Relational Efficiency Research Articles

Does Intellectual Capital Influence Firm's Financial Performance in Bangladesh?

This paper aimed to find the effects of intellectual capital and its components on firms’ financial performance in Bangladesh. A sample of 100 firms comprised of 48 manufacturing, 21 services, and 31 banking companies was studied for five years from 2017 to 2021, setting 500 firm-year observations. Data was collected purposively from secondary sources, such as annual reports of sampled companies. The robust fixed-effect regression model using STATA 14.2 software was applied to test the hypothesis due to autocorrelation and heteroscedasticity problems. The regression results documented that overall IC, human capital efficiency (HCE), and capital employed efficiency (CEE) positively and significantly enhanced the ROA and ROE of the firms. However, structural capital efficiency (SCE) and relational capital efficiency (RCE) negatively and insignificantly influenced the same. The study contributes to resource-based theory using econometric methods to extend the samples of both financial and non-financial companies. This study helps investors, managers, policy-makers, governments, and accounting regulatory bodies regarding the utilization pattern of invisible and tangible resources in Bangladeshi firms.

Empirical Analysis of the Effect of Intellectual Capital Efficiency on Cost of Debt

The main objective of this study was to examine the effect of intellectual capital efficiency on cost of debt of manufacturing companies listed on the floor of the Nigerian Exchange Group from the 2014-2023. The research design adopted for this study was ex post facto, secondary data were used and the population of the study consisted of 62 listed manufacturing companies in Nigeria. The sample size of this study was 27 purposively selected listed manufacturing companies in Nigeria. The data used in this study were analyzed using the Generalized Method of Moment (GMM) regression analysis. The findings of this study revealed that human capital efficiency (HCE), has significant negative effect on cost of debt; relational capital efficiency (RCE) has significant negative effect on cost of debt; and structural capital efficiency (SCE) has significant negative effect on cost of debt of listed manufacturing companies in Nigeria. Based on the above findings, it was concluded that intellectual capital efficiency can significantly impact on the cost of debt of listed manufacturing companies in Nigeria. It was therefore recommended among others that the management of manufacturing firms should develop and maintain strong relationships with creditors and financial institutions to negotiate better credit terms and reduce the cost of debt. It was also recommended that the management of these firms should continue to improve and leverage structural capital to enhance operational efficiencies and lower the cost of debt.

The effect of human capital efficiency, structural capital efficiency, relational capital efficiency, capital employed efficiency & rate of growth of intellectual capital on financial performance

The effect of human capital efficiency, structural capital efficiency, relational capital efficiency, capital employed efficiency & rate of growth of intellectual capital on financial performance

Gender diversity, intellectual capital, and family ownership: An empirical test of Kanter's hypothesis

AbstractThis study examines the relationship between gender diversity and intellectual capital performance, and moderating role of family ownership on this relationship. The study used 3730 firm‐year observations of 307 nonfinancial firms listed on Pakistan Stock Exchange over the period 2008–2020 and employed ordinary least squares regression analysis to test the hypotheses. More specifically, the study used group composition (skewed board, tilted board, and balanced board) to examine multiple significance levels of gender diversity on boards, and used five measures (modified value‐added intellectual coefficient, human capital efficiency, structural capital efficiency, relational capital efficiency, and capital employed efficiency) of intellectual capital performance. Using lens of agency theory and resource dependence theory, we found that gender diversity positively influences intellectual capital performance, however, the strongest impact is apparent in case of balanced board. Moreover, family ownership positively influences this relationship. Our study complements the efforts of policy makers by providing empirical support for the mandatory placement of females on boards and urge them to increase number of females on corporate boards to derive maximum benefits of female directors. In addition, our results recommend the enhancement of the professional skills of women work force to ensure their maximum participation in the corporate sector.

