sectors but the impact of IC in transportation industry largely remains unknown. Thus, the present findings contribute to IC literature by revealing several underlying mechanisms by which the components of IC help achieve good firm performance.

Female directors in the boardroom and intellectual capital performance: Does the “critical mass” matter?

This research aims to investigate the influence of female directors on Intellectual Capital Performance (ICP) using a sample of manufacturing-listed companies in China. Our study investigates the link between having two or more female directors and the Modified Value-Added Intellectual Coefficient (MVAIC) methodology, employing the critical mass theory from 2004–2017. We find that having a critical mass of female directors (three or more) shows a significant positive impact on MVAIC and its components, including human capital efficiency, structural capital efficiency, relational capital efficiency, and physical capital efficiency, with physical capital being the critical driver. Our study reveals that the critical mass participation of female directors substantially influences the IC efficiency of privately owned companies compared to state-owned companies. Moreover, the number of female directors also affects the IC performance of manufacturing companies in multiple regions. Our findings support the validity of group classification identified by Kanter and Critical Mass Theory. To the best of our knowledge, this is one of the few pieces of research that studies the role of female board directors in IC performance and Chinese manufacturing firms using MVAIC as an IC measure.

Influence of COVID-19 on asymmetric cost behavior and intellectual capital efficiency: a comparison of Australian and Chinese listed firms

ABSTRACT This study examines whether intellectual capital efficiency affects the asymmetric cost behavior of managers and whether such influences were impacted by the COVID-19 pandemic in Australia and China. The sample consists of Australian and Chinese-listed firms from 2018 to 2021. The results found that intellectual capital efficiency increases the cost stickiness in general for both countries. However, the degree of cost stickiness caused by intellectual capital efficiency is significantly more pronounced in Australia than in China. When Chinese firms have government connections, the degree of cost stickiness caused by the intellectual capital efficiency increases and the significant difference in cost stickiness between China and Australia ceases. In addition, this study found that COVID-19 affected the degree of cost stickiness in China more profoundly than in Australia. This study presents important implications for external stakeholders to assess a firm’s cost behavior by considering a firm’s intellectual capital efficiency as the determinant of asymmetric cost behavior.

Intellectual Capital Efficiency from the Lens of Audit Committee Attributes

The purpose of this research is to find out the association between audit committee traits and intellectual capital efficiency in the context of Pakistan. For this purpose, this study employs a sample of 28 banks covering a duration of 10 years (2010-2020). Furthermore, this study employs audit committee attributes as an independent variable, while the dependent variable is the efficiency of intellectual capital, which is measured by using the value-added intellectual coefficient (VAIC) approach. As the audit committee aids in strengthening the internal control systems by overseeing the top management decision-making process, thus, it improves the overall effectiveness of organizations. Preluding to the control system process, the results of this study are justified by revealing a significantly positive impact of audit attributes on banks’ intellectual capital efficiency. Therefore, this research illustrates the insights of intellectual capital efficiency with audit committee attributes as a major component, which would be significant for managers in making decisions regarding audit committee composition to increase intellectual capital in the developing nations.

Digitalization and Firm Financial Performance in Healthcare: The Mediating Role of Intellectual Capital Efficiency

The digitalization of processes in healthcare sector firms is expected to reduce costs, improve the quality of healthcare service, customer care experience, and patient safety, and attain efficiency and efficacy in project implementation. This research investigates the impact of digitalization on the financial performance of healthcare-sector firms in the European Union. The study also examines whether a firm’s intellectual capital efficiency mediates the process of digitalization’s impact on a firm’s financial performance. Using a sample of 965 firm observations from 2017 to 2021, we find that digitalization positively affects financial performance. Further analysis suggests that capital-employed efficiency fully mediates the relationship between digitalization and firm performance. Partial mediation is also reported for intellectual capital efficiency, human capital efficiency, and structural capital efficiency in the process of digitalization impacting firm performance. These findings provide fresh insight into how digitalization impacts a firm’s financial performance, establishing intellectual capital efficiency as a mediating mechanism that may explain this impact.

The effect of intellectual capital on audit fees stickiness

PurposeThis study aims to evaluate the effects of intellectual capital (IC) efficiency and its components on audit fee stickiness (AFS), such as human capital (HC), organisational capital (OC), structural capital (SC) and relational capital (RC). Moreover, the moderating roles of audit industry specialisation (AIS), tenure and auditors’ market concentration are also estimated.Design/methodology/approachThis study’s method is descriptive-correlational based on the information disclosed by listed firms on the Tehran Stock Exchange from 2012 to 2018 using 1,316 year-firm. The method used for hypothesis testing is linear regression using panel data.FindingsThe results show that all the intellectual capital components (ICCs), including HC, SC, OC and RC, negatively impact audit fees (AFS). Further analyses also show that the AIS moderates the relationship between ICCs and AFS.Originality/valueThis paper is one of the pioneer studies assessing the auditors’ response to the riskless environments driven by existing IC.