Intellectual Capital and Firms’ Performance Measures of Listed Non-Financial Companies in Nigeria
Keywords:
Human capital, intellectual capital, performance, Non-financial firm.Abstract
The prolonged neglect of intellectual capital by management of firms is a major challenge due
to the paradigm shift towards knowledge economy where performance and competitive edge
of firms are no longer primarily a matter of machines and tools but of brains and harnessing
those brains. It is in view of this that this study investigated the effect of intellectual capital on
perfo rmance measures of listed non-financial companies in Nigeria between year 2007 and
2017. The study adopted ex-post facto research design and data were obtained from secondary
sources through the audited annual reports of sampled firms and the fact books of Nigerian
Stock Exchange. Data such as human capital efficiency, structural capital efficiency and
capital employed efficiency were proxies for intellectual capital while return on equity and
return on assets was proxies for financial performance. Sample sizes of fifty (50) out of a
population of eighty (80) listed non-financial firms on Nigerian Stock Exchange as at
December 2018 were purposively selected for the study. Data collected were analyzed using
descriptive statistics and panel regression analysis. The results of the study revealed that
human capital efficiency, capital employed efficiency, firm size had significant positive effect
on return on equity while human capital efficiency, structural capital efficiency, capital
employed efficiency and leverage had a significant effect on return on assets. The study
concluded that intellectual capital has positive significant effect on financial performance
measures. The study recommended a policy framework for the management to increase
intellectual capital utilization through investment in human and customer capital to enhance
their financial performance and maintain competitive edge.
References
Abualoush, S., Masa’deh, R., Bataineh, K., & Alrowwad, A. (2018). The role of knowledge
management process and intellectual capital as intermediary variables between
knowledge management infrastructure and organization performance.
Interdisciplinary Journal of Information, Knowledge, and Management, 13, 279-309.
https://doi.org/10.28945/4088
Ahangar, R. G. (2011). The Relationship between intellectual capital and financial
performance: An empirical investigation in an Iranian company. African Journal of
Business Management, 5(1), 88-95.
Alipour, M. (2012). The effect of intellectual capital on firm performance: An investigation
of Iran Insurance companies. Measuring Business Excellence, 16(1), 53-66.
Al-Manaseer, M. F., Al-Hindawi, R. M., Al-Dahiyat, M. A., & Sartawi, I. I. (2012). The
impact of corporate governance on the performance of Jordanian Banks. European.
Journal of Scientific Research, 67(3): 349-359.
Al-Shubiri, F. N. (2013). The impact of value-added intellectual coefficient components on
financial health. Review of International Comparative Management, 14(3), 459-472.
Andreeva, T. & Garanina, T. (2017). Do all elements of intellectual capital matter for
crganizational performance? Evidence from Russian context. Journal of Intellectual
Capital,17(2), 397- 412.
Apiti, C.U., Ugwoke, R.O., & Chiekezie, N. R. (2017). Intellectual capital management and
organizational performance in selected food and beverage companies in Nigeria.
International Journal of Advanced Scientific Research and Management, 2(1), 47- 58.
Araniyar, I. C., & Chizea, J. J. (2017). Corporate governance disclosure in developing
countries: A comparative analysis in Nigerian and South African Banks. SAGE Open,
7(3)
Basuki, M. S. (2012). Intellectual capital and its impact on financial profitability of
Indonesian listed companies. Journal of Economics, Business and Accountancy,
Ventura, 14(3).15-25.
Berzkalne, I., & Zelgalve, E. (2013). Intellectual capital and company value. Procedia -
Social and Behavioral Sciences, 110, 887–896.
Bontis, N. (1998). Intellectual Capital: An exploratory study that develops measures and
models. Management Decision, 36, 63-76.
Boujelbene, M. A., & Affes, H. (2013). The impact of intellectual capital disclosure on cost
of equity capital: A case of French firms. Journal of Economics, Finance and
Administrative Science, 18, 45-53.
Brannstrom, D., & Giuliani, M. (2009). Accounting for intellectual capital: A comparative
analysis. VINE, 39(1), 68-79.
