Abstract:
This study examines the moderating effect of Corporate Social Responsibility on the
relationship between Intellectual Capital and firm performance, focusing on
companies listed on the Colombo Stock Exchange in Sri Lanka from 2016 to 2022.
Using a sample of 18 firms in the material sector, data were analysed through
descriptive statistics, correlation analysis, variance inflation factor analysis, and panel
data analysis in E-Views. The findings indicate that Human Capital Efficiency and
CSR significantly impact Return on Assets(ROA). In contrast, structural capital
efficiency and capital employed efficiency did not exhibit substantial effects on return
on equity (ROE). The Hausman test results suggest that a random effects model is
appropriate for ROA, while a fixed effects model is suitable for ROE. Based on these
findings, businesses should prioritise investments in human capital through employee
training, development, and innovation to enhance financial performance.
Additionally, firms should align CSR initiatives with their strategic goals to maximise
benefits. Policymakers can use these insights to establish industry-specific
regulations encouraging sustainable business practices and resource efficiency.
Furthermore, investors and stakeholders can leverage this knowledge to assess
financial sustainability and CSR effectiveness, leading to informed investment
decisions that align with long-term value creation. This study contributes to
intellectual capital, CSR, and financial performance literature, offering practical
implications for corporate leaders, policymakers, and investors.
