Influence of Intellectual Capital on Performance of Large Manufacturing Firms in Kenya

Intellectual capital has been gaining increased attention in competitive industries due to shortened product life cycles, globalization, rapid technological progress, deregulation and accelerated diffused rates for technology–based products. In addition, only 46 percent of the large manufacturing firms operate a full 8 hours while 47 percent of the businesses run between 6-8 hours a day. Majority of the firms use outdated technology; 83 percent are semi-automated while a measly 11 percent are fully automated. Therefore, this study sought to establish the effect of intellectual capital on performance among large manufacturing firms. This study was guided by positivism philosophy and used a deductive approach. The study adopted a descriptive survey. The population of interest comprised all the 124 large manufacturing firms in Kenya that are members of the Kenya Association of Manufacturer (KAM) as at December 2019. Data was gathered using a questionnaire. The questionnaire targeted CEO, director of human resources and finance. To test the stated hypothesis and correspondingly address this objective, the factor variable, intellectual capital was indicated by 3 sub-constructs, including human capital, structural capital and relational capital while the outcome variable. The study concluded that intellectual capital is a significant predictor of performance among large manufacturing firms in Kenya. By enhancing human capital, large manufacturing firms in the country benefit from a skillful, productive, effective and an efficient workforce which results in performance improvements through more efficient and innovative production processes and products. The study recommends that, for superior performance, large manufacturing firms in the country should invest in their intellectual capital by investing in employee training and development to build skills, expertise and capabilities; and enhancing human resource management systems and programs, improving their reward performance programs in relation to task and promote a supportive firm culture.