Intellectual Capital and Financial Sustainability During The Covid-19 Outbreak

  • Authors

    • Rochman Arif Faculty of Economics and Business Sebelas Maret University
    • Bandi Faculty of Economics and Business Sebelas Maret University
    • Agung Nur Probohudono Faculty of Economics and Business Sebelas Maret University
    • Djuminah Faculty of Economics and Business Sebelas Maret University
    https://doi.org/10.14419/ygyzg193

    Received date: May 15, 2025

    Accepted date: June 11, 2025

    Published date: June 21, 2025

  • Commissioners' Characteristics, Intellectual Capital, and Financial Sustainability

  • Abstract

    By examining the banking industry in Indonesia during the Covid-19 pandemic, this study aims to explore the influence of intellectual capital on financial sustainability moderated by top management characteristics. This analysis combines data from annual reports and sustainability reports of 81 Indonesian banking companies listed on the Indonesia Stock Exchange in 2019-2020. Data analysis involves multiple linear regression. This study finds that intellectual capital has a substantial influence on the board of commissioners' knowledge and understanding of financial sustainability. However, an increase in the board's intellectual capital does not affect financial sustainability. Although intellectual capital is a form of capital that companies must possess to address future challenges, which are predicted to drive improvements in sustainable financial performance, research on the impact of intellectual capital on financial sustainability remains scarce.