14
Chan, K. H. (2009). Impact of intellectual capital on organizational performance: An
empirical study of companies in the Hang Seng Index. The Learning Organisation,
16(1), 22-39.
Chen, M. C., Chen, S. J., & Hwang, Y. (2005). An empirical investigation of the relationship
between intellectual capital and firm’s market value and financial performance.
Journal of Intellectual Capital, 6(2), 159-176.
Clarke, T., Tan, H. P., Plowman, D. & Hancock, P. (2007). Intellectual capital and financial
returns of companies, Journal of Intellectual Capital, 10(4), 588-599.
Duho, K.C., & Agomor, P.E. (2021). Intellectual capital and performance among listed non-
financial firms in West Africa. Dataking Working Paper Series N° WP2021-03-02,
Available at https://ssrn.com/abstract=3803094
Ekwe, M. C. (2012). The relationship between intellectual capital and bank performance: The
Nigerian experience. Research Journal of Finance and Accounting, 4(1), 139-148.
Elfiswandi, D., & Ade, K., Zerni, M. (2019). Do diversity of directors improve market
performance? The Academy of Management Journal, 1(4), 77-78.
Filipe, S., Serrasqueiro, Z., & Alves, H. (2018). On the relationship between intellectual
capital and financial performance: A panel data analysis on SME hotels. International
Journal of Hospitality Management, 75, 67–74.
Firer, S., & Williams, M. (2003). Intellectual capital and traditional measures of corporate
performance. Journal of Intellectual Capital, 4(3), 348-360.
Habib, M. (2018). Are human capital, intellectual property rights, and research and
development expenditures really important for total factor productivity? An empirical
analysis. International Journal of Social Economics, 34, 21-43.
Hashim, M. J., Osman, I., & Alhabshi, S. M. (2015). Effect of intellectual capital on
organizational performance. Procedia - Social and Behavioral Sciences, 211,
207–214.
Holmen, J. (2011). Using intellectual capital disclosure as a framework for non-financial
disclosures. International Journal of Advanced Multidisciplinary Research. 8(1), 8-
12.
Horibe, F. (2015). Managing knowledge workers: new skills and attitudes to unlock the
intellectual capital in your organization. John Wiley & Sons, New York.
Huihui, Z., & Jitian, W. (2010). Study on the relationship between intellectual capital and
financial performance of real estate companies, Journal of Intellectual Capital, 6(5),
72–75.
Irawanto D. W., Gondomono H. & Hussein S. A. (2017). The effect of intellectual capital on
a company's performance moderated by its governance and its strategy integration
employed by banks listed in Indonesian Stock Exchange. The south East Asian
Journal of Management, 11(2), 86-102.
15
Kamath, G. B. (2007). The intellectual capital performance of the Indian banking sector.
Journal of Intellectual Capital, 8(1), 96–123.
Kariuki. M. (2014). Intellectual capital, corporate reputation, corporate culture and
performance of firms listed on Nairobi Securities. School of Business, University of
Nairobi.
Khairu.,Ismail, A. M. & Mohammed (2009). Intellectual capital efficiency and firm’s
performance: study on Malaysian financial sector. International Journal of
Economics and Finance, 1(2), 206-212. available at www.ccsenet.org/journal.htm1
Kharal, M., Abrar, M., Zia-ur-Rehman, M., Sarfraz Khan, M., & Kharal, M. (2014).
Intellectual capital & firm performance: An empirical study on the Oil & Gas sector
of Pakistan. International Journal of Accounting and Financial Reporting, 4(1), 238-
250..
Komnenic, B., & Pokrajcic, D. (2012). Intellectual capital and corporate performance of
MNCs in Serbia. Journal of Intellectual Capital, 13(1), 106-119.
Kurfi, S. A., Udin, N. M., & Bahamman, S. M. (2017). The impact of intellectual capital on
the financial performance of listed Nigerian food products companies. Journal of
Accounting and Taxation, 9(11), 147-160.
Marr, B., Schiuma, G., & Neely, A. (2004). The dynamics of value creation: Mapping your
intellectual performance drivers. Journal of Intellectual Capital, 5, 312-325.