Effects of Ownership Structure on Intellectual Capital: Evidence from Publicly Listed Banks in Bangladesh

This study explored the impacts of ownership structure (OS) on intellectual capital (IC) and its components. Data were gathered from 31 Dhaka Stock Exchange-listed banks for five years, from 2017 to 2021, consisting of 155 observations as balanced panel data. The study used the modified value-added intellectual coefficient (MVAIC) model to track the IC efficiency. The robust fixed effects model was employed for regression analysis to test the hypotheses. The research found that sponsor director ownership is negatively associated with the MVAIC, human capital efficiency (HCE), and structural capital efficiency (SCE) but positively with relational capital efficiency (RCE). High institutional and public ownership are positively linked with SCE but negatively with RCE. Foreign ownership is only positively associated with banks’ MVAIC and HCE. The regression results showed that high institutional ownership (IO) significantly enhanced the MVAIC and HCE. Foreign and public ownership positively influenced banks’ MVAIC, HCE, and capital employed efficiency (CEE) but negatively impacted RCE. The findings of this study will help banks’ policymakers with ownership mixes for the optimum utilization of banks’ resources. Management may assess IC’s efficiency level for proper supervision and use of knowledge resources to boost bank profitability. Also, the findings will help investors make prudent investment decisions. This is the first study to focus on OS and IC with diverse elements in Southeast Asia, especially Bangladesh, an emerging market.

Intellectual capital and firm risk: evidence from an emerging economy

Purpose Intellectual capital (IC) plays a pivotal role in determining corporate risk profiles in the contemporary knowledge era. Consequently, this study aims to analyze the impact of IC on firm risk (FR) among the manufacturing companies listed on the Pakistan Stock Exchange (PSX). Design/methodology/approach The authors have adopted the modified value-added intellectual model which combines human capital efficiency, structural capital efficiency, efficiency of capital employed and relational capital efficiency. FR has been used as the dependent variable, measured as the standard deviation of the daily stock prices. The study has used panel data from a sample of 40 manufacturing companies listed in the KSE-100 Index from 2015 to 2021. Findings The results suggest that IC has a significant impact on the FR of manufacturing companies listed on the benchmark index of PSX. Moreover, this relationship is direct; thus, an increase in IC would also increase FR measured by the change in stock prices. Research limitations/implications The current study has only used linear techniques. Future researchers may consider investigating the impact of IC at varying levels of FR using nonlinear techniques. Practical implications This study provides corporate managers and policymakers valuable insight into the need to strike a balance between investment in IC and their FR, particularly in an emerging market context. Originality/value IC is frequently associated with firm performance. However, the relationship between IC and FR has generally been underexplored. This study adds to the strand of limited IC literature by investigating the impact of a modified IC model on FR in an emerging economy.

Intellectual capital and asset quality: A nonlinear investigation in the Turkish Banking sector

This study aims to investigate the intricate relationship between intellectual capital and asset quality within the context of the Turkish banking sector to determine the optimal level of intellectual capital investment that can enhance the asset quality of deposit banks. The study relies on panel data regression analysis to explore this complex relationship, and its dataset encompasses 22 deposit banks over 17 years, from 2005 to 2021. The study provides compelling evidence of a nonlinear relationship between intellectual capital and asset quality. It pinpoints an optimal threshold for intellectual capital investments, beyond which further increases can erode asset quality. Furthermore, the study identifies specific intellectual capital components that impact the asset quality of state-owned, privately owned, and foreign deposit banks differently. The findings indicate that optimizing human capital efficiency and capital employed efficiency is critical for enhancing the asset quality of deposit banks. In contrast, the significance of structural and relational capital efficiency may vary, demanding a careful balance of investment strategies.

Does intellectual capital efficiency measured by modified value-added intellectual coefficient affect the financial performance of insurance companies in Ethiopia?

