Intellectual Capital and Organisational Performance of the Financial Sector: Evidence from Nigeria

Akintoye Ishola Rufus; Adegbie Folajimi Festus; Bello Isiaka Dada

doi:doi:10.11648/j.ijafrm.20220701.11

| Peer-Reviewed

Intellectual Capital and Organisational Performance of the Financial Sector: Evidence from Nigeria

Akintoye Ishola Rufus, Adegbie Folajimi Festus, Bello Isiaka Dada

Published in International Journal of Accounting, Finance and Risk Management (Volume 7, Issue 1)

Received: 14 December 2021 Accepted: 4 January 2022 Published: 12 January 2022

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

The world economy is moving to a knowledge-based economy from the industrial era. Prior studies have shown that reliance on physical and financial capital is not enough for sustained improved performance. Improved performance will continue to be of interest to management of organisations and to researchers and businesses should utilise strategic resources especially intangible ones (intellectual capital) to achieve competitive advantage. The study examined the effect of intellectual capital on organisational performance of financial companies quoted in Nigeria. The study adopted ex-post facto research design. The population was 53 financial companies listed on the Nigerian Stock Exchange (NSE) in 2019, from which 35 were purposively selected. The audited financial statements from 2010 to 2019 validated by the external auditors’ report were the data source. Descriptive and inferential statistics using regression analyses were employed. The Value-Added Intellectual Coefficient (VAIC) was used to measure intellectual capital (IC) and organizational performance had five measures of return of assets (ROA), return on equity (ROE), Leverage (Lev), Assets Turnover (ATO), and Market to Book Ratio (MB ratio). The study concluded that intellectual capital impacts positively on organizational performance, but firm size do not play a significant role. The study recommended that financial institutions should develop competencies by replacing the less-qualified performers, assist employees learn new management and technical skills through regular training and mentoring. Management should devise ways to improve employee’s competence in technical and information technology, in customer relation, suppliers’ management, projecting bank’s image, and a positive organizational culture to improve their intellectual capital stock.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 7, Issue 1)
DOI	10.11648/j.ijafrm.20220701.11
Page(s)	1-10
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2022. Published by Science Publishing Group

Keywords

Capital Employed, Financial Sector, Human Capital, Intellectual Capital, Structural Capital, Value-added Intellectual Coefficient (VAIC)