Mehralian, G., Rasekh, H. R., Akhavan, P., & Sadeh, M. R. (2012). The impact of intellectual
capital efficiency on market value: An empirical study from Iranian pharmaceutical
companies. Iranian Journal of Pharmaceutical Research, 11, 195-207.
Mirza, S. A., & Javed, A. (2013). Determinants of financial performance of a firm: Case of
Pakistani Stock Market. Journal of Economics and International Finance, 5(2), 43-
52.
Muhammad, et al., (2020). Impact of intellectual capital on financial performance and
investment decisions; evidence from non-financial sector of Pakistan. International
Journal of Management, 11(8), 1969-1987. Doi: 10.34218/IJM.11.8.2020.174
Murale, V. and Fali, A. (2010). Impact of intellectual capital on firm value: A panel data
analysis of Indian IT firms, Advance Journal in Management, 3(7), 1-23.
Nassar, S. (2018). Impact of intellectual capital on firm performance of the Turkish real
estate companies before and after the crisis. European Scientific Journal, 14(1), 20-
35.
Nixon, K., Augustine, A., & Joseph, M. N. (2010). Intellectual capital and financial
performance in Uganda’s microfinance institutions. African Journal of Accounting,
Economics, Finance and Banking Research, 6(6), 17-31.
16
Nnubia, I., Okolo, M.N., & Emeka-Nwokeji, N. A. (2019). Effect of intellectual capital on
performance of nonfinancial firms in Nigeria. International Journal of Research and
Innovation in Applied Science, 4(4), 28-38.
Nuryaman. (2015). The influence of intellectual capital on the firm’s value with the financial
performance as intervening variable. Procedia - Social and Behavioral Sciences, 211,
292–298.
OECD. (2008). Intellectual assets and value creation-synthesis report. Paris: OECD.
Olusoji, M. O., & Odeleye, A. T. (2018). Service sector potentials in the transformation of
the Nigerian economy. BizEcons Quarterly, 2, 24–35.
Onyekwelu, U. L., Okoh, J. I., & Iyidiobi, F. C. (2017). Effect of intellectual capital on
financial performance of banks in Nigeria. European Journal of Accounting, Auditing
and Finance Research, 5(2), 28-57.
Ozkan, N., Cakan, S., & Kayacan, M. (2017). Intellectual capital and financial performance:
A Study of the Turkish banking Sector. BorsaInstabul Review, 17(3), 190-198.
Petty, R., & Guthrie, J. (2000). Intellectual capital literature review, measurement, reporting
and management. Journal of Intellectual Capital, 1(2), 155-176.
Pulic, A. (1998). Measuring the performance of intellectual potential in the knowledge
economy. The 2nd World Congress on the Management of Intellectual Capital.
Hamilton, ON.
Ramezan, M. (2011). Intellectual capital and organizational organic structure in knowledge
society: How are these concepts related? International Journal of Information
Management, 31, 88-95.
Salman, R. T., Mansor, M., Babatunde, D. A., & Tayib, M. (2012). Impact of intellectual
capital on return on assets in Nigerian manufacturing companies. Interdisciplinary
Journal of Research in Business, 2(4), 21-30.
Selvam, M., Gayanthri, J., & Vasanth, V. (2016). Determinants of firm performance: A
Subjective Model. International Journal of Social Science Studies, 4(17), 1662-1674.
Seng, D., & Whiting, R.H. (2011). Intellectual capital and firm performance in Australia
.Journal of Intellectual Capital, 12(4), 505-530.
Stewart, T., & Ruckdeschel, E. (1998). Intellectual capital: The new wealth of organizations.
Performance improvement, 56-59.
Sumedrea, S. (2013). Intellectual capital and firm performance: A dynamic relationship in
Crisis time. Procedia Economics and Finance, 6, 137-144.
Sveiby, K. E. (2001). A knowledge-based theory of the firm to guide in strategy formulation.
Journal of Intellectual Capital, 2(4), 344-358.
Trequattrini, R. (2008). Conoscenzaedeconomiaaziendale. Elementi di teoria. Italy: Naples.
