Intellectual capital and financial performance in Uganda's microfinance institutions

Abstract

This paper examined the individual contribution of intellectual capital elements to performance. Its purpose was to explore the extent to which intellectual capital elements can explain financial performance in Uganda’s microfinance industry. Hierarchical regression was used because of its capacity to indicate precisely what happens to the model as different predictor variables are introduced. This study confirms that the three intellectual capital elements are strong predictors of financial performance and they account for 47% of variance in performance. However, the order of importance of these variables in explaining the variance in financial performance (basing on their standardized beta values) is: relational capital, structural capital and human capital. The findings can help management to intensify initiatives to encourage greater understanding and acceptance of the concept of intellectual capital that boosts performance in the industry. Keywords Intellectual capital, Microfinance institutions, financial performance, human, relational and structural capitals