  • References

    1. A. Elisabeth, “OJK Sebut Transformasi Digitalisasi Jadi Tantangan Perbankan di Tengah Pandemi.”
    2. B. A. Pramudita, “Rangkaian Kejahatan Siber Tahun 2020 di Asia Tenggara Versi Kaspersky.” [Online]. Available: https://www.wartaekonomi.co.id/read321161/rangkaian-kejahatan-siber-tahun-2020-di-asia-tenggara-versi-kaspersky
    3. N. I. Ahuja, B.R. and Ahuja, ““Intellectual capital approach to performance evaluation: a case studyofthe bankingsectorinIndia,” Int. ofFinance Econ., vol. Vol.93, p. pp.110-122., 2012.
    4. N. Bontis, S. Janošević, and V. Dženopoljac, “Intellectual capital in serbia’s hotel industry,” Int. J. Contemp. Hosp. Manag., vol. 27, no. 6, pp. 1365–1384, 2015, doi: 10.1108/IJCHM-12-2013-0541.
    5. C. J. Liang, T. T. Huang, and W. C. Lin, “Does ownership structure affect firm value? Intellectual capital across industries per-spective,” J. Intellect. Cap., vol. 12, no. 4, pp. 552–570, 2011, doi: 10.1108/14691931111181724.
    6. M. Aksoy, M. K. Yilmaz, E. Tatoglu, and M. Basar, “Antecedents of corporate sustainability performance in Turkey: The effects of ownership structure and board attributes on non-financial companies,” J. Clean. Prod., vol. 276, p. 124284, 2020, doi: 10.1016/j.jclepro.2020.124284.
    7. G. Aras, N. Tezcan, and O. Kutlu Furtuna, “Multidimensional comprehensive corporate sustainability performance evaluation model: Evidence from an emerging market banking sector,” J. Clean. Prod., vol. 185, pp. 600–609, 2018, doi: 10.1016/j.jclepro.2018.01.175.
    8. O. Badunenko, S. C. Kumbhakar, and A. Lozano‐Vivas, “Achieving a sustainable cost-efficient business model in banking: The case of European commercial banks,” Eur. J. Oper. Res., vol. 293, no. 2, pp. 773–785, 2021, doi: 10.1016/j.ejor.2020.12.039.
    9. O. M. Bătae, V. D. Dragomir, and L. Feleagă, “The relationship between environmental, social, and financial performance in the banking sector: A European study,” J. Clean. Prod., vol. 290, 2021, doi: 10.1016/j.jclepro.2021.125791.
    10. M. B. Fakoya and M. V. Nakeng, “Board characteristics and sustainable energy performance of selected companies in South Afri-ca,” Sustain. Prod. Consum., vol. 18, pp. 190–199, 2019, doi: 10.1016/j.spc.2019.02.003.
    11. A. Jan, M. Marimuthu, R. Hassan, and Mehreen, “Sustainable business practices and firm’s financial performance in islamic bank-ing: Under the moderating role of islamic corporate governance,” Sustain., vol. 11, no. 23, pp. 1–25, 2019, doi: 10.3390/su11236606.
    12. A. A. Jan, F. W. Lai, and M. Tahir, “Developing an Islamic Corporate Governance framework to examine sustainability perfor-mance in Islamic Banks and Financial Institutions,” J. Clean. Prod., vol. 315, no. March, p. 128099, 2021, doi: 10.1016/j.jclepro.2021.128099.
    13. E. Kartadjumena and W. Rodgers, “Executive compensation, sustainability, climate, environmental concerns, and company finan-cial performance: Evidence from Indonesian commercial banks,” Sustain., vol. 11, no. 6, 2019, doi: 10.3390/su11061673.
    14. S. Moufty, E. Clark, and B. Al-Najjar, “The different dimensions of sustainability and bank performance: Evidence from the EU and the USA,” J. Int. Accounting, Audit. Tax., vol. 43, p. 100381, 2021, doi: 10.1016/j.intaccaudtax.2021.100381.
    15. E. Nizam, A. Ng, G. Dewandaru, R. Nagayev, and M. A. Nkoba, “The impact of social and environmental sustainability on finan-cial performance: A global analysis of the banking sector,” J. Multinatl. Financ. Manag., vol. 49, pp. 35–53, 2019, doi: 10.1016/j.mulfin.2019.01.002.
    16. S. Nosratabadi, G. Pinter, A. Mosavi, and S. Semperger, “Sustainable banking; Evaluation of the European business models,” Sustain., vol. 12, no. 6, 2020, doi: 10.3390/su12062314.
    17. B. T. Olmo, M. C. Saiz, and S. S. Azofra, “Sustainable banking, market power, and efficiency: Effects on banks’ profitability and risk,” Sustain., vol. 13, no. 3, pp. 1–23, 2021, doi: 10.3390/su13031298.
    18. M. Ramzan, M. Amin, and M. Abbas, “How does corporate social responsibility affect financial performance, financial stability, and financial in-clusion in the banking sector? Evidence from Pakistan,” Res. Int. Bus. Financ., vol. 55, no. August 2020, p. 101314, 2021, doi: 10.1016/j.ribaf.2020.101314.