17
Tsai, J. H., Yu, J., & Wen, S.-Y. (2013). Intellectual capital, corporate governance and firm
performance. Information Management and Business Review, 5(10), 482-491.
Uwuigbe, U., & Uadiale, O. M. (2011). Intellectual capital and business performance:
Evidence from Nigeria. Interdisciplinary Journal of Research in Business, 1, 49-56.
Yamane, T. (1973). Statistics: An Introductory Analysis (3rd ed.). New York: Harper and
Row.
Zehri, C., Abdelbaki, A., & Bouabdellah, N. (2012). Effects of the current financial crisis on
Islamic banks compared to conventional banks. Banks and Bank Systems, 7(1).
management process and intellectual capital as intermediary variables between
knowledge management infrastructure and organization performance.
Interdisciplinary Journal of Information, Knowledge, and Management, 13, 279-309.
https://doi.org/10.28945/4088
Ahangar, R. G. (2011). The Relationship between intellectual capital and financial
performance: An empirical investigation in an Iranian company. African Journal of
Business Management, 5(1), 88-95.
Alipour, M. (2012). The effect of intellectual capital on firm performance: An investigation
of Iran Insurance companies. Measuring Business Excellence, 16(1), 53-66.
Al-Manaseer, M. F., Al-Hindawi, R. M., Al-Dahiyat, M. A., & Sartawi, I. I. (2012). The
impact of corporate governance on the performance of Jordanian Banks. European.
Journal of Scientific Research, 67(3): 349-359.
Al-Shubiri, F. N. (2013). The impact of value-added intellectual coefficient components on
financial health. Review of International Comparative Management, 14(3), 459-472.
Andreeva, T. & Garanina, T. (2017). Do all elements of intellectual capital matter for
crganizational performance? Evidence from Russian context. Journal of Intellectual
Capital,17(2), 397- 412.
Apiti, C.U., Ugwoke, R.O., & Chiekezie, N. R. (2017). Intellectual capital management and
organizational performance in selected food and beverage companies in Nigeria.
International Journal of Advanced Scientific Research and Management, 2(1), 47- 58.
Araniyar, I. C., & Chizea, J. J. (2017). Corporate governance disclosure in developing
countries: A comparative analysis in Nigerian and South African Banks. SAGE Open,
7(3)
Basuki, M. S. (2012). Intellectual capital and its impact on financial profitability of
Indonesian listed companies. Journal of Economics, Business and Accountancy,
Ventura, 14(3).15-25.
Berzkalne, I., & Zelgalve, E. (2013). Intellectual capital and company value. Procedia -
Social and Behavioral Sciences, 110, 887–896.
Bontis, N. (1998). Intellectual Capital: An exploratory study that develops measures and
models. Management Decision, 36, 63-76.
Boujelbene, M. A., & Affes, H. (2013). The impact of intellectual capital disclosure on cost
of equity capital: A case of French firms. Journal of Economics, Finance and
Administrative Science, 18, 45-53.
Brannstrom, D., & Giuliani, M. (2009). Accounting for intellectual capital: A comparative
analysis. VINE, 39(1), 68-79.
14
Chan, K. H. (2009). Impact of intellectual capital on organizational performance: An
empirical study of companies in the Hang Seng Index. The Learning Organisation,
16(1), 22-39.
Chen, M. C., Chen, S. J., & Hwang, Y. (2005). An empirical investigation of the relationship
between intellectual capital and firm’s market value and financial performance.
Journal of Intellectual Capital, 6(2), 159-176.
Clarke, T., Tan, H. P., Plowman, D. & Hancock, P. (2007). Intellectual capital and financial
returns of companies, Journal of Intellectual Capital, 10(4), 588-599.
Duho, K.C., & Agomor, P.E. (2021). Intellectual capital and performance among listed non-
financial firms in West Africa. Dataking Working Paper Series N° WP2021-03-02,
Available at https://ssrn.com/abstract=3803094
Ekwe, M. C. (2012). The relationship between intellectual capital and bank performance: The
Nigerian experience. Research Journal of Finance and Accounting, 4(1), 139-148.
