Intellectual capital as the essence of sustainable corporate performance

Abstract

The term 'intellectual capital' (IC) may sound unfamiliar to the wider public. However, IC has started to cast greater attention in the corporate world. IC refers to intangible asset which is closely related with the development of strategic decision and corporate performance. With endless challenging business environment and complicated electronic transactions, IC is argued to act as a vital essence for a business to innovate which then drives business sustainability. The ultimate purpose of this study was to investigate whether IC is acknowledged and managed towards improving performance, be it financial or non-financial performance. For this purpose, a questionnaire survey was distributed to the head of internal audit of Malaysian public listed companies. Questions tapping on core IC components including human capital, structural capital, relational capital and spiritual capital were included. Data were analysed using inference analysis methods, including ANOVA, t-test and regression. Findings revealed that IC does exist, but not much of IC management is sought in the companies, although the practice is in place. The results also demonstrate that relational capital emerged as the most influential IC component on corporate performance, while human capital ranked the last. This is an obvious indication that IC is well in fact has developed within Malaysian companies and become an important source for business performance.