Board governance, intellectual capital and firm performance Importance of multiplicative effects
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Date
2016
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Economic and Administrative Sciences
Abstract
Purpose – The purpose of this paper is to examine the relationship between the combined
(multiplicative) effect of board governance and intellectual capital (IC) on firm performance.
Design/methodology/approach – This study is cross-sectional and follows a positivist view of
testing pre-specified hypotheses. The study uses a respondent sample of 128 service firms operating in
Kampala, directors or managers are the unit of enquiry. Structural equation modelling with analysis of
moment structures is used for statistical modelling.
Findings – Board governance and IC make significant contributions to firm performance. However,
their interaction is a significant booster to services sector firms’ performance in Uganda.
Research limitations/implications – Although an attempt is made at controlling for common
method variance in particular by proactive instrument design and testing, and usage of the Harman
single factor analytical technique, its influence may not have been dealt away completely owing to
failure to obtain a plausible common marker variable. Well, it is meaningful to identify the significant
positive multiplicative effects of board governance and IC so as uncover what is needed in service firms
to improve their performance.
Originality/value – Studies explaining firm performance via board governance only and which
ignored the synergistic effects of board governance and IC have often missed the reality that the
performance of the firm can significantly be improved by means of leveraging IC while simultaneously
calling for effective board governance.
Description
Keywords
Uganda, Firm performance, Intellectual capital, Board governance, Multiplicative
Citation
Nkundabanyanga, S. K. (2016). Board governance, intellectual capital and firm performance: Importance of multiplicative effects. Journal of Economic and Administrative Sciences. DOI 10.1108/JEAS-09-2014-0020