Is intellectual capital measurement matters in the profitability of technology firms in Malaysia? Investigating the moderating effect of human capital efficiency
DOI:
https://doi.org/10.24191/jeeir.v11i1.20695Keywords:
MVAIC model, Profitability, Human capital efficiency, Technology sector, MalaysiaAbstract
This study investigates the relationship between intellectual capital and profitability of technology firms in Malaysia, while considering the moderating effect of human capital efficiency. Intellectual capital is measured using the Modified Value-Added Intellectual Coefficient model (MVAIC), and profitability is proxied by return on assets (ROA) and return on equity (ROE). The MVAIC model comprises four dimensions: human capital efficiency (HCE), structural capital efficiency (SCE), relational capital efficiency (RCE) and capital employed efficiency (CEE). The study uses panel data analysis based on usable data of 32 technology firms listed on the main market of Bursa Malaysia and covers a period of seven years from 2013 to 2019. The empirical findings suggest that intellectual capital has a significant effect on profitability, whereas HCE and CEE positively influence the profitability of technology firms. However, SCE and RCE reveal an insignificant association. Nevertheless, human capital moderates positively the impact of SCE and RCE on profitability and improves the explanatory power of the model. The findings confirm that intellectual capital is a key driver of profitability, and therefore, firms and the government should invest in developing intellectual capital for enhanced profitability and economic growth. The study investigates one country and one industry, thus, limiting the generalization of the findings.
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