Intellectual Capital in Action: Unleashing Sustainable Growth in Non-Financial Companies of Pakistan

Abstract

In contemporary competitive markets, firms must have sustainable profits and potential for long-term growth. This research focuses on how intellectual capital efficiency can assist in attaining sustainable growth rate of firms. The research develops a theoretical model that connects components of intellectual capital such as Human, Structural, Relational, Process, and employed capital for corporate sustainable growth in Pakistan's non-financial firms. Six years data of non-financial firms of KSE-100 from the period 2015 to 2020 was collected. Fixed effects panel data regression was used for the testing. The findings of regression output showed strong evidence that two of the intellectual capital components, the Human capital, and Process capital along with basic capital employed measures significantly resulting in the ability to grow sustainably of corporations. However, the results suggested that relational capital is having a weak link with corporate sustainable growth which highlights the doubt that whether Pakistani firms are contributing sufficiently toward the customer, supplier relationships, and marketing. Structural capital is also having a very weak connection with sustainable growth rate. The study conducted adds to the existing literature on intellectual capital and corporate sustainable growth by utilizing more components of IC in the context of Pakistan, a developing economy.