Insurance company managers and shareholders should be conscious of the effect of intellectual capital efficiency and its components on financial performance. The purpose of this study is to examine the role of intellectual capital efficiency and its components on the financial performance of insurance companies. To achieve study objectives Modified value-added intellectual coefficient is adopted to measure the effect of intellectual capital efficiency. The study adopted an explanatory research design with an arrangement of secondary data analysis via document analysis, quantitative approach, and deductive method of inquiry. Panel data was used with a sample of 14 insurance companies from 2012-2022. Descriptive and regression analyses were performed to analyze the data using STATA version 15.0. Econometric model estimation procedures and multiple regression assumptions were tested accordingly. The random effect regression result revealed that the value-added intellectual capital and its component human capital and capital employed efficiency have a positive significance association with financial performance. Whereas, relational capital efficiency and structural capital efficiency do not have a significant contribution to the financial performance of insurance sectors in Ethiopia. The findings of this study contribute to the theoretical and practical understanding of the relationship between intellectual capital efficiency and financial performance in the context of insurance companies in Ethiopia.

Intellectual Capital and Corporate Sustainable Growth: An Empirical Study on Indian Agribusinesses specific to Pesticides and Fertilizer Companies

This study aims to evaluate the impact of Intellectual Capital on the Sustainable Growth Rate of Indian Agribusiness companies. Intellectual Capital plays a vital role in the global agriculture business. Data is collected from 17 Agribusiness companies engaged explicitly in pesticides and fertilizers between 2011 and 2022, using Prowessiq (CMIE) and financial reports. The Extended Value-Added Intellectual Capital (E-VAIC) model is employed to measure Intellectual Capital. The System Generalized Method of Moments (S-GMM) regression method is employed for data analysis. The results revealed that Innovation Capital Efficiency and Human Capital Efficiency are the most significant variables that affect the Sustainable Growth of Indian Agribusiness companies. The other Intellectual Capital variables, such as Relational Capital Efficiency and Structural Capital Efficiency, positively impact the Sustainable Growth Rate. The study concludes that Indian Agribusiness companies must recognize the importance of Intellectual Capital resources and invest in them to achieve long- term corporate growth.

Does corporate governance spur bank intellectual capital in an emerging economy? A system GMM analysis from Ethiopia

PurposeThe current study aims to explore the impact of corporate governance (CG) mechanisms, as measured by board size, board meeting frequency, board gender diversity, number of board subcommittees, board remuneration, size of audit committee, and audit committee meeting frequency, on bank intellectual capital (as calculated by the modified value-added intellectual coefficient (M-VAIC) and its components (human capital efficiency (HCE), structural capital efficiency (SCE), and relational capital efficiency (SCE)).Design/methodology/approachPanel data is extracted from the financial and other internal reports of 14 commercial banks and the National Bank of Ethiopia for the period 2011–2022. A two-step system generalized method of moments (2SYS-GMM) was used to account for the unobserved endogeneity and heteroscedasticity problems.FindingsThe empirical findings suggest that board size and board meeting frequency have a negative and significant impact on all IC performance measures. Besides, audit committee size has a negative and significant effect on HCE, SCE, and M-VAIC of the banking industry in Ethiopia. Moreover, board remuneration has a significant positive relationship with IC efficiency (HCE, SCE, and M-VAIC). Also, audit committee meeting frequency has a positive and significant effect on the HCE of banks. However, board gender diversity and the number of board subcommittees have not made statistically significant contributions to IC performance.Research limitation/implicationThe study is limited in its use of seven dimensions of CG and future studies can use other alternative accounts for CG variables. Next, this study applies only to commercial banks; hence, future studies can include other financial as well as non-financial organizations such as insurance companies, microfinance institutions, manufacturing, and other sectors.Practical implicationsThis study contributes to helping the regulators and practitioners of the banking industry improve the existing standards and guidelines for CG practices to strengthen their IC performance. The findings may also give input for policymakers to integrate the intellectual capital in the decision-making process for policy formulation and implementation for the establishment of a robust banking sector.Originality/valueConsidering the modified value-added IC coefficient (M-VAIC) and 2SYS-GMM models, this research is the first study to analyze the relationships between CG and banks’ IC in Ethiopia.

