The Effect of Intellectual Capital on Taiwan Banking Institutions’ Business Performance

Abstract

Transforming into a knowledge-based economy, there is an increasing need for Taiwan to explore how intellectual capital creates value for financial institutions especially when signing MOU in 2009. Thus, this empirical study aims to understand how intellectual capital influences the business performance, specifically in the context of financial institutions in Taiwan. An Intellectual capital questionnaire adapted to measure the intellectual capital components, including human capital, structural capital, customer capital and innovation capital. The population is employees of financial companies in Taiwan. Research samples are collected and the data are analyzed by Partial Least Squares (PLS) and multiple regressions through backward elimination methods. There are two outcomes as follow: Firstly, PLS analysis pointed out that intellectual capital does have significant influence on Taiwan banking institutions’ performance. The positive influence of human capital to structural capital and customer capital, structural capital to customer capital, innovation to structural capital and structural capital and customer capital to business performance are proved to be significant. Secondly, multiple regression results proved intellectual capital’s significant impact on business performance. The outcomes discovered the characteristics of Taiwan banking institutions and pointed out room for the industry’s improvement. Also, it improves the problem of PLS analysis. All the models have high explanatory power over Taiwan banking institutions’ performance. Also, some recommendations for the government, Taiwan financial institutions’ managers, and future researches were provided.

Transforming into a knowledge-based economy, there is an increasing need for Taiwan to explore how intellectual capital creates value for financial institutions especially when signing MOU in 2009. Thus, this empirical study aims to understand how intellectual capital influences the business performance, specifically in the context of financial institutions in Taiwan. An Intellectual capital questionnaire adapted to measure the intellectual capital components, including human capital, structural capital, customer capital and innovation capital. The population is employees of financial companies in Taiwan. Research samples are collected and the data are analyzed by Partial Least Squares (PLS) and multiple regressions through backward elimination methods. There are two outcomes as follow: Firstly, PLS analysis pointed out that intellectual capital does have significant influence on Taiwan banking institutions’ performance. The positive influence of human capital to structural capital and customer capital, structural capital to customer capital, innovation to structural capital and structural capital and customer capital to business performance are proved to be significant. Secondly, multiple regression results proved intellectual capital’s significant impact on business performance. The outcomes discovered the characteristics of Taiwan banking institutions and pointed out room for the industry’s improvement. Also, it improves the problem of PLS analysis. All the models have high explanatory power over Taiwan banking institutions’ performance. Also, some recommendations for the government, Taiwan financial institutions’ managers, and future researches were provided.