Intellectual Capital: A Case Study of Power Loom using AHP

Abstract

The purpose of this paper is to identify the critical success factors of IC influencing the performance of power loom textiles, to evaluate their impact on the organizational performance and to find out the effect of these factors on the organizational performance of small and medium-sized enterprises (SMEs) in Maharashtra using AHP. The methodology adopted is factors are identified through the literature survey and finalization of these factors is done by taking the opinion of Experts in the Indian context. By cognitive map the relation between these factors is determined and cause and effect diagram is prepared. Then these factors are arranged hierarchically and tree diagram is prepared. A questionnaire was designed and distributed among the experts; data is collected. By using Expert choice software data is filled to quantify by pair wise comparison of these factors and are prioritized. The weights demonstrate several key findings: local and global priority reveals there is a substantial effect of the Human capital on the organizational performance. The work related experience contributes 34.21%, which has a greater impact on performance. Operational procedures or practices contribute 52% in order to improve the operational performance and hence organizational performance. Overall, the results showed the central role of the human capital is important. The research is subject to the normal limitations of AHP. The study is using perceptual data provided by Experts which may not provide clear measures of impact factors. However, this can be overcome using more experts to collect data in future studies. Interestingly, the findings here may be generalisable outside Maharashtra, India. AHP as an innovative tool for quantification of IC factors impacting on performance and improving operational and organizational performance in today’s dynamic manufacturing environment. The finding suggests the notion that these critical success factors (CSFs) are to be studied carefully and improvement strategy should be developed. Moreover, the study emphasizes the need to link priority of factors to organizational performance and improvement. The study integrates the CSFs of performance and its quantification by using AHP and its effect on performance of power loom textiles. Very few studies have been performed to investigate and understand this issue. Therefore, the research can make a useful contribution.

Keywords: Intellectual capital, RBV, Power looms, Performance, AHP, Maharashtra