Intellectual capital and public sector performance

Kardina Kamaruddin, Indra Abeysekera

Research output: Book/ReportBookResearchpeer-review

Abstract

This study investigated the management of intellectual capital in the Malaysian public sector as a tool for non-financial organizational performance. Intellectual capital is the organizational knowledge that is not recognized in financial statements and could support non-financial organizational performance. First, the study analysed the theoretical relationship between intellectual capital and non-financial organizational performance. Second, the study investigated the empirical relationships between intellectual capital observed variables and the non-financial organizational performance observed variables. The observed variables of intellectual capital in this study were human capital, internal capital and external capital and the observed variables of non-financial organizational performance were effectiveness, efficiency and reputation. Three major factors motivated the examination of intellectual capital in Malaysian public sector. First, the rise of the knowledge economy challenges the Malaysian public sector to be more effective, more efficient, and more reputable as a service provider. Thus, the Vision 2020 was introduced by the government to develop Malaysians to be a knowledge intensive society towards achieving the status of developed nation by the year 2020. Such intent encompasses many intangible objectives that confront the public sector managers in the task of managing the intellectual capital in the sector. Second, the Malaysian public sector organizations have gone through a radical transformation through New Public Management (NPM) reforms making them interesting examples for a large-scale study of the relationship between intellectual capital and nonfiancial performance in the public sector. Third, there has been no attempt to study intellectual capital and non-financial organizational performance in an emerging nation, nor specifically in the Malaysian public sector organizations. The study used self-administered survey questionnaires to collect data on both the intellectual capital and non-financial organizational performance aspects of the Malaysian public sector. The items in the survey questionnaire were initially selected from the literature, and validated through a series of focus group interviews with Malaysian public sector staff. The chosen measurement items were further validated through a pilot test conducted on the internet with another cohort of Malaysian public sector staff. Participants for the main study were chosen from the Malaysian public sector from a pre-defined sampling frame and using simple random sampling techniques. The total number of participants was 1,092 covering the three levels of the government-federal, state and the local governments. Using resource-based theory as a theoretical framework, this study proposed that intellectual capital resource bundles leads to capabilities and competence that should enhance non-financial organizational performance. This study developed one hypothesis to test the theoretical relationship, and nine hypotheses to test the empirical relationship. The results of the survey questionnaire were analysed using a multivariate Structural Equation Model to ensure that the data appropriately fit the theoretical model proposed in the study which meant selecting the survey instrument items through the structural equation model analysis. The results revealed that all hypotheses were not rejected in this study. First, there is a significant and positive relationship between intellectual capital and performance. Second, human capital has a significant and positive relationship with observed variables of non-financial organizational performance (i.e. effectiveness, efficiency and reputation) in the public sector. Third, internal capital has a significant and positive relationship with observed variables of non-financial organizational performance (i.e. effectiveness, efficiency and reputation) in the public sector. Lastly, external capital has a significant and positive relationship with observed variables of non-financial organizational performance (i.e. effectiveness, efficiency and reputation) in the public sector. The findings of this study have positive implications for the development for the management of intellectual capital practices in the Malaysian public sector. First, they provide useful input into the review of the relevant intellectual capital resources, and second on improving the effectiveness, efficiency and reputation aspects of the non-financial organizational performance of the Malaysian public sector. The findings are also useful to other parties (such as for the public sector stakeholders and researchers) by providing a nexus that connects the matrix of intellectual capital bundled resources (i.e. internal capital, external capital and human capital) with a matrix of non-financial organizational performance (i.e. efficiency, effectiveness and reputation). In interpreting the results however, it should be acknowledged that the relationship between intellectual capital and non-financial organizational performance can be impacted by other variables that were not included in this study such as decentralization, performance measurement system, size and sector. This study also suggests a future research proposition to enhance the proposed theoretical and empirical relationships established in this study.

