Abstract:
The current theory of the firm posits that firms maximise their value by making
decisions to maximise the wealth of their stakeholders. Intellectual capital is a key
input to achieving that goal, is a major strategic asset capable of garnering
sustainable competitive advantage. The data used in this study comes from 150 Sri
Lanka (Colombo stock exchange listed firms). The research questions are answered
via a quantitative research design that uses secondary data. This study finds that
intellectual capital has a significant impact on ROA whereas the insignificant
impact found between the intellectual and Tobin Q can be explained by other
factors (e.g., Tobin Q may not handle the high levels of intangible assets present in
rising knowledge economy of Sri Lanka) which validates the assertion that Sri
Lankan culture may be more individualistic. Findings also demonstrate the Sri
Lankan firms more closely adhere to the ethical branch of stakeholder theory.