    19. E. Sardianou, A. Stauropoulou, K. Evangelinos, and I. Nikolaou, “A materiality analysis framework to assess sustainable devel-opment goals of banking sector through sustainability reports,” Sustain. Prod. Consum., vol. 27, pp. 1775–1793, 2021, doi: 10.1016/j.spc.2021.04.020.
    20. A. W. H. Yip and N. M. P. Bocken, “Sustainable business model archetypes for the banking industry,” J. Clean. Prod., vol. 174, pp. 150–169, 2018, doi: 10.1016/j.jclepro.2017.10.190.
    21. A. S. Ornek and S. Ayas, “The Relationship between Intellectual Capital, Innovative Work Behavior and Business Performance Reflection,” Pro-cedia - Soc. Behav. Sci., vol. 195, pp. 1387–1395, 2015, doi: 10.1016/j.sbspro.2015.06.433.
    22. K. S. Adesina, “Bank technical, allocative and cost efficiencies in Africa: The influence of intellectual capital,” North Am. J. Econ. Financ., vol. 48, no. August 2018, pp. 419–433, 2019, doi: 10.1016/j.najef.2019.03.009.
    23. A. E. Castillo, G. V. Pacheco, L. H. Fernandez, E. N. Manotas, T. C. Borrero, and J. Silva, “Factorial analysis in the intellectual capital’s dimen-sions on micro, small and medium-sized export enterprises,” Procedia Comput. Sci., vol. 160, pp. 567–572, 2019, doi: 10.1016/j.procs.2019.11.046.
    24. C. Cavicchi and E. Vagnoni, “Does intellectual capital promote the shift of healthcare organizations towards sustainable develop-ment? Evidence from Italy,” J. Clean. Prod., vol. 153, pp. 275–286, 2017, doi: 10.1016/j.jclepro.2017.03.175.
    25. M. Minoja and G. Romano, “Managing intellectual capital for sustainability: Evidence from a Re-municipalized, publicly owned waste management firm,” J. Clean. Prod., vol. 279, p. 123213, 2021, doi: 10.1016/j.jclepro.2020.123213.
    26. A. Mondal and S. K. Ghosh, “Intellectual capital and financial performance of Indian banks,” J. Intellect. Cap., vol. 13, no. 4, pp. 515–530, 2012, doi: 10.1108/14691931211276115.
    27. G. K. Oppong and J. K. Pattanayak, “Does investing in intellectual capital improve productivity? Panel evidence from commercial banks in India,” Borsa Istanbul Rev., vol. 19, no. 3, pp. 219–227, 2019, doi: 10.1016/j.bir.2019.03.001.
    28. G. Secundo, V. Ndou, P. Del Vecchio, and G. De Pascale, “Sustainable development, intellectual capital and technology policies: A structured lit-erature review and future research agenda,” Technol. Forecast. Soc. Change, vol. 153, no. March 2019, p. 119917, 2020, doi: 10.1016/j.techfore.2020.119917.
    29. B. Hutahayan, “The mediating role of human capital and management accounting information system in the relationship between innovation strate-gy and internal process performance and the impact on corporate financial performance,” Benchmarking, vol. 27, no. 4, pp. 1289–1318, 2020, doi: 10.1108/BIJ-02-2018-0034.
    30. G. Tonial, A. Cassol, P. M. Selig, and E. Giugliani, “Intellectual capital management and sustainability activities in Brazilian organ-izations: A case study,” Intellect. Cap. Manag. as a Driv. Sustain. Perspect. Organ. Soc., pp. 119–138, 2018, doi: 10.1007/978-3-319-79051-0_7.
    31. Y. M. Yusoff, M. K. Omar, M. D. Kamarul Zaman, and S. Samad, “Do all elements of green intellectual capital contribute toward business sustain-ability? Evidence from the Malaysian context using the Partial Least Squares method,” J. Clean. Prod., vol. 234, pp. 626–637, 2019, doi: 10.1016/j.jclepro.2019.06.153.
    32. M. Massaro, J. Dumay, A. Garlatti, and F. Dal Mas, “Practitioners’ views on intellectual capital and sustainability: From a perfor-mance-based to a worth-based perspective,” J. Intellect. Cap., vol. 19, no. 2, pp. 367–386, 2018, doi: 10.1108/JIC-02-2017-0033.
    33. A. A. G. S. Utama and R. R. Mirhard, “International Journal of Economics and Financial Issues the Influence of Sustainability Report Disclosure as Moderating Variable towards the Impact of Intellectual Capital on Company’s Performance,” Int. J. Econ. Financ. Issues, vol. 6, no. 3, pp. 1262–1269, 2016, [Online]. Available: http: www.econjournals.com
