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Does investing in intellectual capital improve financial performance? Panel evidence from firms listed in Tanzania DSE

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  • Pendo Shukrani Kasoga
  • Mohammed M Elgammal

Abstract

Despite that reviews have been done in intellectual capital and the performance of firms, their status has remained uncertain in the emerging economy. Previous studies have generally focused on single industries and have overlooked the input of the service and manufacturing sectors as a whole. This study offers new insight into the area of intellectual capital and its relationship with firms’ performance in Tanzania and evaluates intellectual capital within the service and manufacturing sectors in totality. Using panel regression analysis for the periods of 2010 to 2019, the performance was measured in terms of SG, ROA, ATO, and Tobin’s. Heteroscedasticity and endogeneity were controlled using clustered robust standard errors. The empirical findings demonstrate a significant positive influence between structural capital efficiency and SG, ROA, ATO, and Tobin’s. However, the effect of human capital efficiency and capital employed efficiency were negative which suggests poor investment in human skills and capital of the firms. Further, VAIC was significantly positively associated with SG, ATO, ROA, and Tobin’s Q. It is recommended that to have a competitive advantage, managers and policymakers should focus on the three parts of intellectual capital which are the key drivers of value creation in the organization.

Suggested Citation

  • Pendo Shukrani Kasoga & Mohammed M Elgammal, 2020. "Does investing in intellectual capital improve financial performance? Panel evidence from firms listed in Tanzania DSE," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1802815-180, January.
    • Handle: RePEc:taf:oaefxx:v:8:y:2020:i:1:p:1802815
    DOI: 10.1080/23322039.2020.1802815
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    Cited by:

    1. Angi Skhvediani & Anastasia Koklina & Tatiana Kudryavtseva & Diana Maksimenko, 2023. "The Impact of Intellectual Capital on the Firm Performance of Russian Manufacturing Companies," Risks, MDPI, vol. 11(4), pages 1-25, April.
    2. Ramesh Prasad & Amitava Mondal, 2025. "Sectoral disparities and the nonlinear role of intellectual capital in Indian SMEs," Future Business Journal, Springer, vol. 11(1), pages 1-21, December.
    3. Monika Barak & Rakesh Kumar Sharma, 2024. "Does intellectual capital impact the financial performance of Indian public sector banks? An empirical analysis using GMM," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-11, December.
    4. Ahmed Jinjiri Bala & Aminu Hassan & Isah Umar Kibiya, 2026. "Does Profitability Moderate the Effect of Intellectual Innovation on Firm Value in the Technology-Driven Sectors of Emerging Economies?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 17(2), pages 6078-6108, April.
    5. Ramesh Prasad & Amitava Mondal, 2025. "Determinants of SMEs’ financial performance in an emerging economy: an econometric view," SN Business & Economics, Springer, vol. 5(9), pages 1-31, September.
    6. Monika Barak & Rakesh Kumar Sharma, 2024. "Analyzing the Impact of Intellectual Capital on the Financial Performance: A Comparative Study of Indian Public and Private Sector Banks," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(4), pages 20320-20348, December.
    7. Okeke, Clement Ejiofor, 2024. "Financial Capital, Manufactured Capital, and Financial Performance: Evidence from Listed Industrial Goods Firms in Nigeria," MPRA Paper 123032, University Library of Munich, Germany, revised 10 Oct 2024.
    8. Clement Ejiofor Okeke & Jonah Okpe Arumona & Solomon Mangba Aza, 2025. "Financial and Manufactured Capital Reporting and Firm Value of Listed Consumer and Industrial Goods Firms in Nigeria: A Comparative Analysis," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(9), pages 5055-5084, September.

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