References

[1]	Soewarno, N. & Tjahjadi, B. (2020). Measures that matter: an empirical investigation of intellectual capital and financial performance of banking firms in Indonesia. Journal of Intellectual Capital, 21 (6), 1085-1106.
[2]	Chowdhury, L, A, M., Rana, T., & Azim, M. I. (2019). Intellectual capital efficiency and organisational performance- in the context of the pharmaceutical industry in Bangladesh. Journal of Intellectual Capital, 20 (6), 784-806.
[3]	Drucker, P. F. (2017). The theory of business (Harvard Business Review Classics). Boston, MA: Harvard Business Press.
[4]	Akintoye, I. R. (2019). Accounting, a mismanaged concept requiring urgent re-definition, Babcock University 28^th Inaugural Lecture. Nigeria, Ilishan-Remo: Babcock University Press.
[5]	Kwarbai, J. D. & Akinpelu, M. A (2016). Human capital efficiency and corporate performance: The Nigerian perspective. International Journal of Business & Management, 4 (3), 1-9.
[6]	Saddam, S. C. (2021). Intellectual capital: The current affluence of organisations in Malaysian banking industry, International Journal of Academic Research in Business and Social Sciences, 11 (1), 11-21.
[7]	World Bank Group (2019). Nigeria Economic Update-Jumpstarting inclusive growth: unlocking the productive potential of Nigeria’s people and resource endowments.
[8]	Orea, L. & Kumbhakar, S. (2004). Efficiency management using a stochastic frontier class model, Empirical Economics, 29, 169-183.
[9]	Mckinsey & Company (2020). Nigeria’s banking sector: Thriving in the force of crisis.
[10]	Nadeem, M., Gan, C., & Nguyen, C. (2018). The importance of intellectual capital for firm performance: evidence from Australia. Australian Accounting Review, 28 (3), 334-344.
[11]	Nadeem, M., Dumay, J. and Massaro, M. (2019), “If you can measure it, you can manage it: a case of Intellectual Capital”, Australian Accounting Review, 29 (2), 395-407.
[12]	Putra, N. W. A., & Ratnadi, N. M. D. (2021). Intellectual capital and its disclosure on firm value: evidence of Indonesian banking industries. International Journal of Finance and Banking studies, 10 (1), 86-95.
[13]	Goh (2003). Improving organization learning capability: lessons from two case studies. The Learning Organization, 10 (4), 216-227.
[14]	Nayer, D. (2002). Managing Performance. Insep Consulting Editions, Paris.
[15]	Folan, P. (2007). Performance: It’s meaning and content for today’s business research. Computers in Industry, 58 (7), 605-620.
[16]	Rostam, F. A. (2019). Organisational Performance Management Conference: Social Science Studies, Dec 2019.
[17]	Edvinsson, L., & Malone, M. (1997). Intellectual Capital: The Proven Way to Establish Your Company’s Real Value by Measuring Its Hidden Values. London: Piatkus.
[18]	Stewart, T. A. (1997). Intellectual Capital. Doubleday, New York: New wealth of organization.
[19]	Pulic, A. (1998). Measuring the performance of intellectual potential in knowledge Economy. Paper presented at the 2^nd McMaster Word Congress on Measuring and Managing Intellectual Capital by the Austrian Team for Intellectual Potential.
[20]	Pulic, A. (2000). VAIC–an accounting tool for IC management, International Journal of Technology Management, 20 (5-8), 702-714.
[21]	Rehman, A., Aslam, E., & Iqbal, A. (2021). Intellectual capital efficiency and bank performance: evidence from Islamic banks. Borsa Istanbul Review, 1-9.
[22]	Yaseen, H. & Al-Amaneh, A. (2021). Intellectual capital and financial performance: case of the emerging market banks. Journal of Governance and Regulation, 10 (1), 35-41
[23]	Nabi, N., Gao, Q., Rahman, T., Britton, S. O., & Islam, M. M. (2020). Intellectual capital and corporate performance: evidence from banking industry of Bangladesh. International Journal of Human Resource Studies, 10 (1), 234-259.