    34. J. Zhang and Y. Wang, “How to Improve the Corporate Sustainable Development? — The Importance of the Intellectual Capital and the Role of the Investor Confidence,” Sustain., vol. 14, no. 7, 2022, doi: 10.3390/su14073749.
    35. A. Pulic, “VAICTM – An Accounting Tool for Intellectual Capital Management,” Int. J. Technol. Manag., vol. 20, no. 5/6/7/8, pp. 702–714, 2000.
    36. S. Vishnu and V. K. Gupta, “Intellectual capital and performance of pharmaceutical firms in India,” J. Intellect. Cap., vol. 15, no. 1, pp. 83–99, 2014, doi: 10.1108/JIC-04-2013-0049.
    37. Sirinuch Nimtrakoon, “Intellectual capital, firms’ market the relationship between value and financial performance Empirical evi-dence from the ASEAN,” J. Intellect. Cap., vol. Vol. 16, no. 3, pp. 587–618, 2015.
    38. A. A. Ousama and A. H. Fatima, “Intellectual capital and financial performance of Islamic banks,” Int. J. Learn. Intellect. Cap., vol. 12, no. 1, pp. 1–15, 2015, doi: 10.1504/IJLIC.2015.067822.
    39. V. Dzenopoljac, N. E. Chadi Yaacoub, and N. Bontis, “Impact of Intellectual Capital on Corporate,” Emerald Insights, vol. 2, no. 1, pp. 6–17, 2017.
    40. I. Sidharta and A. Affandi, “Kajian Empiris Pendekatan Intellectual Capital Terhadap Kinerja Keuangan pada Sektor Perbankan Perdesaan di In-donesia,” J. Int. Ekon. dan Keuang. Masal., vol. ISSN: 2146, 2016.
    41. S. G. Maji and M. Goswami, “Intellectual capital and firm performance in emerging economies: the case of India,” Rev. Int. Bus. Strateg., vol. 26, no. 3, pp. 410–430, 2016, doi: 10.1108/RIBS-03-2015-0019.
    42. T. Nawaz and R. Haniffa, “Determinants of financial performance of Islamic banks: an intellectual capital perspective,” J. Islam. Account. Bus. Res., vol. 8, no. 2, pp. 130–142, 2017, doi: 10.1108/JIABR-06-2016-0071.
    43. A. N. Probohudono, A. D. Pratiwi, and M. R. Rochmatullah, “Does intellectual capital have any influence on stock price crash risk?” J. Intellect. Cap., 2021, doi: 10.1108/JIC-09-2020-0306.
    44. I. Ulum, I. Ghozali, and A. Purwanto, “Intellectual Capital Performance of Indonesian Banking Sector: A Modified VAIC (M-VAIC) Perspective,” Asian J. Financ. Account., vol. 6, no. 2, p. 103, 2014, doi: 10.5296/ajfa. v6i2.5246.
    45. I. Ulum, N. Kharismawati, and D. Syam, “Modified value-added intellectual coefficient (MVAIC) and traditional financial perfor-mance of Indo-nesian biggest companies,” Int. J. Learn. Intellect. Cap., vol. 14, no. 3, pp. 207–219, 2017, doi: 10.1504/IJLIC.2017.086390.
    46. A. Buallay, A. M. Hamdan, S. Reyad, S. Badawi, and A. Madbouly, “The efficiency of GCC banks: the role of intellectual capi-tal,” Eur. Bus. Rev., vol. 32, no. 3, pp. 383–404, 2020, doi: 10.1108/EBR-04-2019-0053.
    47. M. Nadeem, J. Dumay, and M. Massaro, “If You Can Measure It, You Can Manage It: A Case of Intellectual Capital,” Aust. Account. Rev., vol. 29, no. 2, pp. 395–407, 2019, doi: 10.1111/auar.12227.
    48. N. Soewarno and B. Tjahjadi, “Measures that matter: an empirical investigation of intellectual capital and financial performance of banking firms in Indonesia,” J. Intellect. Cap., vol. 21, no. 6, pp. 1085–1106, 2020, doi: 10.1108/JIC-09-2019-0225.
    49. D. C. Hambrick and P. A. Mason, “Upper Echelons: The Organization as a Reflection of Its Top Managers,” Int. J. Discl. Gov., vol. 9, no. 1, pp. 193–206, 1984, doi: 10.1057/s41310-019-00054-0.
    50. T. Zenger, “Beyond Competitive advantage,” Engineering, 2016.
    51. C. A. Tilt, W. Qian, S. Kuruppu, and D. Dissanayake, “The state of business sustainability reporting in sub-Saharan Africa: an agenda for policy and practice,” Sustain. Accounting, Manag. Policy J., vol. 12, no. 2, pp. 267–296, 2021, doi: 10.1108/SAMPJ-06-2019-0248.
    52. H. Fauzi, G. Svensson, and A. A. Rahman, “‘Triple bottom line’ as ‘sustainable corporate performance’: A proposition for the future,” Sustainabil-ity, vol. 2, no. 5, pp. 1345–1360, 2010, doi: 10.3390/su2051345.
    53. G. Seyfang and A. Gilbert-Squires, “Move your money? Sustainability Transitions in Regimes and Practices in the UK Retail Banking Sector,” Ecol. Econ., vol. 156, pp. 224–235, 2019, doi: 10.1016/j.ecolecon.2018.09.014.
