Cited by 99Intellectual Capital and Performance AnalysisWorking Capital and Financial PerformanceEfficiency Analysis Using DEA

Does the Efficiency of a Firm's Intellectual Capital and Working Capital Management Affect Its Performance?

Open access
Habib, Ahmed Mohamed, Dalwai, Tamanna·2024·Journal of the knowledge economy

Abstract

This study explores the efficiency of intellectual capital (ICE) and working capital management (WCME) in the GCC industrial sector and its potential impact on firm performance. The data were gathered from Standard & Poor’s database from 2015 to 2019. This study uses data envelopment analysis (DEA), regression analysis, and robustness tests to accomplish its aims. The results indicate that most firms do not employ their intellectual and working capital investments well and need improvement actions to achieve the best practices. The regression model results reveal that ICE and WCME significantly and positively influence firms’ performance. The results of this study support the resource-based, trade-off, and pecking order theories. The study findings have important implications for many stakeholders; for example, they would be helpful for firm decision-makers in managing their investments in intellectual and working capital to achieve the best practices and improve a firm's performance. In addition, the findings would be helpful for financiers, because high-performance firms are likely to have more reasonable valuations that facilitate debt financing. Moreover, the findings have noteworthy implications for trading procedures as investors aspire to attractive economic returns for their investments in corporations that pasture ICE and WCME issues. Additionally, these findings have important implications for employee job satisfaction and retention by improving IC management.

Integrity signals

Registry

Crossref · 10.1007/s13132-023-01138-7

Cites

156 of 156 references verified0 citation errors · 0 not checkable

Statistics

Nothing to recompute.

Claims the paper makes

6 of 40 cited sources checked · 1 supported · 0 flagged · accuracy not yet measured

  • Premisereasoning

    The DEA methodology is flexible and accurate in analyzing the relationship between multiple outputs and inputs.

    “This study uses the DEA methodology for efficiency analysis because of its flexibility and accuracy in analyzing the relationship between multiple outputs and inputs”
    Quote in the paperSubstantial claim1 of 3 sources checked
    • cites Avkiran, 2011 source
    • cites Desta, 2016 source
    • cites Habib & Mourad, 2022 source

      The Introduction and Data and Methodology sections describe DEA as versatile and able to capture relationships between multiple inputs and outputs, supporting the flexibility portion. They call it a powerful benchmarking technique, but do not establish its accuracy in analyzing those relationships; the model-validation discussion does not make that broader claim. Page numbers are unavailable in our copy. (LLM, conf=0.84)

      Experimental — accuracy not yet measured
  • Interpretationcitation

    The study's results are consistent with prior research showing that improvements in ICE and WCME lead DMUs to achieve better performance.

    “These results are consistent with prior research showing that improvements in ICE and WCME lead DMUs' to achieve better performance (Hamdan, 2018;Isola et al., 2020;Kabuye et al., 2019;Louw et al., 2022;Nadeem et al., 2017Nadeem et al., , 2018;;Seth, Chadha, Ruparel, et al., 2020;Seth et al., 2021a, b).”
    Quote in the paperNot a substantial claim2 of 3 sources checked
    • cites Hamdan, 2018 source
    • cites Isola et al., 2020 source

      Section 4.2 reports positive, significant relationships between human capital efficiency, capital employed efficiency and firm performance in the Nigerian banks studied. It finds no significant relationship for structural capital efficiency, and the paper does not examine WCME or DMUs. Its reported relationships also do not establish that improvements cause better performance. (LLM, conf=0.88)

      Experimental — accuracy not yet measured
    • cites Kabuye et al., 2019 source

      Section 4.3 reports positive correlations between both internal controls and working capital management and supermarkets’ financial performance. But the Introduction states that only working capital management was a significant predictor in the regression model. The study surveyed supermarkets, so it does not establish that improving both efficiencies causes better performance across DMUs generally. (LLM, conf=0.86)

      Experimental — accuracy not yet measured
  • Findingown data

    WCME significantly and positively influences firms' performance.

    “The regression model results reveal that ICE and WCME significantly and positively influence firms' performance.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The 40 sampled industrial firms are representative of the GCC industrial sector.
  • Findingown data

    Most firms in the GCC industrial sector do not employ their intellectual and working capital investments efficiently.

    “The results indicate that most firms do not employ their intellectual and working capital investments well and need improvement actions to achieve the best practices.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The 40 sampled industrial firms are representative of the GCC industrial sector.
  • Findingown data

    ICE significantly and positively influences firms' performance.