[24]	Tu D. Q. Le & Nguyen, D. T. (2020). Intellectual capital and bank profitability: new evidence from Vietnam. Cogent Business and Management, 7 (1), 1-19.
[25]	Nazir, M. I. Tan, Y., & Nazir, M. R. (2020). Intellectual capital performance in the financial sector; evidence from China, Hong Kong, and Taiwan. International Journal of Financial Economics, 1-21.
[26]	Yao, H., Haris, M., Tariq, G., Javaid, H. M., & Khan, M. H. S. (2019). Intellectual capital, profitability, and productivity: Evidence from Pakistan. Sustainability, 11, 3812, 2-30.
[27]	Naushad, M. (2019). Intellectual capital and financial performance of Sharia-compliant banks in Saudi Arabia. Banks and Bank Systems, 14 (4), 1-9.
[28]	Ousama, A. A. Hemmami, H. & Abdulkarim, M. (2020). Association between intellectual capital and financial performance in the Islamic banking industry. International Journal of Islamic and Middle East Finance and Management, 13 (1), 75-93.
[29]	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.
[30]	Ozkan, N., Cakan, S., Kayacan, M. (2017). Intellectual capital and financial performance: a study of the Turkish banking sector. Borsa Istanbul Review, 17 (3), 190-198.
[31]	Thakur, V. S. (2017). Intellectual capital: its effects of financial performance of Indian public and private sector banks. Research reviews: Journal of Social Sciences, 3 (2), 100-106.
[32]	AbdullRazak, R. & Al Johani, O. (2017). Intellectual capital and financial performance of Saudi insurance company. GE-International Journal of Management Research, 5 (1), 108-125.
[33]	Tahir, M., Ali Shah, S. Q., Khan, M. M. & Afridi, M. A. (2017). Intellectual capital and financial performance of banks in Pakistan, The Dialogue, 13 (1), 105-118.
[34]	Ahmad, M. & Ahmed, N. (2016). Testing the relationship between intellectual and a firm’s performance: an empirical investigation regarding financial industries in Pakistan. International Journal of Learning and Intellectual Capital, 15 (2/3), 250-274.
[35]	Sherif, M., & Elsayed, M. (2015). The impact of intellectual capital on corporate performance: evidence from the Egyptian Insurance Market. International Journal of Innovation Management, 1-38.
[36]	Isanzu, J. N. (2015). Impact of intellectual capital on financial performance of banks in Tanzania. Journal of International Business Research and Marketing, 1 (1), 1-8.
[37]	Zin, K., Hassan, H., & Ahmed, I. (2014). Individual capital amongst commercial banks in Malaysia, Handbook on the Emerging Trends in Scientific Research, 400-410.
[38]	Rosita, Ghozali, M., Harto, P., Susanto, H., & Zainuddin, F. (2020). Intellectual capital and financial performance of state-owned banking: evidence from Indonesia, International Journal of Learning and Intellectual Capital, 17 (1), 47-60.
[39]	John-Akamelu, R. C. & Iyidiobi, F. C. (2018). Intellectual capital and performance of Nigerian banks. International Journal of Innovative Finance and Economic Research, 6 (1), 60-74.
[40]	Offurum, C. O. & Aliyu, A. S. (2018). Intellectual capital component and financial performance of quoted banks in Nigeria, International Journal of Advanced Academic Research, 4 (2), 24-46.
[41]	Tan, Y., & Floros, C. (2012). Bank profitability and inflation: The case of China. Journal of Economic Studies, 39 (6), 675-696.
[42]	Yao, H.; Haris, M.; Tariq, G. (2018). Profitability determinants of financial institutions: Evidence from banks in Pakistan. International Journal of Finance. 6 (53), 1-28.
[43]	Muritala, T. A., Ijaiya, M. A., Adekunle, A. O., & Abidoye, M. K. (2017). Capitalisation and bank performance: evidence from Nigerian banking sector. Financial Interest Quarterly, 13 (4), 67-75.

