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Impact of intellectual capital on financial performance: evidence from the Bangladeshi textile sector

Impact of intellectual capital on financial performance: evidence from the Bangladeshi textile... The purpose of this paper is to investigate the influence of intellectual capital (IC) on financial performance and, in turn, to provide insights into its impact on emerging economies.Design/methodology/approachData were collected from 34 textile firms in Bangladesh between 2013 and 2017. The IC efficiency, through value-added intellectual coefficient (VAIC) model, and its impact on financial performance, through return on assets (ROA), return on equity and asset turnover (ATO), was examined using descriptive statistics and multiple regression techniques. The analysis is based on secondary data obtained from annual reports.FindingsThe results indicate the impact of VAIC components on financial performance and also demonstrate diverse relationships with changes in financial indicators. The VAIC components significantly influenced productivity outcomes, with tangible capital playing a major role in both productivity and profitability. Moreover, it was found that structural capital had a considerable effect on ATO and ROA with human capital indicating an insignificant impact on all financial performance indicators.Research limitations/implicationsThe research outcome is specific to the textile industry in emerging economies. The study may guide future research on IC performance in textile firms and cross-industry comparisons.Practical implicationsManagers, firm owners and regulators need to align IC to performance management to sustain the competitive advantage in globalised competitive settings.Originality/valueThe study provides an empirical evidence and extends knowledge of IC utilisation for enhancing the financial performance of the textile firms in emerging economies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting & Organizational Change Emerald Publishing

Impact of intellectual capital on financial performance: evidence from the Bangladeshi textile sector

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References (96)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1832-5912
DOI
10.1108/jaoc-11-2017-0109
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to investigate the influence of intellectual capital (IC) on financial performance and, in turn, to provide insights into its impact on emerging economies.Design/methodology/approachData were collected from 34 textile firms in Bangladesh between 2013 and 2017. The IC efficiency, through value-added intellectual coefficient (VAIC) model, and its impact on financial performance, through return on assets (ROA), return on equity and asset turnover (ATO), was examined using descriptive statistics and multiple regression techniques. The analysis is based on secondary data obtained from annual reports.FindingsThe results indicate the impact of VAIC components on financial performance and also demonstrate diverse relationships with changes in financial indicators. The VAIC components significantly influenced productivity outcomes, with tangible capital playing a major role in both productivity and profitability. Moreover, it was found that structural capital had a considerable effect on ATO and ROA with human capital indicating an insignificant impact on all financial performance indicators.Research limitations/implicationsThe research outcome is specific to the textile industry in emerging economies. The study may guide future research on IC performance in textile firms and cross-industry comparisons.Practical implicationsManagers, firm owners and regulators need to align IC to performance management to sustain the competitive advantage in globalised competitive settings.Originality/valueThe study provides an empirical evidence and extends knowledge of IC utilisation for enhancing the financial performance of the textile firms in emerging economies.

Journal

Journal of Accounting & Organizational Change – Emerald Publishing

Published: Nov 20, 2018

Keywords: Intellectual capital; Return on assets; Performance management; Return on equity; Textile industry; Asset turnover

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