Intellectual Capital and Corporate Sustainable Growth: An Empirical Study on Indian Agribusinesses specific to Pesticides and Fertilizer Companies

Vaishnavi Balaji; Rajesh Mamilla

doi:10.58429/qaj.v4n1a311

Authors

Vaishnavi Balaji VIT Business School, Vellore Institute of Technology, Vellore, Tamilnadu-632014
Rajesh Mamilla VIT Business School, Vellore Institute of Technology,Vellore, Vellore, Tamilnadu-632014

DOI:

https://doi.org/10.58429/qaj.v4n1a311

Keywords:

Human Capital Efficiency, Indian Agri-Business Companies, Innovation Capital Efficiency, Intellectual Capital, Relational Capital Efficiency, Sustainable Growth Rate

Abstract

This study aims to evaluate the impact of Intellectual Capital on the Sustainable Growth Rate of Indian Agribusiness companies. Intellectual Capital plays a vital role in the global agriculture business. Data is collected from 17 Agribusiness companies engaged explicitly in pesticides and fertilizers between 2011 and 2022, using Prowessiq (CMIE) and financial reports. The Extended Value-Added Intellectual Capital (E-VAIC) model is employed to measure Intellectual Capital. The System Generalized Method of Moments (S-GMM) regression method is employed for data analysis. The results revealed that Innovation Capital Efficiency and Human Capital Efficiency are the most significant variables that affect the Sustainable Growth of Indian Agribusiness companies. The other Intellectual Capital variables, such as Relational Capital Efficiency and Structural Capital Efficiency, positively impact the Sustainable Growth Rate. The study concludes that Indian Agribusiness companies must recognize the importance of Intellectual Capital resources and invest in them to achieve long- term corporate growth.

Downloads

Download data is not yet available.

References

Alhassan, A. L., & Asare, N. (2016). Intellectual capital and bank productivity in emerging markets: evidence from Ghana. Management Decision, 54(3), 589-609.

Ali, BJ, & Anwar, G. (2021). Intellectual capital: A modern model to measure the value creation in a business. International journal of Engineering, Business and Management, 5(2), 31-43.

Al-Khoury, A., Hussein, S. A., Abdulwhab, M., Aljuboori, Z. M., Haddad, H., Ali, M. A., ... & Flayyih, H. H. (2022). Intellectual Capital History and Trends: A Bibliometric Analysis Using Scopus Database. Sustainability, 14(18), 11615.

Anik, S., & Sulistyo, H. (2021). The role of green intellectual capital and green innovation on competitive advantage of SMEs. International Journal of Learning and Intellectual Capital, 18(1), 28-44.

Ashton, R. H. (2005). Intellectual capital and value creation: a review. Journal of accounting literature, 24, 53.

Azamat, K., Galiya, J., Bezhan, R., & Nurdana, Z. (2023). The impact of intangible assets on the value of FMCG companies worldwide. Journal of Innovation and Knowledge, 8(1), 100330.

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), 99-120.

Beck, R., Jakubik, P., & Piloiu, A. (2013). Non-performing loans: What matters in addition to the economic cycle?.

Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of econometrics, 87(1), 115-143.

Chen, L., Zhao, X., Tang, O., Price, L., Zhang, S., & Zhu, W. (2017). Supply chain collaboration for sustainability: A literature review and future research agenda. International Journal of Production Economics, 194(1),73-87.

Chen, M. C., Cheng, S. J., & Hwang, Y. (2005). An empirical investigation of the relationship between intellectual capital and firms’ market value and financial performance. Journal of intellectual capital, 6(2), 159-176.

Cuganesan, S. (2005). Intellectual capital‐in‐action and value creation: a case study of knowledge transformations in an innovation project. Journal of Intellectual Capital, 6(3), 357- 373.

Demartini, C., & Trucco, S. (2016). Does intellectual capital disclosure matter for audit risk? evidence from the UK and Italy. Sustainability, 8(9), 867.

Edvinsson, L. (1997). Developing intellectual capital at Skandia. Long range planning, 30(3), 366-373.

Gupta, K., Goel, S., & Bhatia, P. (2020). Intellectual capital and profitability: evidence from Indian pharmaceutical sector. Vision, 24(2), 204–216.

Hall, R. (1992). The strategic analysis of intangible resources. Strategic Management Journal, 13(2), 135-144.