Cite This Article

Plain Text BibTeX RIS

APA Style

Akintoye Ishola Rufus, Adegbie Folajimi Festus, Bello Isiaka Dada. (2022). Intellectual Capital and Organisational Performance of the Financial Sector: Evidence from Nigeria. International Journal of Accounting, Finance and Risk Management, 7(1), 1-10. https://doi.org/10.11648/j.ijafrm.20220701.11

Copy | Download

ACS Style

Akintoye Ishola Rufus; Adegbie Folajimi Festus; Bello Isiaka Dada. Intellectual Capital and Organisational Performance of the Financial Sector: Evidence from Nigeria. Int. J. Account. Finance Risk Manag. 2022, 7(1), 1-10. doi: 10.11648/j.ijafrm.20220701.11

Copy | Download

AMA Style

Akintoye Ishola Rufus, Adegbie Folajimi Festus, Bello Isiaka Dada. Intellectual Capital and Organisational Performance of the Financial Sector: Evidence from Nigeria. Int J Account Finance Risk Manag. 2022;7(1):1-10. doi: 10.11648/j.ijafrm.20220701.11

Copy | Download

@article{10.11648/j.ijafrm.20220701.11,
  author = {Akintoye Ishola Rufus and Adegbie Folajimi Festus and Bello Isiaka Dada},
  title = {Intellectual Capital and Organisational Performance of the Financial Sector: Evidence from Nigeria},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {7},
  number = {1},
  pages = {1-10},
  doi = {10.11648/j.ijafrm.20220701.11},
  url = {https://doi.org/10.11648/j.ijafrm.20220701.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20220701.11},
  abstract = {The world economy is moving to a knowledge-based economy from the industrial era. Prior studies have shown that reliance on physical and financial capital is not enough for sustained improved performance. Improved performance will continue to be of interest to management of organisations and to researchers and businesses should utilise strategic resources especially intangible ones (intellectual capital) to achieve competitive advantage. The study examined the effect of intellectual capital on organisational performance of financial companies quoted in Nigeria. The study adopted ex-post facto research design. The population was 53 financial companies listed on the Nigerian Stock Exchange (NSE) in 2019, from which 35 were purposively selected. The audited financial statements from 2010 to 2019 validated by the external auditors’ report were the data source. Descriptive and inferential statistics using regression analyses were employed. The Value-Added Intellectual Coefficient (VAIC) was used to measure intellectual capital (IC) and organizational performance had five measures of return of assets (ROA), return on equity (ROE), Leverage (Lev), Assets Turnover (ATO), and Market to Book Ratio (MB ratio). The study concluded that intellectual capital impacts positively on organizational performance, but firm size do not play a significant role. The study recommended that financial institutions should develop competencies by replacing the less-qualified performers, assist employees learn new management and technical skills through regular training and mentoring. Management should devise ways to improve employee’s competence in technical and information technology, in customer relation, suppliers’ management, projecting bank’s image, and a positive organizational culture to improve their intellectual capital stock.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - Intellectual Capital and Organisational Performance of the Financial Sector: Evidence from Nigeria
AU  - Akintoye Ishola Rufus
AU  - Adegbie Folajimi Festus
AU  - Bello Isiaka Dada
Y1  - 2022/01/12
PY  - 2022
N1  - https://doi.org/10.11648/j.ijafrm.20220701.11
DO  - 10.11648/j.ijafrm.20220701.11
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 1
EP  - 10
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20220701.11
AB  - The world economy is moving to a knowledge-based economy from the industrial era. Prior studies have shown that reliance on physical and financial capital is not enough for sustained improved performance. Improved performance will continue to be of interest to management of organisations and to researchers and businesses should utilise strategic resources especially intangible ones (intellectual capital) to achieve competitive advantage. The study examined the effect of intellectual capital on organisational performance of financial companies quoted in Nigeria. The study adopted ex-post facto research design. The population was 53 financial companies listed on the Nigerian Stock Exchange (NSE) in 2019, from which 35 were purposively selected. The audited financial statements from 2010 to 2019 validated by the external auditors’ report were the data source. Descriptive and inferential statistics using regression analyses were employed. The Value-Added Intellectual Coefficient (VAIC) was used to measure intellectual capital (IC) and organizational performance had five measures of return of assets (ROA), return on equity (ROE), Leverage (Lev), Assets Turnover (ATO), and Market to Book Ratio (MB ratio). The study concluded that intellectual capital impacts positively on organizational performance, but firm size do not play a significant role. The study recommended that financial institutions should develop competencies by replacing the less-qualified performers, assist employees learn new management and technical skills through regular training and mentoring. Management should devise ways to improve employee’s competence in technical and information technology, in customer relation, suppliers’ management, projecting bank’s image, and a positive organizational culture to improve their intellectual capital stock.
VL  - 7
IS  - 1
ER  -

Copy | Download

Author Information

Akintoye Ishola Rufus

Department of Accounting, Babcock University, Ilishan-Remo, Nigeria
Adegbie Folajimi Festus

Department of Accounting, Babcock University, Ilishan-Remo, Nigeria
Bello Isiaka Dada

Department of Accounting, Babcock University, Ilishan-Remo, Nigeria

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Akintoye Ishola Rufus, Adegbie Folajimi Festus, Bello Isiaka Dada. (2022). Intellectual Capital and Organisational Performance of the Financial Sector: Evidence from Nigeria. International Journal of Accounting, Finance and Risk Management, 7(1), 1-10. https://doi.org/10.11648/j.ijafrm.20220701.11

Copy | Download

ACS Style

Akintoye Ishola Rufus; Adegbie Folajimi Festus; Bello Isiaka Dada. Intellectual Capital and Organisational Performance of the Financial Sector: Evidence from Nigeria. Int. J. Account. Finance Risk Manag. 2022, 7(1), 1-10. doi: 10.11648/j.ijafrm.20220701.11