    “The regression model results reveal that ICE and WCME significantly and positively influence firms' performance.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The 40 sampled industrial firms are representative of the GCC industrial sector.
  • May combine two claims. 17
  • Classified as probably not a substantial claim. 33
  • May combine two claims.

    Premisecitation

    Negative data values and lack of data restrict the DEA model's ability to conduct the analyses.

    “Following Habib (2022); Habib and Kayani (2022); Habib and Mourad (2022); Pastor and Ruiz (2007); and Portela et al. (2004), negative data values and lack of data restrict the DEA model's ability to conduct the analyses.”
    Quote in the paperSubstantial claim1 of 3 sources checked
    • cites Habib (2022)

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

    • cites Pastor and Ruiz (2007) source
    • cites Portela et al. (2004) source

      The Abstract and Introduction say that traditional DEA models generally require non-negative data, supporting the claim about negative values. The Input and output data section says quantity data were unavailable and the authors used value data instead; it does not say that a lack of data prevented DEA analysis. No page numbers are provided in our copy. (LLM, conf=0.86)

      Experimental — accuracy not yet measured
  • Probably not a substantial claim: may not pass S2 (checkable).

    Premisecitation

    Firms should first operate efficiently to achieve the optimal level of liquidity through WCM.

    “therefore, firms should first operate efficiently to achieve the optimal level of liquidity through WCM (Jahanzeb et al., 2013;Serrasqueiro & Caetano, 2015).”
    Quote in the paperNot a substantial claim1 of 2 sources checked
    • cites Jahanzeb et al., 2013

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

    • cites Serrasqueiro & Caetano, 2015 source

      The Introduction and section 3.2 discuss capital structure and SMEs’ adjustment toward an optimal debt ratio, not an optimal level of liquidity. Searches for working capital management, liquidity, and operating efficiency found no passage in our copy supporting the attributed recommendation. (LLM, conf=0.78)

      Experimental — accuracy not yet measured
  • Classified as probably not a substantial claim.

    Study design and conductcitation

    The interior-validity test was executed to validate study results.

    “the interior-validity test has been executed to validate study results.”
    Quote in the paperSubstantial claim1 of 3 sources checked
    • cites Fixler et al. (2014) source
    • cites Habib (2022)

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

    • cites Habib and Kayani (2022) source
  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Findingown data

    The average ROA is 0.07 with a standard deviation of 0.06.

    “the average ROA, ROE, Tobin's Q are 0.07, 0.13, and 2.13, with a standard deviation of 0.06, 0.12, and 3.99, respectively.”
    Quote in the paperNot a substantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Findingown data

    The average LEV is 0.95 with a standard deviation of 1.05.

    “the average SIZE, LEV, and AGE are 5.74, 0.95, and 3.27, with a standard deviation of 1.49, 1.05, and 0.56, respectively.”
    Quote in the paperNot a substantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Findingown data

    The average AGE is 3.27 with a standard deviation of 0.56.

    “the average SIZE, LEV, and AGE are 5.74, 0.95, and 3.27, with a standard deviation of 1.49, 1.05, and 0.56, respectively.”
    Quote in the paperNot a substantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Findingown data

    No explanatory variables have coefficients greater than 0.8.

    “The results show no explanatory variables with coefficients greater than 0.8.”
    Quote in the paperNot a substantial claim
  • May combine two claims.

    Findingown data

    The average ICE was approximately 59.2% in 2015, 62.9% in 2016, 56.2% in 2017, 62.7% in 2018, and 64.8% in 2019.

    “The results indicated that the ICE was approximately 59.2%, 62.9%, 56.2%, 62.7%, and 64.8% (on average) for the study years from 2015 to 2019, respectively.”
    Quote in the paperNot a substantial claim
  • May combine two claims.

    Findingown data

    Hypotheses H3a and H4a are supported.

    “Therefore, hypotheses H3a and H4a are supported.”
    Quote in the paperSubstantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Findingown data

    The average SIZE is 5.74 with a standard deviation of 1.49.

    “the average SIZE, LEV, and AGE are 5.74, 0.95, and 3.27, with a standard deviation of 1.49, 1.05, and 0.56, respectively.”
    Quote in the paperNot a substantial claim
  • May combine two claims.

    Findingown data

    SIZE is negatively correlated with ICE and positively correlated with WCME.

