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

Author

Listed:
  • Leena Afroz Mostofa Chowdhury
  • Tarek Rana
  • Mahmuda Akter
  • Mahfuzul Hoque

Abstract

Purpose - 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/approach - Data 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. Findings - The 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/implications - The 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 implications - Managers, firm owners and regulators need to align IC to performance management to sustain the competitive advantage in globalised competitive settings. Originality/value - The study provides an empirical evidence and extends knowledge of IC utilisation for enhancing the financial performance of the textile firms in emerging economies.

Suggested Citation

  • Leena Afroz Mostofa Chowdhury & Tarek Rana & Mahmuda Akter & Mahfuzul Hoque, 2018. "Impact of intellectual capital on financial performance: evidence from the Bangladeshi textile sector," Journal of Accounting & Organizational Change, Emerald Group Publishing Limited, vol. 14(4), pages 429-454, November.
    • Handle: RePEc:eme:jaocpp:jaoc-11-2017-0109
    DOI: 10.1108/JAOC-11-2017-0109
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    Citations

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    Cited by:

    1. Govindan, Kannan, 2023. "How digitalization transforms the traditional circular economy to a smart circular economy for achieving SDGs and net zero," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    2. Rafał Prusak & Edyta Kardas, 2024. "The Analysis of Mutual Relations and Dependencies of Intellectual Capital Components in Polish Enterprises in the Context of Sustainability Goals," Sustainability, MDPI, vol. 16(18), pages 1-28, September.
    3. Zakaria Nejjari & Hanane Aamoum, 2023. "The Impact of Intellectual Capital on Profitability, Market Value, Productivity, and Return on Equity: Empirical Evidence from Moroccan ICT Firms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 1734-1748, June.
    4. Ummu Salma Al-Azizah & Bagus Pamungkas Wibowo, 2023. "Impact of Intellectual Capital on Financial Performance: Panel Evidence from Banking Industry in Indonesia," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 51-65.

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