The Relationship between Intellectual Capitals and Growth in Revenue of Deposit Money Banks in Nigeria

Abstract

In today’s business world, most organisations are established for the purposes of making profit and giving a high return on the investments of stakeholders. The extent an organisation can go in achieving this onerous objective depends on the amount of revenue such organisation is able to generate from its operations as there seem to be a direct relationship between the level of revenue generated and the amount of profit made by an organisation. There has been this belief that it is the amount of physical resources (assets and finance) invested in a firm that determines the amount of profit the firm makes. The use of high technology, information, and innovation based environment in recent times, has taken the centre stage in the global economy. Under this new technology, knowledge, ability, skills, experience and attitude of workers, assume greater significance even as organizations utilize their intellectual capital as a critical resource to enhance their performances. Organisations nowadays use their intellectual capital in combination with their physical assets to sharpen their competitive edge against their competitors. Organizations which have managed their intellectual capital better, are observed to have achieved stronger competitive advantage than the general enterprises. Following from above, it is expected that there should be a positive relationship between intellectual capital and growth in revenue of banks in Nigeria. Empirical records of studies on this relationship in some developed nations showed divergent opinions. Unfortunately, no empirical records on the relationship of intellectual capital and growth in revenue in the Nigeria Banking sector exist. This study had the broad objective of using the Value Added Intellectual Coefficient (VAIC) model to investigate if there is a positive and significant relationship between the Intellectual Capital indices (such as Human Capital Efficiency, Structural Capital Efficiency and the Capital Employed Efficiency) and growth in revenue of selected banks in Nigeria. The study adopted the ex-post facto research design. It was systematically conducted using longitudinal time series data generated and computed from the annual reports and accounts of the selected banks in Nigeria spanning from year 2000 to 2011. The hypotheses of the study were: (i) The performance of the human capital efficiency (HCE) of a bank, do not positively and significantly affect the Growth in Revenue (GR) of the Banks in Nigeria. (ii)  The performance of the structural capital efficiency (SCE) of a bank in Nigeria, do not positively and significantly affect the Growth in Revenue (GR) of the Banks in Nigeria. (iii) The performance of the capital employed efficiency (CEE) of a bank in Nigeria, do not positively and significantly affect the Growth in Revenue (GR) of the Banks in Nigeria. The dependent variables was Growth in Revenue, while the independent variables were the components of Value Added Intellectual Capital {Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE) and the Capital Employed Efficiency (CEE)}. The multiple regression analysis method was adopted for the test of all the hypotheses. The SPSS statistical software (version 17.0) was used for the data analysis. The results showed that there was positive and significant relationship between components of VAIC and the growth in revenue of the banks in Nigeria (VIAC coefficient = 14.160, R²_c = 0.87, R²_t = 0.49, P < 0.05). From the results stated above, it is thus established that indeed there is a positive and significant relationship between intellectual capital and growth in revenue of banks in Nigeria.

Keywords: Intellectual Capital, Human Capital, Structural Capital, Growth in Revenue, Nigeria, VAIC.