Abstract:
Intellectual capital and knowledge are foremost thing of new economic system is
increasing every day. The purpose of this research is to examine the impact of
Intellectual capital efficiency on firm performance and to examine the relationship
between the intellectual capital efficiency and financial performance by using data
drawn from 32 manufacturing companies listed in Colombo Stock Exchange Sri
Lanka over the five years period from 2015 to 2019. Value added intellectual
coefficient (VAIC) approach developed by Ante Pulic is used to determine intellectual
capital efficiency (ICE). According to that, human capital efficiency (HCE) and
structure capital efficiency (SCE) are used as intellectual capital efficiency proxies of
this research. Return on equity is used to measure the financial performance of
selected manufacturing companies. The data obtained from manufacturing
companies' annual reports are regressed to measure the impact of Intellectual capital
efficiency on firm performance and correlated to identify the relationship between
intellectual capital efficiency and firm performance. Findings from the regression
analysis of this research indicates that intellectual capital efficiency has significant
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impact on firm performance (r = 0.32) in case of human capital efficiency (0.031). At
the same times intellectual capital efficiency in case of human capital efficiency has
significant positive correlation (0.56) with financial performance. Further, findings of
this study reveal that, the important of intellectual capital efficiency especially in
human capital efficiency as a key factor that can enhance a company's ability to
maintain their competitive position in manufacturing companies, Sri Lanka.