Original languageEnglish
PublisherEmerald Group Publishing Limited
Number of pages210
ISBN (Print)9781783501687
DOIs
Publication statusPublished - 2013
Externally publishedYes

Publication series

NameStudies in Managerial and Financial Accounting
Volume27
ISSN (Print)1479-3512

Fingerprint

Intellectual capital
Public sector
Organizational performance
Questionnaire survey
Resources
Human capital
Staff
Public sector organizations
Structural equation model
Government
Financial statements
Decentralization
New public management
Local government
Resource-based theory
Random sampling
Sampling
Theoretical framework
Intangibles
Performance measurement system

Cite this

Kamaruddin, K., & Abeysekera, I. (2013). Intellectual capital and public sector performance. (Studies in Managerial and Financial Accounting; Vol. 27). Emerald Group Publishing Limited. https://doi.org/10.1108/S1479-3512%282013%290000027017
Kamaruddin, Kardina ; Abeysekera, Indra. / Intellectual capital and public sector performance. Emerald Group Publishing Limited, 2013. 210 p. (Studies in Managerial and Financial Accounting).
@book{2abe947b9b9e49c7a81071318bd2ac2a,
title = "Intellectual capital and public sector performance",
abstract = "This study investigated the management of intellectual capital in the Malaysian public sector as a tool for non-financial organizational performance. Intellectual capital is the organizational knowledge that is not recognized in financial statements and could support non-financial organizational performance. First, the study analysed the theoretical relationship between intellectual capital and non-financial organizational performance. Second, the study investigated the empirical relationships between intellectual capital observed variables and the non-financial organizational performance observed variables. The observed variables of intellectual capital in this study were human capital, internal capital and external capital and the observed variables of non-financial organizational performance were effectiveness, efficiency and reputation. Three major factors motivated the examination of intellectual capital in Malaysian public sector. First, the rise of the knowledge economy challenges the Malaysian public sector to be more effective, more efficient, and more reputable as a service provider. Thus, the Vision 2020 was introduced by the government to develop Malaysians to be a knowledge intensive society towards achieving the status of developed nation by the year 2020. Such intent encompasses many intangible objectives that confront the public sector managers in the task of managing the intellectual capital in the sector. Second, the Malaysian public sector organizations have gone through a radical transformation through New Public Management (NPM) reforms making them interesting examples for a large-scale study of the relationship between intellectual capital and nonfiancial performance in the public sector. Third, there has been no attempt to study intellectual capital and non-financial organizational performance in an emerging nation, nor specifically in the Malaysian public sector organizations. The study used self-administered survey questionnaires to collect data on both the intellectual capital and non-financial organizational performance aspects of the Malaysian public sector. The items in the survey questionnaire were initially selected from the literature, and validated through a series of focus group interviews with Malaysian public sector staff. The chosen measurement items were further validated through a pilot test conducted on the internet with another cohort of Malaysian public sector staff. Participants for the main study were chosen from the Malaysian public sector from a pre-defined sampling frame and using simple random sampling techniques. The total number of participants was 1,092 covering the three levels of the government-federal, state and the local governments. Using resource-based theory as a theoretical framework, this study proposed that intellectual capital resource bundles leads to capabilities and competence that should enhance non-financial organizational performance. This study developed one hypothesis to test the theoretical relationship, and nine hypotheses to test the empirical relationship. The results of the survey questionnaire were analysed using a multivariate Structural Equation Model to ensure that the data appropriately fit the theoretical model proposed in the study which meant selecting the survey instrument items through the structural equation model analysis. The results revealed that all hypotheses were not rejected in this study. First, there is a significant and positive relationship between intellectual capital and performance. Second, human capital has a significant and positive relationship with observed variables of non-financial organizational performance (i.e. effectiveness, efficiency and reputation) in the public sector. Third, internal capital has a significant and positive relationship with observed variables of non-financial organizational performance (i.e. effectiveness, efficiency and reputation) in the public sector. Lastly, external capital has a significant and positive relationship with observed variables of non-financial organizational performance (i.e. effectiveness, efficiency and reputation) in the public sector. The findings of this study have positive implications for the development for the management of intellectual capital practices in the Malaysian public sector. First, they provide useful input into the review of the relevant intellectual capital resources, and second on improving the effectiveness, efficiency and reputation aspects of the non-financial organizational performance of the Malaysian public sector. The findings are also useful to other parties (such as for the public sector stakeholders and researchers) by providing a nexus that connects the matrix of intellectual capital bundled resources (i.e. internal capital, external capital and human capital) with a matrix of non-financial organizational performance (i.e. efficiency, effectiveness and reputation). In interpreting the results however, it should be acknowledged that the relationship between intellectual capital and non-financial organizational performance can be impacted by other variables that were not included in this study such as decentralization, performance measurement system, size and sector. This study also suggests a future research proposition to enhance the proposed theoretical and empirical relationships established in this study.",
author = "Kardina Kamaruddin and Indra Abeysekera",
year = "2013",
doi = "10.1108/S1479-3512{\%}282013{\%}290000027017",
language = "English",
isbn = "9781783501687",
series = "Studies in Managerial and Financial Accounting",
publisher = "Emerald Group Publishing Limited",
address = "United Kingdom",

}

Kamaruddin, K & Abeysekera, I 2013, Intellectual capital and public sector performance. Studies in Managerial and Financial Accounting, vol. 27, Emerald Group Publishing Limited. https://doi.org/10.1108/S1479-3512%282013%290000027017

Intellectual capital and public sector performance. / Kamaruddin, Kardina; Abeysekera, Indra.

