Effect of Intellectual Capitals on Employee Productivity of Banks in Developing Economies: The Nigeria Experience

Abstract

In recent times, a new high technology, information, and innovation based environment has gradually taken the centre stage in the global economy particularly in the banking sector. The Nigeria banking sector has responded appropriately to the introduction of these new technologies and innovations. Under this new dispensation, knowledge, ability, skills, experience and attitude of workers, assume greater significance even as organizations use intellectual capital as a critical resource to enhance their performances. Service firms as well as manufacturing organisations use intellectual capital with their physical assets to sharpen their competitive edge while organizations which have managed their intellectual capital better, are observed to have achieved stronger competitive advantage than the general enterprises. Following from above, it is expected that intellectual capital should have positive effect on Employee Productivity. Empirical records of studies on this effect in some developed nations showed divergent views. Unfortunately, no empirical records on the effect of intellectual capital and Employee Productivity in the Nigeria banking sector exist. This study therefore uses the Value Added Intellectual Coefficient (VAIC) model to investigate the effect of the Intellectual Capital indices (i.e. Human Capital Efficiency, Structural Capital Efficiency and the Capital Employed Efficiency) on the Employee Productivity of banks in Nigeria. The data were collected from the annual reports of six banks and analysis was conducted using longitudinal time series data generated from the annual reports and accounts of the selected banks in Nigeria spanning from year 2000 to 2011. The multiple regression analysis method was adopted for the test of the hypothesis. The SPSS statistical software (version 17.0) was used for the data analysis. The study showed that there was a positive and significant relationship between components of VAIC and employee productivity of the banks in Nigeria (VIAC coefficient = 1.186, R2c = 0.806, R2t = 0.49, P < 0.05). From the result stated above, it is thus established that indeed intellectual capital has positive and significant effect on Employee Productivity of banks in Nigeria. Keywords: Intellectual Capital, Human Capital, Structural Capital, Employee Productivity, Nigeria, VAIC