Relationship between intellectual capital and business performance in indigenous audit firms in Uganda.
Okot, Davidson A. Christopher
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The purpose of this study is to determine the relationship between intellectual capital (i.e., human capital, structural capital, relational capital) and business performance in indigenous audit firms in Uganda. This has been necessitated by the fact the indigenous audit firms have remained small, poorly resourced and uncompetitive in light of proper management of intellectual capital. A valid research instrument was utilized to conduct a survey of 54 managing partners of indigenous audit firms operating in the central district of Kampala. A correlation and partial least square regression analysis were conducted to ascertain the validity of the measures and models. Statistical support was found indicating that intellectual capital is substantively and significantly related to business performance in audit firms in Uganda. The results showed that the Relational, Structural and Human Capitals have the potential to explain 65.4% of the performance of these firms. The results also showed that human capital (mean score: 3.99) and relational capital (mean score: 3.88) has better performance than structural capital (mean score: 3.73) in Uganda’s audit firms. The results further reveals that, only relational capital (Beta: 0.602) has direct influence on business performance as indicated by the partial least square regression analysis. The results generally revealed that there is still room for improving intellectual capital management by audit firms by focusing their efforts on managing all three components of intellectual capital in order to increase their business performance.