Copy | Download

AMA Style

Akintoye Ishola Rufus, Adegbie Folajimi Festus, Bello Isiaka Dada. Intellectual Capital and Organisational Performance of the Financial Sector: Evidence from Nigeria. Int J Account Finance Risk Manag. 2022;7(1):1-10. doi: 10.11648/j.ijafrm.20220701.11

Copy | Download

@article{10.11648/j.ijafrm.20220701.11,
  author = {Akintoye Ishola Rufus and Adegbie Folajimi Festus and Bello Isiaka Dada},
  title = {Intellectual Capital and Organisational Performance of the Financial Sector: Evidence from Nigeria},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {7},
  number = {1},
  pages = {1-10},
  doi = {10.11648/j.ijafrm.20220701.11},
  url = {https://doi.org/10.11648/j.ijafrm.20220701.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20220701.11},
  abstract = {The world economy is moving to a knowledge-based economy from the industrial era. Prior studies have shown that reliance on physical and financial capital is not enough for sustained improved performance. Improved performance will continue to be of interest to management of organisations and to researchers and businesses should utilise strategic resources especially intangible ones (intellectual capital) to achieve competitive advantage. The study examined the effect of intellectual capital on organisational performance of financial companies quoted in Nigeria. The study adopted ex-post facto research design. The population was 53 financial companies listed on the Nigerian Stock Exchange (NSE) in 2019, from which 35 were purposively selected. The audited financial statements from 2010 to 2019 validated by the external auditors’ report were the data source. Descriptive and inferential statistics using regression analyses were employed. The Value-Added Intellectual Coefficient (VAIC) was used to measure intellectual capital (IC) and organizational performance had five measures of return of assets (ROA), return on equity (ROE), Leverage (Lev), Assets Turnover (ATO), and Market to Book Ratio (MB ratio). The study concluded that intellectual capital impacts positively on organizational performance, but firm size do not play a significant role. The study recommended that financial institutions should develop competencies by replacing the less-qualified performers, assist employees learn new management and technical skills through regular training and mentoring. Management should devise ways to improve employee’s competence in technical and information technology, in customer relation, suppliers’ management, projecting bank’s image, and a positive organizational culture to improve their intellectual capital stock.},
 year = {2022}
}

Copy | Download

TY  - JOUR
T1  - Intellectual Capital and Organisational Performance of the Financial Sector: Evidence from Nigeria
AU  - Akintoye Ishola Rufus
AU  - Adegbie Folajimi Festus
AU  - Bello Isiaka Dada
Y1  - 2022/01/12
PY  - 2022
N1  - https://doi.org/10.11648/j.ijafrm.20220701.11
DO  - 10.11648/j.ijafrm.20220701.11
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 1
EP  - 10
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20220701.11
AB  - The world economy is moving to a knowledge-based economy from the industrial era. Prior studies have shown that reliance on physical and financial capital is not enough for sustained improved performance. Improved performance will continue to be of interest to management of organisations and to researchers and businesses should utilise strategic resources especially intangible ones (intellectual capital) to achieve competitive advantage. The study examined the effect of intellectual capital on organisational performance of financial companies quoted in Nigeria. The study adopted ex-post facto research design. The population was 53 financial companies listed on the Nigerian Stock Exchange (NSE) in 2019, from which 35 were purposively selected. The audited financial statements from 2010 to 2019 validated by the external auditors’ report were the data source. Descriptive and inferential statistics using regression analyses were employed. The Value-Added Intellectual Coefficient (VAIC) was used to measure intellectual capital (IC) and organizational performance had five measures of return of assets (ROA), return on equity (ROE), Leverage (Lev), Assets Turnover (ATO), and Market to Book Ratio (MB ratio). The study concluded that intellectual capital impacts positively on organizational performance, but firm size do not play a significant role. The study recommended that financial institutions should develop competencies by replacing the less-qualified performers, assist employees learn new management and technical skills through regular training and mentoring. Management should devise ways to improve employee’s competence in technical and information technology, in customer relation, suppliers’ management, projecting bank’s image, and a positive organizational culture to improve their intellectual capital stock.
VL  - 7
IS  - 1
ER  -

Copy | Download