Intellectual capital and competitive advantage in Uganda’s microfinance industry

Abstract

Purpose The paper examines individual contribution of intellectual capital elements to competitive advantage. The purpose of this paper is to explore the weight of individual intellectual capital elements in explaining competitive advantage in Uganda’s microfinance industry. Design/methodology/approach Hierarchical regression was used because of its capacity to indicate precisely what happens to the model as different predictor variables are introduced. Findings This study confirms that the three intellectual capital elements are the strong predictors of competitive advantage and they account for 44 percent of variance in competitive advantage. However, the order of importance of these variables in explaining the variance in competitive advantage in the microfinance industry (basing on their standardized β values) is relational capital, structural capital and human capital. Research limitations/implications Only a single research methodological approach was employed and future research through interviews could be undertaken to triangulate the data. Furthermore, the findings from the present study are cross-sectional; future research should be undertaken to examine the longitudinal effects of intellectual capital elements. Practical implications The findings can help the management to intensify initiatives to encourage greater understanding and acceptance of the concept of intellectual capital that boosts competitive edge in the industry. Originality/value This is the first study that focuses on testing the individual contribution of intellectual capital dimensions to competitive advantage in Uganda’s microfinance institutions.

The Role of a Manager’s Intangible Capabilities in Resource Acquisition and Sustainable Competitive Performance

“…This is in line with prior studies where Khan, Yang, and Waheed [4] argued that intangible resources such as IC could help firms to utilize their resources efficiently to gain SCP. Moreover, Kamukama and Sulait [22] claimed that IC (such as human capital, structural capital, and relational capital) helps firms in establishing a sustainable competitive position in turbulent markets. In a similar context, our research favors Lee et al [37], who investigated whether IC helps firms to gain tangible and intangible means.…”

“…Especially SMEs, due to a lack of resources and capabilities, can acquire a great advantage of IC, as it is considered less risky and a convenient resource [18]. Top managers are required to intensify initiative to encourage the promotion of IC (human capital, structural capital and relational capital) inside organizations to acquire competitive advantage [22]. In the current era of globalization, IC has been considered as an effective strategy of business firms that leads to financial performance [23] as well as significantly enhances non-financial performance [24], innovative performance [25] and competitive advantage [18].…”

Competitive Advantage as a Mediating Variable to the Relationship Between Intellectual Capital and Financial Performance

“…Invested resources and the human value-added resources and maintained customer relationships represent competitive advantages has significant effect to performance was used to explain corporate value [14,15]. It is also found that research and development relate to the firms' financial performance [3].…”

Young Entrepreneurs in Sub-Saharan Africa

“…The main product initially offered by Ugandan MFIs was microcredit, but over time, they have introduced other financial products including savings, insurance, and money transfer. However, as mentioned earlier, many of these MFIs operate at very high costs, which threaten their sustainability (Kamukama, Ahiauzu, & Ntayi, 2010).…”