Higgins, R.C. (1981). Sustainable growth under inflation. Financial Management, 10(4), 36– 40.

Huang, R., & Liu, G. (2009). Study on the enterprise sustainable growth and the leverage mechanism. International journal of Business and Management, 4(3), 200-205.

Jamei, R. (2017). Intellectual capital and corporate governance mechanisms: Evidence from tehran stock exchange. International Journal of Economics and Financial Issues, 7(5), 86-72. Jin, G., & Xu, J. (2022). Does intellectual capital affect financial leverage of Chinese agricultural companies? Exploring the role of firm profitability. Sustainability, 14(5), 2682.

Jordão, R. V. D., Almeida, V. R. D., & Novas, J. (2022). Intellectual capital, sustainable economic and financial performance and value creation in emerging markets: the case of Brazil. Bottom Line, 35(1), 1-22.

Kader, M. (2001). Intellectual capital management in agricultural research efforts and the role of smartcard applications in enabling knowledge exchange. Journal of Agriculture in the Tropics and Subtropics, 102(1), 53-58.

Kozera, M. (2011). Intellectual Capital in agriculture–measurement and determinants. Acta Scientiarum Polonorum, Oeco-nomia, 10(3), 83-95.

Lee, S. (2010). Effects of Capital intensity on firm performance: the US Restaurant industry.

The Journal of Hospitality Financial Management, 18(1), 1-13.

Lu, Y., Li, G., Luo, Z., Anwar, M., & Zhang, Y. (2021). Does intellectual capital spur sustainable competitive advantage and sustainable growth?: A study of Chinese and Pakistani firms. Sage Open, 11(1), 2158244021996702.

Luthy, D. H. (1998, August). Intellectual capital and its measurement. In Proceedings of the Asian Pacific Interdisciplinary Research in Accounting Conference (APIRA), Osaka, Japan (pp. 16-17).

MacKinnon, J. G. (1996). Numerical distribution functions for unit root and cointegration tests.

Journal of applied econometrics, 11(6), 601-618.

Marr, B. (2004). Measuring and benchmarking intellectual Capital. Benchmarking: An International Journal, 11(6), 559-570.

Marr, B., Schiuma, G., & Neely, A. (2004). Intellectual capital–defining key performance indicators for organizational knowledge assets. Business Process Management Journal, 10(5), 551-569.

Mouritsen, J. (1998). Driving growth: economic value added versus intellectual capital.

Management accounting research, 9(4), 461-482.

Mouritsen, J. (1998). Driving growth: economic value added versus intellectual capital.

Management accounting research, 9(4), 461-482.

O’Brien, R. G., & Kaiser, M. K. (1985). MANOVA method for analyzing repeated measures designs: an extensive primer. Psychological bulletin, 97(2), 316.

Ocak, M., & Fındık, D. (2019). The impact of intangible assets and sub-components of intangible assets on sustainable growth and firm value: evidence from Turkish listed firms. Sustainability, 11(19), 5359.

Pallant, J. (2011). Survival manual. A step by step guide to data analysis using SPSS, 4(4). Peppard, J., & Rylander, A. (2001). Using an intellectual capital perspective to design and implement a growth strategy:: the case of APiON. European Management Journal, 19(5), 510- 525.

Pesämaa, O., Zwikael, O., HairJr, J., & Huemann, M. (2021). Publishing quantitative papers with rigor and transparency. International Journal of Project Management, 39(3), 217-222.

Phonthanukitithaworn, C., Srisathan, W. A., Ketkaew, C., & Naruetharadhol, P. (2023). Sustainable Development towards Openness SME Innovation: Taking Advantage of Intellectual Capital, Sustainable Initiatives, and Open Innovation. Sustainability, 15(3), 2126. Pulic, A. (1998, January). Measuring the performance of intellectual potential in knowledge economy. In 2nd McMaster word congress on measuring and managing intellectual capital by the Austrian team for intellectual potential (pp. 1-20).

Pulic, A. (2000). VAIC™–an accounting tool for IC management. International journal of technology management, 20(5-8), 702-714.

Qiao, S.; Xu, X.L.; Liu, C.K.; Chen, H.H. (2016). A panel study on the relationship between biofuels production and sustainable development. International Journal of Green Energy, 13(1), 94–101.

