Impact of Intellectual Capital on Firm Performance
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For the better performance in the business, significance of Intellectual Capital (IC) has got world glance. Current study analysis is primarily based on the investigating the impact of intellectual capital on the overall financial performance and financial efficiency of manufacturing firms in Pakistan. For this purpose, panel data regression analysis has been conducted to check the effect of major explanatory factors like human capital efficiency (HCE), structural capital efficiency (SCE), and capital employed efficiency (CEE) has been considered for the outcome factor. Intellectual capital is considered as major IV with three components of HCE, SCE, CEE while firm performance is considered through Return on the assets (ROA) of the business which is considered as major DV. The outcomes of the study reveal the fact that there exists the significant association between the various components of Intellectual Capital and the firm performance. The study will be very much beneficial for the various policy makers in considering the significance of intellectual capital in evaluating the financial performance of the business. However, among the key limitations, this study is not covering the other sectors like service industry in the same region of Pakistan. Therefore, adding some other sectors from Pakistan will provide some more meaningful results like the service industry to conduct the future research. Future studies can be carried while adding some more predictors like social capital and spiritual capital for the consideration of firm performance. In addition, cross sectional comparison in coming time will provide a comprehensive empirical evidence in present literature as well.
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