IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i11p4528-d1402601.html
   My bibliography  Save this article

The Impact of Intellectual Capital on Sustainable Performance: Banking Sector in Saudi Arabia

Author

Listed:
  • Omer Ahmed Sayed

    (Department of Finance and Investment, Faculty of Business Administration, University of Tabuk, Tabuk 47512, Saudi Arabia)

  • Aida Nefzi

    (Department of Finance and Investment, Faculty of Business Administration, University of Tabuk, Tabuk 47512, Saudi Arabia)

Abstract

This study investigates the impact of intellectual capital on the sustainable performance of banks in Saudi Arabia, focusing on the period from 2012 to 2022. Utilizing data from 10 major Saudi banks, the research examines how different components of intellectual capital—Human capital efficiency (HCE), Structural capital efficiency (SCE), and Capital employed efficiency (CEE)—influence key financial performance indicators such as return on equity (ROE) and Net profit margin (NPM). The study is grounded in the resource-based view of the firm, which suggests that a firm’s internal resources can provide a sustainable competitive advantage. The analysis employs panel data techniques, including fixed and random effect models, to assess the relationships between intellectual capital components and bank performance while controlling for variables like bank size (SIZE), financial leverage (LEV), gross domestic product growth (GGDP), inflation (INF), and the impact of the COVID-19 pandemic (COV). The findings reveal that intellectual capital significantly enhances bank performance in Saudi Arabia, with human capital efficiency showing the most decisive influence on ROE and NPM. Structural capital and capital employed efficiency also contribute positively but vary in their impact on different performance measures. This research contributes to the theoretical and practical understanding of the role of intellectual capital in promoting sustainable banking practices. It underscores the importance of the strategic management of intellectual capital in enhancing financial performance and achieving sustainability goals, particularly in the context of Saudi Arabia’s Vision 2030. The study’s insights are relevant for bank managers and policymakers who leverage intellectual capital for economic diversification and sustainable development.