    “SIZE negatively correlated with ICE and positively correlated with WCME.”
    Quote in the paperNot a substantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Findingown data

    AGE is negatively correlated with ICE, but insignificantly correlated with WCME.

    “AGE is negatively correlated with ICE, but insignificantly correlated with WCME.”
    Quote in the paperNot a substantial claim
  • May combine two claims.

    Findingown data

    LEV is negatively correlated with ICE and WCME.

    “LEV is negatively correlated with ICE and WCME.”
    Quote in the paperNot a substantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Findingown data

    The average ROE is 0.13 with a standard deviation of 0.12.

    “the average ROA, ROE, Tobin's Q are 0.07, 0.13, and 2.13, with a standard deviation of 0.06, 0.12, and 3.99, respectively.”
    Quote in the paperNot a substantial claim
  • May combine two claims.

    Findingown data

    The average WCME was approximately 85.8% in 2015, 83.6% in 2016, 82.4% in 2017, 78.5% in 2018, and 78% in 2019.

    “The results indicated that the WCME was approximately 85.8%, 83.6%, 82.4%, 78.5%, and 78% (on average) for the study years from 2015 to 2019, respectively.”
    Quote in the paperNot a substantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Findingown data

    The average Tobin's Q is 2.13 with a standard deviation of 3.99.

    “the average ROA, ROE, Tobin's Q are 0.07, 0.13, and 2.13, with a standard deviation of 0.06, 0.12, and 3.99, respectively.”
    Quote in the paperNot a substantial claim
  • Probably not a substantial claim: may not pass S1 (asserted), S3 (load-bearing).

    Premisecitation

    Trade-off theory suggests that an optimal level of cash is achieved with the balance of its associated costs and benefits.

    “Trade-off theory suggests that an optimal level of cash is achieved with the balance of its associated costs and benefits (Miller & Orr, 1966).”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Miller & Orr, 1966 source
  • Classified as probably not a substantial claim.

    Interpretationreasoning

    The needed improvement actions are related to fundamental improvements in CEE, HCE, SCE, sales, and working capital.

    “According to the study results, these actions are related to fundamental improvements in CEE, HCE, SCE, sales, and working capital.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: Improving efficiency is essential for firms to achieve their goals.
  • Classified as probably not a substantial claim.

    Study design and conductcitation

    The study controlled for firm size (SIZE), financial leverage (LEV), and firm age (AGE).

    “we controlled for three variables: firm size (SIZE), which was measured by the natural logarithm of total assets; financial leverage (LEV), which was measured by dividing the DMU's total liabilities by its shareholders' equity; and firm age (AGE) as a proxy for learning, which was measured by the natural logarithm of the DMU's age since inception.”
    Quote in the paperSubstantial claim0 of 3 sources checked
    • cites Appuhami & Bhuyan, 2015 source
    • cites Buallay, 2018 source
    • cites Costa, 2012 source
  • Probably not a substantial claim: may not pass S2 (checkable).

    Premisecitation

    The DEA methodology can provide essential information for DMUs for continuous improvement that may support inefficient units to reach the best practices.

    “it can provide essential information for DMUs for continuous improvement that may support inefficient units to reach the best practices”
    Quote in the paperNot a substantial claim0 of 3 sources checked
    • cites Habib & Kayani, 2022 source
    • cites Habib & Shahwan, 2020 source
    • cites Long Kweh et al., 2013 source
  • May combine two claims.

    Interpretationown data

    Most DMUs in the GCC industrial sector do not employ their intellectual and working capital investments well and need improvement actions to achieve the best practices.

    “This indicates that most DMUs in the GCC industrial sector do not employ their intellectual and working capital investments well, and need improvement actions to achieve the best practices.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: Improving efficiency is essential for firms to achieve their goals.
  • Classified as probably not a substantial claim.

    Premisecitation

    The DMUs size must be more than three times that of the model variables.

    “According to Cooper et al. (2007) and Sarkis (2007), the DMUs size must be more than three times that of the model variables.”
    Quote in the paperSubstantial claim0 of 2 sources checked
    • cites Cooper et al. (2007) source
    • cites Sarkis (2007) source
  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Premisecitation

    According to resource-based theory, IC is a strategic resource that occupies two-thirds of a company's assets and, when managed well, results in value generation.

