The impact of busy director on the relationship between intellectual capital and performance of manufacturing companies: Evidence from Indonesia

Abstract

Purpose: The purpose of this study is to investigate and analyse the influence of intellectual capital on manufacturing company performance, as well as the impact of busy directors on the relationship between intellectual capital and manufacturing company performance in Indonesia.

Design/methodology/approach: This study analyse secondary data from the Indonesia Stock Exchange and the official websites of manufacturing companies for the 2016-2020 period. To test the hypotheses, this study used a quantitative method with panel data regression to investigate the relationship between intellectual capital and company performance and the moderating effect of busy directors on the relationship between intellectual capital and company performance.

Findings: The results show that intellectual capital has a positive effect on company performance and that busy directors enhance this effect.

Research limitations/implications: Indonesian companies are characterised by concentrated ownership and lower investor protection so the result may not be generalised in other contexts.

Practical implications: The public-listed Indonesian company should consider the board of commissioners with multiple directorships to strengthen the positive relationship between intellectual capital and company performance. 

Originality/value: This study highlights and examines the impact of the board of commissioners with multiple directorships on the relationship between intellectual capital and the financial performance of manufacturing companies in Indonesia. Therefore, this study provides a better understanding of the importance of board competency as reflected in multiple directorships that affect the relationship between intellectual capital and company performance.