Elfiswandi, D., & Ade, K., Zerni, M. (2019). Do diversity of directors improve market
performance? The Academy of Management Journal, 1(4), 77-78.
Filipe, S., Serrasqueiro, Z., & Alves, H. (2018). On the relationship between intellectual
capital and financial performance: A panel data analysis on SME hotels. International
Journal of Hospitality Management, 75, 67–74.
Firer, S., & Williams, M. (2003). Intellectual capital and traditional measures of corporate
performance. Journal of Intellectual Capital, 4(3), 348-360.
Habib, M. (2018). Are human capital, intellectual property rights, and research and
development expenditures really important for total factor productivity? An empirical
analysis. International Journal of Social Economics, 34, 21-43.
Hashim, M. J., Osman, I., & Alhabshi, S. M. (2015). Effect of intellectual capital on
organizational performance. Procedia - Social and Behavioral Sciences, 211,
207–214.
Holmen, J. (2011). Using intellectual capital disclosure as a framework for non-financial
disclosures. International Journal of Advanced Multidisciplinary Research. 8(1), 8-
12.
Horibe, F. (2015). Managing knowledge workers: new skills and attitudes to unlock the
intellectual capital in your organization. John Wiley & Sons, New York.
Huihui, Z., & Jitian, W. (2010). Study on the relationship between intellectual capital and
financial performance of real estate companies, Journal of Intellectual Capital, 6(5),
72–75.
Irawanto D. W., Gondomono H. & Hussein S. A. (2017). The effect of intellectual capital on
a company's performance moderated by its governance and its strategy integration
employed by banks listed in Indonesian Stock Exchange. The south East Asian
Journal of Management, 11(2), 86-102.
15
Kamath, G. B. (2007). The intellectual capital performance of the Indian banking sector.
Journal of Intellectual Capital, 8(1), 96–123.
Kariuki. M. (2014). Intellectual capital, corporate reputation, corporate culture and
performance of firms listed on Nairobi Securities. School of Business, University of
Nairobi.
Khairu.,Ismail, A. M. & Mohammed (2009). Intellectual capital efficiency and firm’s
performance: study on Malaysian financial sector. International Journal of
Economics and Finance, 1(2), 206-212. available at www.ccsenet.org/journal.htm1
Kharal, M., Abrar, M., Zia-ur-Rehman, M., Sarfraz Khan, M., & Kharal, M. (2014).
Intellectual capital & firm performance: An empirical study on the Oil & Gas sector
of Pakistan. International Journal of Accounting and Financial Reporting, 4(1), 238-
250..
Komnenic, B., & Pokrajcic, D. (2012). Intellectual capital and corporate performance of
MNCs in Serbia. Journal of Intellectual Capital, 13(1), 106-119.
Kurfi, S. A., Udin, N. M., & Bahamman, S. M. (2017). The impact of intellectual capital on
the financial performance of listed Nigerian food products companies. Journal of
Accounting and Taxation, 9(11), 147-160.
Marr, B., Schiuma, G., & Neely, A. (2004). The dynamics of value creation: Mapping your
intellectual performance drivers. Journal of Intellectual Capital, 5, 312-325.
Mehralian, G., Rasekh, H. R., Akhavan, P., & Sadeh, M. R. (2012). The impact of intellectual
capital efficiency on market value: An empirical study from Iranian pharmaceutical
companies. Iranian Journal of Pharmaceutical Research, 11, 195-207.
Mirza, S. A., & Javed, A. (2013). Determinants of financial performance of a firm: Case of
Pakistani Stock Market. Journal of Economics and International Finance, 5(2), 43-
52.
Muhammad, et al., (2020). Impact of intellectual capital on financial performance and
investment decisions; evidence from non-financial sector of Pakistan. International
Journal of Management, 11(8), 1969-1987. Doi: 10.34218/IJM.11.8.2020.174
Murale, V. and Fali, A. (2010). Impact of intellectual capital on firm value: A panel data
analysis of Indian IT firms, Advance Journal in Management, 3(7), 1-23.
Nassar, S. (2018). Impact of intellectual capital on firm performance of the Turkish real
estate companies before and after the crisis. European Scientific Journal, 14(1), 20-
35.
