Intellectual capital efficiency and organisational performance: In the context of the pharmaceutical industry in Bangladesh
Journal of Intellectual Capital
ISSN: 1469-1930
Article publication date: 13 November 2019
Issue publication date: 15 November 2019
Abstract
Purpose
The purpose of this paper is to, the first of its kind, investigate the relationship between the intellectual capital efficiency and organisational performance of the pharmaceutical sector in Bangladesh, an emerging economy that enjoys Trade-Related Aspects of Intellectual Property Rights (TRIPS) relaxation.
Design/methodology/approach
The study used hand-picked data from annual reports for five years. The relationship between efficient use of intellectual capital and corporate performance was examined through the practical use of human capital, structural capital and capital employed. Multiple regressions were used to assess their impact on financial performance – specifically, return on assets, return on equity, asset turnover and market-to-book value.
Findings
Value-added intellectual coefficient components (i.e. human capital, structural capital and capital employed) significantly explained asset turnover and return on assets but failed to predict the return on equity outcome. Additionally, asset turnover was negatively influenced by structural capital and positively influenced by capital employed. The return on assets was mostly affected by variation in human capital. Intellectual capital did not predict market-to-book value or investment decisions.
Practical implications
This paper provides useful resources for evaluating the financial performance and value creation of companies in emerging economies that enjoy TRIPS exemptions; this research could also be extended using cross-industry comparisons. The findings have theoretical and practical implications, particularly for the pharmaceutical industry in emerging economy contexts, and for managers globally.
Originality/value
This study is among only a few that have reported on the relationship between intellectual capital efficiency and value creation in emerging economy contexts.
Keywords
Citation
Chowdhury, L.A.M., Rana, T. and Azim, M.I. (2019), "Intellectual capital efficiency and organisational performance: In the context of the pharmaceutical industry in Bangladesh", Journal of Intellectual Capital, Vol. 20 No. 6, pp. 784-806. https://doi.org/10.1108/JIC-10-2018-0171
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited