The Impact of Intellectual Capital and Ownership Structure on Firm Performance

Even though several studies have been done on intellectual capital, ownership structure, and firm performance, their status has remained uncertain in developing countries like Malaysia. Prior studies have generally focused on a single industry and overlooked the input of all Malaysian non-financial firms. This study investigates the impact of intellectual capital, its components, and ownership structure on firm performance. This study employs a balanced panel data examination for the data of 409 non-financial firms from 11 sectors listed on Bursa, Malaysia for five years (2016–2020). The modified value-added intellectual coefficient model was applied to examine the effect of IC efficiency on firm performance. The empirical findings revealed that IC efficiency, human capital efficiency, structural capital efficiency, capital employed efficiency, and relational capital efficiency are positively and significantly related to firm performance. However, physical and structural capital is the most substantial element of intellectual capital efficiency in augmenting profitability. In addition, government and foreign ownership positively affect firm performance. The research will help managers, policymakers, and investors understand how IC investments increase performance and make prudent investment choices in government and foreign ownership firms.