Nixon, K., Augustine, A., & Joseph, M. N. (2010). Intellectual capital and financial
performance in Uganda’s microfinance institutions. African Journal of Accounting,
Economics, Finance and Banking Research, 6(6), 17-31.
16
Nnubia, I., Okolo, M.N., & Emeka-Nwokeji, N. A. (2019). Effect of intellectual capital on
performance of nonfinancial firms in Nigeria. International Journal of Research and
Innovation in Applied Science, 4(4), 28-38.
Nuryaman. (2015). The influence of intellectual capital on the firm’s value with the financial
performance as intervening variable. Procedia - Social and Behavioral Sciences, 211,
292–298.
OECD. (2008). Intellectual assets and value creation-synthesis report. Paris: OECD.
Olusoji, M. O., & Odeleye, A. T. (2018). Service sector potentials in the transformation of
the Nigerian economy. BizEcons Quarterly, 2, 24–35.
Onyekwelu, U. L., Okoh, J. I., & Iyidiobi, F. C. (2017). Effect of intellectual capital on
financial performance of banks in Nigeria. European Journal of Accounting, Auditing
and Finance Research, 5(2), 28-57.
Ozkan, N., Cakan, S., & Kayacan, M. (2017). Intellectual capital and financial performance:
A Study of the Turkish banking Sector. BorsaInstabul Review, 17(3), 190-198.
Petty, R., & Guthrie, J. (2000). Intellectual capital literature review, measurement, reporting
and management. Journal of Intellectual Capital, 1(2), 155-176.
Pulic, A. (1998). Measuring the performance of intellectual potential in the knowledge
economy. The 2nd World Congress on the Management of Intellectual Capital.
Hamilton, ON.
Ramezan, M. (2011). Intellectual capital and organizational organic structure in knowledge
society: How are these concepts related? International Journal of Information
Management, 31, 88-95.
Salman, R. T., Mansor, M., Babatunde, D. A., & Tayib, M. (2012). Impact of intellectual
capital on return on assets in Nigerian manufacturing companies. Interdisciplinary
Journal of Research in Business, 2(4), 21-30.
Selvam, M., Gayanthri, J., & Vasanth, V. (2016). Determinants of firm performance: A
Subjective Model. International Journal of Social Science Studies, 4(17), 1662-1674.
Seng, D., & Whiting, R.H. (2011). Intellectual capital and firm performance in Australia
.Journal of Intellectual Capital, 12(4), 505-530.
Stewart, T., & Ruckdeschel, E. (1998). Intellectual capital: The new wealth of organizations.
Performance improvement, 56-59.
Sumedrea, S. (2013). Intellectual capital and firm performance: A dynamic relationship in
Crisis time. Procedia Economics and Finance, 6, 137-144.
Sveiby, K. E. (2001). A knowledge-based theory of the firm to guide in strategy formulation.
Journal of Intellectual Capital, 2(4), 344-358.
Trequattrini, R. (2008). Conoscenzaedeconomiaaziendale. Elementi di teoria. Italy: Naples.
17
Tsai, J. H., Yu, J., & Wen, S.-Y. (2013). Intellectual capital, corporate governance and firm
performance. Information Management and Business Review, 5(10), 482-491.
Uwuigbe, U., & Uadiale, O. M. (2011). Intellectual capital and business performance:
Evidence from Nigeria. Interdisciplinary Journal of Research in Business, 1, 49-56.
Yamane, T. (1973). Statistics: An Introductory Analysis (3rd ed.). New York: Harper and
Row.
Zehri, C., Abdelbaki, A., & Bouabdellah, N. (2012). Effects of the current financial crisis on
Islamic banks compared to conventional banks. Banks and Bank Systems, 7(1).
Published
2021-07-07
How to Cite
Adegbayibi, A. T. (2021). Intellectual Capital and Firms’ Performance Measures of Listed Non-Financial Companies in Nigeria: Array. The Journal of Accounting and Management, 11(2). Retrieved from https://dj.univ-danubius.ro/index.php/JAM/article/view/944
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