Relationship between Intellectual Capital and Organizational Performance: A case Study of Public Sector Universities in Southern Punjab-Pakistan

Abstract

During the last decade the growing interest in intellectual capital has been shifted from business organizations to higher educational institutions because major functions of higher educational institutions particularly Universities is to create and disseminate knowledge acquired through education and research. Now educational institutions are regarded as center of innovations and produce of innovative human capital.

The main objective of this study is to analyze the concept of intellectual capital, its importance for higher educational institutions and its impact on their working environment and performance. For this purpose the author has selected two Universities, namely: Bahauddin Zakariya University Multan and Islamia University Multan and has taken a sample of 200 employees of these Universities: 150 academic and 50 non-academic. The data was collected through a structured questionnaire by conducting face-to-face interview. Three estimation methods were used to analyze the data. Five point likert scale was used to record the view of respondents about the importance of intellectual capital and its management by these two selected Universities. Regression method was used to measure the impact of intellectual capital (independent) variables on the performance (dependent variables) of these Universities. Scorecard and Ratio Analysis was used to compare the output level of intellectual capital and their relative performance.

Our empirical results are robust and show that intellectual capital and organizational performance has had a significant correlation and Bahauddin Zakariya University Multan outperformed Islamia University of Bahawalpur in better output of intellectual capital, its management, and overall performance. The evidence shows that Bahauddin Zakriya University Multan has greater intellectual capital than Islamia University of Bahawalpur. As regard to the components of intellectual capital, human capital ranked first in its impact on performance while structural capital and rational capital has second and third rank. In other words, human capital has greater contribution in creation of intellectual capital and its influence on the performance of these two Universities, out study concludes.

Keywords: Intellectual capital, Human capital, Structural capital, Relational capital, University, Research performance.