Emerald Group Publishing Limited, 2013. 210 p. (Studies in Managerial and Financial Accounting; Vol. 27).

Research output: Book/ReportBookResearchpeer-review

TY - BOOK

T1 - Intellectual capital and public sector performance

AU - Kamaruddin, Kardina

AU - Abeysekera, Indra

PY - 2013

Y1 - 2013

N2 - This study investigated the management of intellectual capital in the Malaysian public sector as a tool for non-financial organizational performance. Intellectual capital is the organizational knowledge that is not recognized in financial statements and could support non-financial organizational performance. First, the study analysed the theoretical relationship between intellectual capital and non-financial organizational performance. Second, the study investigated the empirical relationships between intellectual capital observed variables and the non-financial organizational performance observed variables. The observed variables of intellectual capital in this study were human capital, internal capital and external capital and the observed variables of non-financial organizational performance were effectiveness, efficiency and reputation. Three major factors motivated the examination of intellectual capital in Malaysian public sector. First, the rise of the knowledge economy challenges the Malaysian public sector to be more effective, more efficient, and more reputable as a service provider. Thus, the Vision 2020 was introduced by the government to develop Malaysians to be a knowledge intensive society towards achieving the status of developed nation by the year 2020. Such intent encompasses many intangible objectives that confront the public sector managers in the task of managing the intellectual capital in the sector. Second, the Malaysian public sector organizations have gone through a radical transformation through New Public Management (NPM) reforms making them interesting examples for a large-scale study of the relationship between intellectual capital and nonfiancial performance in the public sector. Third, there has been no attempt to study intellectual capital and non-financial organizational performance in an emerging nation, nor specifically in the Malaysian public sector organizations. The study used self-administered survey questionnaires to collect data on both the intellectual capital and non-financial organizational performance aspects of the Malaysian public sector. The items in the survey questionnaire were initially selected from the literature, and validated through a series of focus group interviews with Malaysian public sector staff. The chosen measurement items were further validated through a pilot test conducted on the internet with another cohort of Malaysian public sector staff. Participants for the main study were chosen from the Malaysian public sector from a pre-defined sampling frame and using simple random sampling techniques. The total number of participants was 1,092 covering the three levels of the government-federal, state and the local governments. Using resource-based theory as a theoretical framework, this study proposed that intellectual capital resource bundles leads to capabilities and competence that should enhance non-financial organizational performance. This study developed one hypothesis to test the theoretical relationship, and nine hypotheses to test the empirical relationship. The results of the survey questionnaire were analysed using a multivariate Structural Equation Model to ensure that the data appropriately fit the theoretical model proposed in the study which meant selecting the survey instrument items through the structural equation model analysis. The results revealed that all hypotheses were not rejected in this study. First, there is a significant and positive relationship between intellectual capital and performance. Second, human capital has a significant and positive relationship with observed variables of non-financial organizational performance (i.e. effectiveness, efficiency and reputation) in the public sector. Third, internal capital has a significant and positive relationship with observed variables of non-financial organizational performance (i.e. effectiveness, efficiency and reputation) in the public sector. Lastly, external capital has a significant and positive relationship with observed variables of non-financial organizational performance (i.e. effectiveness, efficiency and reputation) in the public sector. The findings of this study have positive implications for the development for the management of intellectual capital practices in the Malaysian public sector. First, they provide useful input into the review of the relevant intellectual capital resources, and second on improving the effectiveness, efficiency and reputation aspects of the non-financial organizational performance of the Malaysian public sector. The findings are also useful to other parties (such as for the public sector stakeholders and researchers) by providing a nexus that connects the matrix of intellectual capital bundled resources (i.e. internal capital, external capital and human capital) with a matrix of non-financial organizational performance (i.e. efficiency, effectiveness and reputation). In interpreting the results however, it should be acknowledged that the relationship between intellectual capital and non-financial organizational performance can be impacted by other variables that were not included in this study such as decentralization, performance measurement system, size and sector. This study also suggests a future research proposition to enhance the proposed theoretical and empirical relationships established in this study.