Suggested Citation

  • Omer Ahmed Sayed & Aida Nefzi, 2024. "The Impact of Intellectual Capital on Sustainable Performance: Banking Sector in Saudi Arabia," Sustainability, MDPI, vol. 16(11), pages 1-26, May.
  • Handle: RePEc:gam:jsusta:v:16:y:2024:i:11:p:4528-:d:1402601
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/11/4528/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/16/11/4528/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. José Vale & Rafaela Miranda & Graça Azevedo & Maria C. Tavares, 2022. "The Impact of Sustainable Intellectual Capital on Sustainable Performance: A Case Study," Sustainability, MDPI, vol. 14(8), pages 1-17, April.
    2. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    3. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 717-737.
    4. Gary S. Becker, 1964. "Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, First Edition," NBER Books, National Bureau of Economic Research, Inc, number beck-5, June.
    5. Kaveh Asiaei & Ruzita Jusoh & Omid Barani & Arash Asiaei, 2022. "How does green intellectual capital boost performance? The mediating role of environmental performance measurement systems," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1587-1606, May.
    6. Abdulelah Alrashidi & Omar Alarfaj, 2020. "The Impact of Intellectual Capital Efficiency on Bank Risks: Empirical Evidence from the Saudi Banking Industry," International Journal of Economics and Financial Issues, Econjournals, vol. 10(4), pages 206-214.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. André de Abreu Saraiva Monteiro Alves & Fernando Manuel Pereira de Oliveira Carvalho, 2022. "How Dynamic Managerial Capabilities, Entrepreneurial Orientation, and Operational Capabilities Impact Microenterprises’ Global Performance," Sustainability, MDPI, vol. 15(1), pages 1-23, December.
    2. Jim Andersén, 2023. "Green resource orchestration: A critical appraisal of the use of resource orchestration in environmental management research, and a research agenda for future study," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 5506-5520, December.
    3. Carl Åberg & Mariateresa Torchia, 2020. "Do boards of directors foster strategic change? A dynamic managerial capabilities perspective," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(3), pages 655-684, September.
    4. Gaižauskienė Laura & Tunčikienė Živilė, 2018. "Organizational Level Factors of Knowledge Worker-Workplace Fit: Identifying the Key Drivers," Open Economics, De Gruyter, vol. 1(1), pages 167-178, December.
    5. Adomako, Samuel & Amankwah-Amoah, Joseph & Frimpong, Kwabena, 2022. "Human capital, reverse engineering and new venture growth: The moderating role of competitive strategy," Technovation, Elsevier, vol. 114(C).
    6. 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.
    7. Yan, Kai & Zhang, Ziyi & Yang, Lisi & Cao, Yuqiang & Shan, Yaowen, 2024. "Capital generates green: Evidence from China's national innovation system policy," International Review of Financial Analysis, Elsevier, vol. 91(C).
    8. Faiza Omer Elmahgop, 2024. "Intellectual Capital and Bank Stability in Saudi Arabia: Navigating the Dynamics in a Transforming Economy," Sustainability, MDPI, vol. 16(10), pages 1-23, May.
    9. Bakari, Sayef, 2024. "Unlocking Prosperity: Fresh Insights into Economic Growth Through Financial Development, Domestic Investment, and Corruption Trends in LAC Countries," MPRA Paper 120411, University Library of Munich, Germany.
    10. Emmanuel, Ongo Nkoa Bruno & Thierry, Mamadou Asngar & Christian, Atangana Zambo Charles & Ludé, Djam'Angai, 2024. "What drives financial market growth in Africa?," International Review of Financial Analysis, Elsevier, vol. 91(C).
    11. Nguyen, Quyen T.K. & Almodóvar, Paloma, 2018. "Export intensity of foreign subsidiaries of multinational enterprises: The role of trade finance availability," International Business Review, Elsevier, vol. 27(1), pages 231-245.
    12. Jiang, Fuming & Travaglione, Tony & Liu, Li Xian & Li, Jizhong, 2021. "When does the global mindset affect headquarters–subsidiary relationships?," Journal of Business Research, Elsevier, vol. 136(C), pages 523-542.
    13. Emerson Erik Schmitz & Thiago Christiano Silva, 2020. "Financial Intermediation, Human Capital Development and Economic Growth," Working Papers Series 533, Central Bank of Brazil, Research Department.
    14. Sa’adiah Munir & Gary John Rangel & Ravichandran K. Subramaniam & Mohd. Zulkhairi bin Mustapha, 2020. "Do Heterogeneous Boards Promote Firm Innovation? Evidence from Malaysia," Capital Markets Review, Malaysian Finance Association, vol. 28(1), pages 25-47.
    15. Beatrix Paal & Bruce D. Smith, 2013. "The sub-optimality of the Friedman rule and the optimum quantity of money," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 911-948, November.
    16. Prof. Dr. Adem KALCA & Resc. Assist. Atakan DURMAZ, 2012. "Diaspora As The Instrument Of Humane Capital," International Journal of Business and Social Research, LAR Center Press, vol. 2(5), pages 94-104, October.
    17. Jung-Suk Yu & M. Kabir Hassan & Abdullah Mamun & Abul Hassan, 2014. "Financial Sectors Reform and Economic Growth in Morocco: An Empirical Analysis," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 13(1), pages 69-102, April.
    18. Iacovone, Leonardo & Ferro, Esteban & Pereira-López, Mariana & Zavacka, Veronika, 2019. "Banking crises and exports: Lessons from the past," Journal of Development Economics, Elsevier, vol. 138(C), pages 192-204.
    19. Marina Dabić & Jane Maley & Leo-Paul Dana & Ivan Novak & Massimiliano M. Pellegrini & Andrea Caputo, 2020. "Pathways of SME internationalization: a bibliometric and systematic review," Small Business Economics, Springer, vol. 55(3), pages 705-725, October.
    20. Shahbaz, Muhammad & Hoang, Thi Hong Van & Mahalik, Mantu Kumar & Roubaud, David, 2017. "Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis," Energy Economics, Elsevier, vol. 63(C), pages 199-212.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2024:i:11:p:4528-:d:1402601. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.