    “According to resource-based theory, IC is a strategic resource that occupies two-thirds of a company's assets and, when managed well, results in value generation (Grant, 1991).”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Grant, 1991 source
  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation

    Resource-based theory suggests that IC is one of the most critical intangible resources.

    “Resource-based theory suggests that IC is one of the most critical intangible resources (Wright et al., 1994).”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Wright et al., 1994 source
  • Classified as probably not a substantial claim.

    Premisecitation

    WCM is one of the main keys to a firm's success.

    “As confirmed in the literature, WCM is one of the main keys to a firm's success.”
    Quote in the paperSubstantial claim0 of 2 sources checked
    • cites Deloof (2003) source
    • cites Tran et al. (2017) source
  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation

    Pecking order theory propagates no optimal level of cash holdings.

    “pecking order theory alternatively propagates no optimal level of cash holdings (Myers & Majluf, 1984).”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Myers & Majluf, 1984 source
  • Classified as probably not a substantial claim.

    Study design and conductown data

    Robustness tests were performed to compare the basic model results with those obtained from additional techniques and models.

    “Robustness tests were performed to compare the basic model results with those obtained from additional techniques and models.”
    Quote in the paperSubstantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Interpretationown data

    The results demonstrate greater confidence and robustness.

    “Accordingly, the results demonstrate greater confidence and robustness.”
    Quote in the paperNot a substantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation

    The pecking order theory suggests that firms would first depend on internal sources of funds for their investments to improve performance.

    “the pecking order theory suggests that firms would first depend on internal sources of funds for their investments to improve performance”
    Quote in the paperNot a substantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Interpretationreasoning

    The adopted DEA-ICE model refers to the internal validity of the model.

    “Based on the preceding section, the adopted DEA-ICE model refers to the internal validity of the model.”
    Quote in the paperNot a substantial claim
  • May combine two claims.

    Interpretationown data

    The current results support resource-based theory, showing that ICE and WCME lead firms to achieve better performance.

    “The current results support resource-based theory, showing that ICE and WCME lead firms to achieve better performance.”
    Quote in the paperSubstantial claim
  • Classified as probably not a substantial claim.

    Study design and conductown data

    A robustness test was performed to determine the validity of the study results.

    “A robustness test was performed to determine the validity of the study results.”
    Quote in the paperSubstantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Study design and conductown data

    A comparison between the inherent model results through the output orientation and the adjusted model results through the input orientation was carried out to enhance the validity results.

    “a comparison between the inherent model results through the output orientation and the adjusted model results through the input orientation was carried out to enhance the validity results.”
    Quote in the paperNot a substantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Study design and conductown data

    The Kruskal-Wallis H test was performed to explore consistency.

    “the Kruskal-Wallis H test was performed to explore consistency.”
    Quote in the paperNot a substantial claim
  • Classified as probably not a substantial claim.

    Study design and conductown data

    Spearman's rank correlation between the fundamental and adjusted DEA models was carried out.

    “Spearman's rank correlation between the fundamental and adjusted DEA models was also carried out.”
    Quote in the paperSubstantial claim
  • Classified as probably not a substantial claim.

    Study design and conductown data

    The Mann-Whitney U test was used to explore whether variable elimination sequentially followed a significant difference in the essential DEA model scores.

    “the Mann-Whitney U test was used to explore whether variable elimination sequentially followed a significant difference in the essential DEA model scores.”
    Quote in the paperSubstantial claim
  • Classified as probably not a substantial claim.

    Study design and conductown data

    Robustness tests were performed by using additional analyses to examine the validity of the findings.

    “Robustness tests were performed by using additional analyses to examine the validity of the findings.”
    Quote in the paperSubstantial claim
  • Classified as probably not a substantial claim.

    Premisecitation

    Resource-based theory suggests that firms would utilize their resources to attain competitive advantage and superior performance.

    “Resourcebased theory suggests that firms would utilize their resources to attain competitive advantage and superior performance (Barney, 1991(Barney, , 2001)).”
    Quote in the paperSubstantial claim0 of 2 sources checked
    • cites Barney, 1991 source
    • cites Barney, 2001 source
  • Probably not a substantial claim: may not pass S2 (checkable), S3 (load-bearing).

    Premisenone given

    Trade-off theory suggests that firms should operate efficiently to achieve an optimal level of cash with the balance of its associated costs and benefits through WCM.

    “Trade-off theory suggests that firms should operate efficiently to achieve an optimal level of cash with the balance of its associated costs and benefits through WCM.”
    Quote in the paperNot a substantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Interpretationown data

    The results demonstrated greater confidence and robustness.

