Intellectual Capital and Corporate Performance of Listed Consumer Goods Firms in Nigeria Stock Exchange

Abstract

DOI: 10.7176/EJBM/15-6-07

Publication date:March 31^st 2023

1.0    Introduction

Over the years, business organizations have recognized that resources are pivotal drivers of business success and performance. Resources such as financial, physical and intangible assets of the firm ought to be optimally managed and utilized in order to ensure that the firm achieves its financial objectives of wealth maximization. Intellectual capital is the most innovative feature for firms to act on according to the environmental changes through their knowledge, experience, and capabilities, which is applied to improve the organizational efficiency (Egolum, 2021). It is now a growing need amongst firm to strategize ways by which their resources could be best maximized for optimal financial returns, hence, the particular attention paid to intellectual capital which is popularly believed to contribute towards the value-added of the firm. (Alfiero, Brescia & Bert, 2021; Ovechkin, Romashkina & Davydenko, 2021).

Intellectual capital refers to the various intangible assets which can be converted into profits or value but are not reflected in the financial statements of the firm (Ngoc & Duc, 2020). Extant literature classified intellectual capital into three, namely, human capital, structural capital and capital employed efficiency. Human capital refers to the skills, competencies and experience of the employees which altogether enable them contribute value to the course of the firm. While structural capital is the sum of methods, processes and brands that are owned by the firm, capital employed efficiency (CEE) refers to the economic term that reflects the level of exploitation and use of capital of a firm in production and business activities with the view to creating maximum value at the barest or minimum cost. Corporate performance, which ordinarily measures or indicates the extent to which a firm achieves its financial objectives, is all about how to create knowledge and transform that same knowledge into value. Therefore, in total disagreement with the submission of Kasoga (2020) that there is a debate on the empirical nexus between intellectual capital and the corporate performance of firms, the researcher underscores that the significant contribution of intellectual capital towards the enhancement of the corporate performance of firms is undebatable, it is indubitable. This is because almost all corporate researchers in this line have a consensus that ownership of knowledge, applied experience, organization innovation, customer relationship, and professional competencies, experience and skills essentially facilitate value creation amongst firms. However, intellectual capital is often not accounted for properly in the financial reports, and some firms still have low investment in intellectual capital. And so, the corporate performance of such firms with demonstrated inadequacies in their intellectual capital continues to be eroded.