The impact of intellectual capital strategy on firm value and financial distress

This study aims to examine the effect of intangible assets, on corporate financial performance and financial distress. Intangible assets in this study are explained by human capital efficiency (HCE), relational capital efficiency (RCE), structural capital efficiency (SCE), and capital employed efficiency (CEE). The measurement model often used is the extended value-added intellectual coefficient plus (EVAIC+) model by Ulum (2017), which is a model developed from a comparison of Edvinsson’s (1997) and Pulic’s (2000) models. Financial performance is measured by firm value with price to book value (PBV) proxy, and financial distress with Altman Z-score. This study was conducted using secondary data and sample selection using purposive sampling with samples being listed manufacturing companies in Indonesia, Singapore, Malaysia, Thailand, the Philippines and South Korea, Japan, and China Stock Exchanges for the period 2011–2021. The results of the study on Model 1 found that HCE, RCE, and CEE have a positive effect and significance and SCE have a negative effect and significance on firm value. Model 2 found that HCE, RCE, and CEE have a positive effect and SCE have a negative effect and significant on financial distress. The results of this study can be used as a reference for companies to be able to manage intangible assets, especially intellectual capital disclosure.

Investigation of intellectual capital and firm performance in Thailand: Mediating role of earnings quality

This study was conducted to investigate two main aspects. First, it seeks to analyze how intellectual capital impacts firm performance. Second, it examines how intellectual capital impacts firm performance through earnings quality. To achieve these objectives, 114 financial datasets from service businesses listed on the Stock Exchange of Thailand (SET) during the period from 2019 to 2020 were utilized. The hypotheses were tested through various analytical techniques, including descriptive statistics, normality tests, a correlation matrix, structural equation models, and path analysis. The findings revealed that earnings quality indirectly impacted firm performance, as assessed by Tobin's Q and return on assets. The study demonstrated that earnings quality, measured through discretionary accruals, served as a partial mediator between intellectual capital and return on assets. Furthermore, earnings quality was identified as a full mediator in the association between intellectual capital and Tobin's Q. After analyzing the data during the COVID-19 pandemic, it was found that businesses that utilized information technology systems and employed efficient distribution channels demonstrated high relational capital efficiency (RCE). This efficiency positively affected market value. The practical contribution of this study provides managers with measurement methods for intellectual capital development, enabling them to enhance operational efficiency in intellectual capital and generate high earnings quality that reflects market value. Additionally, it highlights the importance of adapting to digital-era economic changes. Regulatory bodies can further promote and support intellectual capital to increase market value.

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.

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.

Defining lean experts' roles and behavioral competencies during lean adoption: a case study of Groupe PSA

PurposePrevious research has managed to clearly define lean technical competencies. However, the behavioral competencies remain underestimated, and the roles of lean experts are not clearly stated: are they teachers, facilitators or technical experts? The present paper investigates lean behavioral competencies and their relationship to lean experts' roles.Design/methodology/approachThis article serves as an exploratory study built on interviews, observations and focus groups conducted during a three-year longitudinal study accompanied by a three-year follow-up. The case takes place in an international automotive company in partnership with Toyota in which lean adoption was part of a consistent strategy over a period of 20 years.FindingsThe study clarifies lean behavioral competencies related to organizational efficiency (nominal management, improvement management and respect for people) and relational efficiency (problem resolution, competencies development and systemic interactions). The study helped create a typology of lean experts' roles related to the maturity level of the environment in which they intervened. Moreover, Lean experts' roles in congruence with the environment seem to positively influence the creation of emerging human relationships that are beneficial to process improvement and competencies development.Originality/valueThis paper is the first to clarify behavioral competencies with respect to lean experts' roles and to study the temporality of the introduction of lean practices. The findings recommend that researchers better acknowledge the influence of lean behavioral competencies during lean adoption and their relationship to contextual factors and organizational performance. A practical methodology is proposed to measure the necessary behavioral adjustments of lean experts or employees.

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.

Modified VAIC model: measuring missing components information and treatment of exogenous factors

PurposeValue-added intellectual coefficient (VAIC) is extensively used as a measure of intellectual capital (IC), but it is criticized for not capturing the totality of IC. Therefore, this study aims to analyse critiques of the original VAIC and proposes a modified VAIC by adding missing IC components and adjusting for exogenous factors. The study uses a modified VAIC model to investigate the relationship between IC, firm performance (FP) and market value (MV) for US non-financial firms.Design/methodology/approachThis study employed fundamental data of US non-financial firms listed on the NYSE and NASDAQ from 1980 to 2019. A final sample consisted of 6,019 firms and 62,686 firm-year observations.FindingsThe results provide a significant positive effect of aggregate and components of modified VAIC on FP and MV. Moreover, results validate the modified VAIC model and find that the modified VAIC explains changes in shareholders' MV. In addition, findings indicate that modified VAIC serves as an additional intangible factor to explain firms' capital structure decisions.Practical implicationsThe findings have important implications for management, owners, researchers and investors.Originality/valueThe modified VAIC model differs from the original VAIC model in four ways: first, it corrects the measurement of structural capital efficiency (SCE) following the accounting principle. Second, it replaces SCE with innovation capital efficiency (InVCE) and relational capital efficiency (RCE) to account for missing components of information of structural capital (SC). Third, the modified VAIC model adjusts for exogenous factors like business cycles and cross-industry variations. Finally, with the addition of InVCE and RCE as components of SCE, innovation capital (InVC) and relational capital (RC) are added to the calculation of value-added (VA) as components of IC.

Influence of Green Supply Chain Management on Business Performance of Vietnamese Electronic Firms

The study’s objective is to assess the influence of green supply chain management (GSCM) on business performance of Vietnamese electronic firms by testing multivariate regression model through software SPSS. The study was completed based on survey results of 961 electronic firms and combined with interview results obtained from the directors, the deputy directors, and other positions directly involved in the supply chain management system. The results show that GSCM has a direct positive impact on business performance and has an indirect positive impact on business performance through employee job satisfaction, operational efficiency, relational efficiency. This study provides some valuable implications for electronic firms in raising their awareness and also developing their green supply chain management system. Keywords: GSCM, Green supply chain management, Business performance, Vietnamese electronic firms.

INTELLECTUAL CAPITAL AND FINANCIAL PERFORMANCE OF QUOTED COMPANIES IN NIGERIA


 The study examined the impact of intellectual capital on the financial performance of quoted companies in Nigeria. The study employed twenty-five companies from five sectors of the economy. The ex-post facto research design was employed in the study, to aid the use of secondary data within 2015-2020 was soured from the financial statement of the companies. The dependent variable was measured using the sales and asset growth of the selected companies and the intellectual capital was measured using the human capital efficiency, structural capital efficiency, and relational capital efficiency. The findings revealed that structural, relational capital efficiency and value-added have a negative, positive and positive significant effect on sales and asset growth of the selected companies. It is therefore recommended that the organization should invest in the structural and relational capital efficiency in the organization because it has the intrinsic capacity to improve the level of performance in the organization. 

Econometric analysis of relationship between intellectual capital and gross profit margin of Russian IT companies from 2017 to 2020

Subject. The article addresses relationship between intellectual capital and operating efficiency of IT companies. Objectives. Our aim is to conduct econometric analysis of the impact of intellectual capital and its individual elements on the profit margin of Russian IT companies. Methods. We employ methods of econometric analysis. The sample comprised 323 IT companies operating in Russia from 2016 to 2020. Results. We built two blocks of linear regression models with random and fixed annual and panel effects. For models of the first block, were selected indicators of structural (SCE), human (HCE), relational (RCE) capital efficiency and capital employed efficiency (CEE) as exogenous variables. The regression analysis showed that CEE and SCE have a significant positive effect on profit marginality. For models of the second block, we used a complex indicator, combining SCE, HCE, and RCE. We established that intellectual capital in general is positively associated with gross profit marginality of Russian IT companies. Conclusions. The study revealed that Russian IT companies effectively use the supporting intangible infrastructure and total assets. However, human capital, being the most significant resource of this industry, is used inefficiently and provides no potential for profit. Relationships with counterparties (consumers, suppliers, and other stakeholders), expressed in RCE, did not show a significant relationship with profitability either. Practical application of the findings may help improve business processes and management of intangible resources of IT companies.