Intellectual capital and business performance in the Portuguese banking industry

Abstract

Previous empirical studies confirm that intellectual capital has a significant and substantive impact on performance. The purpose of this research is to examine the interrelationships and interactions among intellectual capital components and business performance in the Portuguese banking industry. The concept of relational capital was extended to include 'stakeholder orientation' items. Model development and hypothesis testing was conducted using PLS on a sample of 253 respondents from 53 organisations. Results show a confirmation of previous studies as it relates to hypothesis testing but a difference in psychometric item evaluation given the unique geographical and sectoral context. Recommendations are then made for researchers and practitioners.

Intellectual Capital, Corporate Culture and Performance of Firms Listed on Nairobi Securities Exchange

“…The choice of the respondents is consistent with studies by Cabrita and Bontis (2008) and Shabarati et al (2010) who argued that organization characteristics measured were known to selected members in upper echelons, thus they were likely to provide more reliable information. The view of key informant is widely used in human resource management studies (Huselid, Jackson, & Schuler, 1997;Cabrita & Bontis, 2008). The targeted respondents were deemed knowledgeable about issues under investigation for which they are directly responsible.…”

“…The researchers established that organizations with high intellectual capital outperform those with low profile of intellectual capital. Similarly, a study by Cabrita and Bontis (2008) on the banking sector in Portugal established a positive significant relationship between intellectual capital and perceptual measures of performance. In addition the results are in line with Fire and Williams's (2003) findings on the relationship between intellectual capital and performance, revealing a negative relationship between intellectual capital (structural, physical, and human capital) and performance of 75 publicly listed companies in South Africa.…”

“…The study failed to include non-financial measures of performance and other factors that affect the relationship. Equally, Cabrita and Bontis (2008) examined interrelationship and interaction of intellectual capital components and business performance. Their study revealed a positive and significant relationship between intellectual capital and corporate performance.…”

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“…Numerous international authors recognise the decisive role of human capital in improving companies' financial performance [CabelloMedina et al, 2011;Jardon, Martos, 2012;Mention, Bontis, 2013], and in increasing their structural and relational capital. This is due to the fact that educated, skilled, and experienced staff tend to establish better relationships with a wide range of partners (thus capitalising on relational assets), and improve the efficiency of business processes (thus generating structural capital) [Cabrita, Bontis, 2008;Kim et al, 2012]. Other authors, on the contrary, insist that relational capital ultimately makes the highest contribution to companies' financial performance [Reed et al, 2006;Huang, Hsueh, 2007;Sharabati et al, 2010]: reliable client and supplier relations allow for cutting costs and increasing sales, thus improving the company's overall competitiveness.…”

“…Another series of studies which have used the telecommunications sector as an example [Garanina, 2010;Suraj, Bontis, 2012] showed that relational capital (a measure of clients' loyalty) may make a critical contribution to such companies' revenues. In turn, [Cabrita, Bontis, 2008] point out that the industry companies specialise in determines the impact that specific elements of intellectual capital make on their performance. Thirdly, the specifically Russian aspects of doing business matter.…”