    “Accordingly, the results demonstrated greater confidence and robustness.”
    Quote in the paperNot a substantial claim
  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Study design and conductown data

    Regression analyses were performed with first-order autoregressive disturbance AR(1) to verify that the results did not change with the use of additional techniques.

    “regression analyses were performed with first-order autoregressive disturbance AR(1) to verify that the results did not change with the use of additional techniques.”
    Quote in the paperNot a substantial claim
  • May combine two claims.

    Interpretationown data

    ICE and WCME play an influential role in enhancing firm performance and achieving a competitive advantage.

    “This indicates the influential role of ICE and WCME in enhancing firm performance and achieving a competitive advantage.”
    Quote in the paperSubstantial claim
42 of 42
  • The paper relies on this without support.

    The 40 sampled industrial firms are representative of the GCC industrial sector.

    “The final decision-making units (DMUs) consist of 40 industrial firms with 200 firm-year observations.”
  • The paper relies on this without support.

    The GCC industrial sector is a key contributor to the gross domestic product of the region.

    “The industrial sector, which is trying to diversify its revenue from the non-hydrocarbon sector, is a key contributor to the gross domestic product of this region.”
  • The paper relies on this without support.

    Each DMU invests in IC to preserve consistency and improve efficiency.

    “Furthermore, each DMU invests in IC to preserve consistency and improve efficiency.”
  • The paper relies on this without support.

    Improving efficiency is essential for firms to achieve their goals.

    “Improving efficiency is essential for firms to achieve their goals.”
4 of 4

Cites

Flagged first, then by citations

Research works printed but not linked: 7

  1. Dalwai, T., Mohammadi, S. S., & Al Siyabi, K. (2018). An empirical analysis of intellectual capital and firm performance of Oman’s financial sector companies 3rd International Conference on Banking and Finance Perspectives (ICBFP). Famagusta.
  2. Evans, J. R. (2011). Quality management, organization, and strategy (6th ed.). Mason, Ohio: South-Western Cengage Learning.
  3. Kweh, Q. L., Chan, Y., & Ting, I. W. K. (2015). Intellectual capital efficiency and its determinants. Kajian Malaysia, 33(1), 105–124.
  4. Mourad, N., Tharwat, A., Habib, A. M., Wafik, D., & Hamed, M. A. (2022). Appraising the economic efficiency of european football teams: Evidence from Covid-19 crisis using data envelop analysis. Journal of Positive School Psychology, 6(8), 4383–4403 https://journalppw.com/index.php/jpsp/article/view/10611
  5. PwC. (2019). Working capital report 2019/20: Creating value through working capital (Unlocking cash in digital age). P. w. h http://www.pwc.com/gx/en/working-capital-management-services/assets/working-capital-report-final.pdf
  6. Shin, H. H., & Soenen, L. (1998). Efficiency of working capital management and corporate profitability. Financial Practice and Education, 8(2), 37–45.
  7. Sveiby, K. E. (1997). The new organizational wealth: Managing & measuring knowledge-based (1st ed.). San Francisco: Berrett-Koehler Publishers.

Cited by

Sorted by citations

Authors
Habib, A. M., & Dalwai, T.
Affiliations
Muscat College (OM)
Corresponding author
Habib, Ahmed Mohamed
Venue
Journal of the knowledge economy
Published
2023-03-21
Volume
15
Issue
1
Pages
3202-3238
ISSN
  • 1868-7865 (ISSN-L)
  • 1868-7873
OpenAlex
W4328106190
Cited by
99
References
145
Citations by year
2026: 21 · 2025: 35 · 2024: 29 · 2023: 14
FWCI
21.27
Type
journal article
Language
en
Open access
Locations
  • Journal of the Knowledge Economy (publishedVersion)
  • PubMed Central (publishedVersion)
  • PubMed (publishedVersion)
  • Nottingham Trent University's Institutional Repository (Nottingham Trent Repository) (submittedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Topics
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Intellectual Capital and Performance Analysis
  • Social Sciences › Business, Management and Accounting › Accounting › Working Capital and Financial Performance
  • Social Sciences › Decision Sciences › Management Science and Operations Research › Efficiency Analysis Using DEA
Keywords
intellectual capital efficiency, working capital efficiency, firm performance, resource-based view, trade-off theory, pecking order theory, debt financing

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