Intellectual Capital and Business Performance of Self-employers in Sri Lanka: An Empirical Investigation

International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue V, May 2020 | ISSN 2454–6186

Intellectual Capital and Business Performance of Self-employers in Sri Lanka: An Empirical Investigation

P.A. Dulanjani1, H. M. S. Priyanath2*
¹Department of Economics and Statistics, Sabaragamuwa University of Sri Lanka, Belihuloya, Sri Lanka
^2*Department of Economics and Statistics, Sabaragamuwa University of Sri Lanka, Belihuloya, Sri Lanka

Abstract: This paper aims to explore the impact of intellectual capital on business performance of self-employers in Sri Lanka. The data were collected from 115 self-employers in Ingiriya Divisional Secretary Division in Sri Lanka. Partial Least Square – Structural Equation Modeling (PLS-SEM) was conducted to test research hypotheses. The findings revealed that human capital and relational capital have a positive and significant impact on the business performance of self-employers except structural capital. In particular, relational capital has the strongest and largest contribution to business performance. Thus, the study provided sufficient evidences to conclude that relational capital and human capital have a significant impact on business performance of self-employers in Sri Lanka. The study provides more important insights for the self-employers and policy makers to make strategies to strength the intellectual capital in order to achieve business performance.

Keywords: Business Performance, Human Capital, Intellectual Capital, Relational Capital, Structural Capital, Self-employers

I. INTRODUCTION

Intellectual Capital(IC) is becoming a most valuable asset for businesses and can be used as a sharpest competitive weapon to foster business performance(Stewart and Stephanie, 1994). This hidden asset is individuals, not the company and it controls the chief sources of competitive advantages as well as, at the same time knowledge employer will survive in his success than a tangible asset (Drucker, 1994). There are many varieties of perspectives which answer how is the IC developed? Stewart (1998), stated that IC is a brand-new tennis ball – fuzzy, but with a lot of bounce. This statement states that the IC is captured by the practitioners who are always finding solutions for more difficult challenges. It further implies that IC enhances the capacity, innovations, leading skills and overall performance of the persons (Edvinsson and Malone, 1997). Hence, the popularity of the topic is mainly come up in the business world with different perspectives. This is why the hidden asset or most recently, IC often says more about the capability of survival of a company than we currently use. So, the need of IC for a good self-employer is one of the most crucial factors behind his success than any other financial asset.

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