Does the Efficiency of a Firm’s Intellectual Capital and Working Capital Management Affect Its Performance?

Abstract

This study explores the efficiency of intellectual capital (ICE) and working capital management (WCME) in the GCC industrial sector and its potential impact on firm performance. The data were gathered from Standard & Poor’s database from 2015 to 2019. This study uses data envelopment analysis (DEA), regression analysis, and robustness tests to accomplish its aims. The results indicate that most firms do not employ their intellectual and working capital investments well and need improvement actions to achieve the best practices. The regression model results reveal that ICE and WCME significantly and positively influence firms’ performance. The results of this study support the resource-based, trade-off, and pecking order theories. The study findings have important implications for many stakeholders; for example, they would be helpful for firm decision-makers in managing their investments in intellectual and working capital to achieve the best practices and improve a firm's performance. In addition, the findings would be helpful for financiers, because high-performance firms are likely to have more reasonable valuations that facilitate debt financing. Moreover, the findings have noteworthy implications for trading procedures as investors aspire to attractive economic returns for their investments in corporations that pasture ICE and WCME issues. Additionally, these findings have important implications for employee job satisfaction and retention by improving IC management.

Evaluating the Super-Efficiency of Working Capital Management Using Data Envelopment Analysis: Does COVID-19 Matter?

“…Therefore, they can concentrate on increasing revenue and income by developing strategies to improve sales and profitability, such as offering sales promotions to boost the volume of sales, refining pricing plans, changing sales incentive structures, surveying customers to understand the market, developing a public reputation for quality and expertise, developing new products or service lines, finding new customers, growing geographic reach by selling in new markets, adding new payment forms, and avoiding any sources of extravagance within the business. Undoubtedly, searching for ways and strategies for continuous improvement is the basis of growth and excellence in the current business environment (Habib & Dalwai [55], Habib & Mourad [56]). Table 4 shows a complementary statistical test to verify whether there is a significant difference in firms' super-efficiency practices before and during the COVID-19 crisis using the sign and Wilcoxon tests.…”

Antecedents and consequences of sustainable intellectual capital reporting: evidence from Iran

“…In the form of the above three dimensions, intellectual capital can be defined as a group of knowledge assets and a part of the characteristics of the organization, and it can lead to a significant improvement of the competitive status of the organization by increasing the level (Ghasemi et al, 2019). In particular, intellectual capital can be a source of accumulation of individual knowledge and skills; defined expertise and experience that can help increase productivity and collective functions (Li et al, 2019), but knowing the elements of intellectual capital alone cannot necessarily be useful, because in order to measure the effectiveness of intellectual capital and its management (Habib and Dalwai, 2023), it is necessary to codify intellectual capital models to create correlation among its criteria (Shang and Lin, 2010). Some capital models are presented in the form of Although intellectual capital evaluation is done through different models and in different ways, but all these models and ways have the same and similar process (Quintero-Quintero et al, 2021).…”

“…, 2019). In particular, intellectual capital can be a source of accumulation of individual knowledge and skills; defined expertise and experience that can help increase productivity and collective functions (Li et al ., 2019), but knowing the elements of intellectual capital alone cannot necessarily be useful, because in order to measure the effectiveness of intellectual capital and its management (Habib and Dalwai, 2023), it is necessary to codify intellectual capital models to create correlation among its criteria (Shang and Lin, 2010). Some capital models are presented in the form of Table 1.…”