Rehman, W. U., Rehman, H. U., Usman, M., & Asghar, N. (2012). A Link of intellectual capital performance with corporate performance: comparative study from banking sector in Pakistan. International Journal of Business and Social Science, 3(12), 313-321.

Rochmadhona, B. N., Suganda, T. R., & Cahyadi, S. (2018). The competitive advantage between intellectual capital and financial performance of banking sector in ASEAN. Jurnal keuangan dan Perbankan, 22(2), 321-334.

Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. The stata journal, 9(1), 86-136.

Scafarto, V., Ricci, F. and Scafarto, F. (2016). Intellectual capital and firm performance in the global agribusiness industry: the moderating role of human capital. Journal of Intellectual Capital, 17(3), 530–552.

Shamsuzzoha, & Tanaka, M. (2021). The role of human capital on the performance of manufacturing firms in Bangladesh. Managerial and Decision Economics, 42(1), pp.21-33.

Singh, R. D., & Narwal, K. P. (2015). Intellectual capital and its consequences on company performance: a study of Indian sectors. International Journal of Learning and Intellectual Capital, 12(3), 300-322.

Soetanto, T., & Liem, P. F. (2019). Intellectual capital in Indonesia: Dynamic panel approach.

Journal of Asia Business Studies, 13(2), 240-262.

Ståhle, P., Ståhle, S., & Aho, S. (2011). Value added intellectual coefficient (VAIC): a critical analysis. Journal of Intellectual Capital, 12(4), 531-551.

Sveiby, K. E., & Lloyd, T. (2010). Methods for measuring intangible assets.

Syah Aji, R. H., & Kurniasih, K. (2015). The intellectual capital effect on financial performances at Islamic insurance. Al-Iqtishad Journal of Islamic Economics, 7(2), 181-196. Tobin, J. (1969). A general equilibrium approach to monetary theory. Journal of money, credit and banking, 1(1), 15-29.

Tran, D. B., & Vo, D. H. (2018). Should bankers be concerned with Intellectual capital? A study of the Thai banking sector. Journal of Intellectual Capital, 19(5), 897-914.

Ulum, I., Kharismawati, N. and Syam, D. (2017). Modified value-added intellectual coefficient (M-VAIC) and traditional financial performance of Indonesian biggest companies. International Journal of Learning and Intellectual Capital, 14(3), 207–219.

Van Horne, J.C. (1987). Sustainable growth modelling. Journal of Corporate Finance, 2(3), 19–26.

Xu, J., & Wang, B. (2018). Intellectual capital, financial performance and companies’ sustainable growth: Evidence from the Korean manufacturing industry. Sustainability, 10(12), 4651.

Xu, X. L., Li, J., Wu, D., & Zhang, X. (2021). The intellectual capital efficiency and corporate sustainable growth nexus: Comparison from agriculture, tourism and renewable energy sector. Environment, Development and Sustainability, 1-19.

Xu, X.L., Chen, H.H. and Zhang, R.R. (2020). The impact of intellectual capital efficiency on corporate sustainable growth-evidence from smart agriculture in China. Agriculture, 10(6), 199.

Xu, X.L.; Liu, C.K. (2019). How to keep renewable energy enterprises to reach economic sustainable performance: From the views of intellectual Capital and life cycle. Energy, Sustainability and Society, 9(1), 1–10.

Xu, X.L.; Sun, CH; Chen, H. (2019). How diversified fuel-fired power enterprises keep their competitive advantages to reach sustainable development. Environmental Progress & Sustainable Energy, 38(2), 137–142.

Yousaf, M. (2022). Intellectual capital and firm performance: evidence from certified firms from the EFQM excellence model. Total Quality Management & Business Excellence, 33 (13- 14), 1472-1488.

Zhang, Y., Ma, E., & Qu, H. (2018). Transaction cost and resources based views on hotels’ outsourcing mechanism: An empirical study in China. Journal of Hospitality Marketing & Management, 27(5), 583-600.

Websites:

https://www.imarcgroup.com/agriculture-industry-in- india#:~:text=The%20agriculture%20industry%20in%20India,12%25%20during%202021% 2D2026.

https://www.india.gov.in/topics/agriculture#:~:text=This%20Portal%20is%20a%20Mission,b y%20the%20respective%20Ministries%2FDepartments.