Open Access Peer-reviewed

Intellectual Capital’s Leverage on Shareholder Value Growth: A Lesson for Developing Economies

Bongani Ngwenya
Solusi University, Zimbabwe
American Journal of Educational Research. 2013, 1(5), 149-155. DOI: 10.12691/education-1-5-1
Published online: August 25, 2017


The purpose of this study is to evaluate whether there is a correlation between the intellectual capital of employees, i.e. top managers (the agent) and the shareholder (the principal) value growth among Zimbabwean companies, listed on the Zimbabwe Stock Exchange. By using these results the aim is to further examine a possible indicator for leveraging the efficiency of intellectual capital in a developing economy as a lesson. In order to perform this investigation, intellectual capital and shareholder value are quantified with, respectively, value added per employee and share price value per employee. These measurements are gathered from 17 Zimbabwean listed companies, divided into five industry sectors, that is, services, manufacturing, agriculture, mining and information technology, and tested statistically in order to find a relationship. This means, according to the researcher`s propositions on the return on intellectual capital, that there also is a correlation between intellectual capital and shareholder value growth. In order to provide an indicator for improving companies’ intellectual capital, a statistical examination concerning the relationship between the Intellectual Capital Multiplier (IC Multiplier) and value added is also performed. This examination shows that there is a strong correlation between the IC Multiplier and value added, value added can to a degree of 84 percent be predicted by the IC Multiplier, and that working with the ratio between structural and human capital is an excellent method for companies in developing economies to increase their intellectual capital. In conclusion it can be said that most companies in this investigation show moderately low values regarding the IC Multiplier, leading to an erosion of the companies’ human capital. In order to become more stable and lower the degree of risk, these companies must improve their IC Multiplier. What this study demonstrates is that an improvement of the IC Multiplier also will have an extensive effect on the company’s shareholder value growth.


intellectual capital, value added per employee, structural capital, human capital, IC multiplier, shareholder value growth
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