Abstract:
The concept of intellectual capital is rapidly expanding within the
academic field, and it is playing a dominant role in the areas of accounting and
management. Based on this scenario, Empirical studies illustrate varied findings
related to intellectual capital and firms’ financial performance. However, there
is no general conclusion related to this aspect. Therefore, this paper examines the
impact of intellectual capital on financial performance based on non-listed,
export-oriented manufacturing firms in Sri Lanka over the period from 2011 to
2020. Annual sales are used as a proxy for financial performance, while following
the "Public Model", a value-added intellectual capital coefficient is calculated,
which is used as a proxy for the intellectual capital. A deductive approach is
employed using firm-level panel data, and the Hausman specification test
suggested the random effect regression model as the best-fit model. As per the
results of this study, value-added intellectual capital significantly influences
sales. Further, two components of the value-added intellectual capital, namely,
the human capital coefficient and the capital employed efficiency coefficient,
significantly influence sales. However, the remaining components of the
structural capital coefficient do not influence sales. The empirical findings of this
study may be helpful for firm managers and policymakers to craft strategic
decisions highlighting the sales of export-oriented manufacturing firms.