AB - This study investigated the management of intellectual capital in the Malaysian public sector as a tool for non-financial organizational performance. Intellectual capital is the organizational knowledge that is not recognized in financial statements and could support non-financial organizational performance. First, the study analysed the theoretical relationship between intellectual capital and non-financial organizational performance. Second, the study investigated the empirical relationships between intellectual capital observed variables and the non-financial organizational performance observed variables. The observed variables of intellectual capital in this study were human capital, internal capital and external capital and the observed variables of non-financial organizational performance were effectiveness, efficiency and reputation. Three major factors motivated the examination of intellectual capital in Malaysian public sector. First, the rise of the knowledge economy challenges the Malaysian public sector to be more effective, more efficient, and more reputable as a service provider. Thus, the Vision 2020 was introduced by the government to develop Malaysians to be a knowledge intensive society towards achieving the status of developed nation by the year 2020. Such intent encompasses many intangible objectives that confront the public sector managers in the task of managing the intellectual capital in the sector. Second, the Malaysian public sector organizations have gone through a radical transformation through New Public Management (NPM) reforms making them interesting examples for a large-scale study of the relationship between intellectual capital and nonfiancial performance in the public sector. Third, there has been no attempt to study intellectual capital and non-financial organizational performance in an emerging nation, nor specifically in the Malaysian public sector organizations. The study used self-administered survey questionnaires to collect data on both the intellectual capital and non-financial organizational performance aspects of the Malaysian public sector. The items in the survey questionnaire were initially selected from the literature, and validated through a series of focus group interviews with Malaysian public sector staff. The chosen measurement items were further validated through a pilot test conducted on the internet with another cohort of Malaysian public sector staff. Participants for the main study were chosen from the Malaysian public sector from a pre-defined sampling frame and using simple random sampling techniques. The total number of participants was 1,092 covering the three levels of the government-federal, state and the local governments. Using resource-based theory as a theoretical framework, this study proposed that intellectual capital resource bundles leads to capabilities and competence that should enhance non-financial organizational performance. This study developed one hypothesis to test the theoretical relationship, and nine hypotheses to test the empirical relationship. The results of the survey questionnaire were analysed using a multivariate Structural Equation Model to ensure that the data appropriately fit the theoretical model proposed in the study which meant selecting the survey instrument items through the structural equation model analysis. The results revealed that all hypotheses were not rejected in this study. First, there is a significant and positive relationship between intellectual capital and performance. Second, human capital has a significant and positive relationship with observed variables of non-financial organizational performance (i.e. effectiveness, efficiency and reputation) in the public sector. Third, internal capital has a significant and positive relationship with observed variables of non-financial organizational performance (i.e. effectiveness, efficiency and reputation) in the public sector. Lastly, external capital has a significant and positive relationship with observed variables of non-financial organizational performance (i.e. effectiveness, efficiency and reputation) in the public sector. The findings of this study have positive implications for the development for the management of intellectual capital practices in the Malaysian public sector. First, they provide useful input into the review of the relevant intellectual capital resources, and second on improving the effectiveness, efficiency and reputation aspects of the non-financial organizational performance of the Malaysian public sector. The findings are also useful to other parties (such as for the public sector stakeholders and researchers) by providing a nexus that connects the matrix of intellectual capital bundled resources (i.e. internal capital, external capital and human capital) with a matrix of non-financial organizational performance (i.e. efficiency, effectiveness and reputation). In interpreting the results however, it should be acknowledged that the relationship between intellectual capital and non-financial organizational performance can be impacted by other variables that were not included in this study such as decentralization, performance measurement system, size and sector. This study also suggests a future research proposition to enhance the proposed theoretical and empirical relationships established in this study.

UR - http://www.scopus.com/inward/record.url?scp=84896302859&partnerID=8YFLogxK

U2 - 10.1108/S1479-3512%282013%290000027017

DO - 10.1108/S1479-3512%282013%290000027017

M3 - Book

SN - 9781783501687

T3 - Studies in Managerial and Financial Accounting

BT - Intellectual capital and public sector performance

PB - Emerald Group Publishing Limited

ER -

Kamaruddin K, Abeysekera I. Intellectual capital and public sector performance. Emerald Group Publishing Limited, 2013. 210 p. (Studies in Managerial and Financial Accounting). https://doi.org/10.1108/S1479-3512%282013%290000027017