    54. I. S. Pylaeva, M. V. Podshivalova, A. A. Alola, D. V. Podshivalov, and A. A. Demin, “A new approach to identifying high-tech manufacturing SMEs with sustainable technological development: Empirical evidence,” J. Clean. Prod., vol. 363, no. December 2021, p. 132322, 2022, doi: 10.1016/j.jclepro.2022.132322.
    55. C. Torre, A. Tommasetti, and G. Maione, “Technology usage, intellectual capital, firm performance and employee satisfaction: the accountants’ idea,” TQM J., vol. 33, no. 3, pp. 545–567, 2020, doi: 10.1108/TQM-04-2020-0070.
    56. V. B. Bayangos, R. A. D. Cachuela, and F. L. E. Del Prado, “Impact of extreme weather episodes on the Philippine banking sector – Evidence us-ing branch-level supervisory data,” Lat. Am. J. Cent. Bank., vol. 2, no. 1, p. 100023, 2021, doi: 10.1016/j.latcb.2021.100023.
    57. M. Farne and A. Vouldis, Working Paper Series Business models of the banks in the euro area, no. 2070. 2017. doi: 10.2866/386225.
    58. A. N. Berger and A. Demirgüç-Kunt, “Banking research in the time of COVID-19,” J. Financ. Stab., vol. 57, no. September, p. 100939, 2021, doi: 10.1016/j.jfs.2021.100939.
    59. M. Elnahass, V. Q. Trinh, and T. Li, “Global banking stability in the shadow of Covid-19 outbreak,” J. Int. Financ. Mark. Institu-tions Money, vol. 72, p. 101322, 2021, doi: 10.1016/j.intfin.2021.101322.
    60. W. Widarjo, “Pengaruh Modal Intelektual Dan Pengungkapan Modal Intelektual Pada Nilai Perusahaan,” Fak. Ekon. Univ. Syiah Kuala Banda Aceh, vol. 8, no. 2, pp. 21–22, 2011.
    61. E. Wany, “Jurnal Akuntansi,” Akrual, vol. 2, no. 1, 2010.
    62. D. A. Arifah, “Pengaruh Mekanisme Corporate Governance Terhadap Pengungkapan Intellectual Capital: Pada Perusahaan Ic Intensive,” J. Akunt. dan Keuang. Indones., vol. 9, no. 2, pp. 189–211, 2012, doi: 10.21002/jaki.2012.12.
    63. R. V. D. Jordão and V. R. de Almeida, “Performance measurement, intellectual capital and financial sustainability,” J. Intellect. Cap., vol. 18, no. 3, pp. 643–666, 2017, doi: 10.1108/JIC-11-2016-0115.
    64. I. Abeysekera, “The influence of board size on intellectual capital disclosure by Kenyan listed firms,” J. Intellect. Cap., vol. 11, no. 4, pp. 504–518, 2010, doi: 10.1108/14691931011085650.
    65. C. J. Chen and J. W. Huang, “Strategic human resource practices and innovation performance - The mediating role of knowledge management ca-pacity,” J. Bus. Res., vol. 62, no. 1, pp. 104–114, 2009, doi: 10.1016/j.jbusres.2007.11.016.
    66. H. N. Rudez and T. Mihalic, “Intellectual capital in the hotel industry: A case study from Slovenia,” Int. J. Hosp. Manag., vol. 26, no. 1, pp. 188–199, 2007, doi: 10.1016/j.ijhm.2005.11.002.
    67. C. A. Ho and S. M. Williams, “International comparative analysis of the association between board structure and the efficiency of value added by a firm from its physical capital and intellectual capital resources,” Int. J. Account., vol. 38, no. 4, pp. 465–491, 2003, doi: 10.1016/j.intacc.2003.09.001.
    68. A. N. Probohudono, D. Perwitasari, and R. P. Putra, “Faktor-Faktor Yang Memengaruhi Remunerasi Direksi: Studi Komparasi Perusahaan Di Aus-tralia, Singapura, Indonesia, Dan Malaysia,” J. Akunt. dan Keuang. Indones., vol. 13, no. 1, pp. 52–69, 2016, doi: 10.21002/jaki.2016.03.
    69. T. Miller and M. del C. Triana, “Demographic Diversity in the Boardroom : Mediators of the Board Diversity – Firm Performance Relationship Toyah Miller and María del Carmen Triana,” J. Manag. Stud., vol. 46, no. 5, 2009.
    70. A. Pant and G. K. Nidugala, “Board characteristics and efficiency of value added by banks: Evidence from an emerging economy,” J. Asian Econ., vol. 79, no. December 2021, p. 101455, 2022, doi: 10.1016/j.asieco.2022.101455.
    71. M. Bhuyan and R. Appuhami, “Examining the influence of corporate governance on intellectual capital efficiency Evidence from top service firms in Australia,” Manag. Audit. J., vol. 30, no. 1, pp. 347–372, 2015.
    72. N. Asare, A. L. Alhassan, M. E. Asamoah, and M. Ntow-Gyamfi, “Intellectual capital and profitability in an emerging insurance market,” J. Econ. Adm. Sci., vol. 33, no. 1, pp. 2–19, 2017, doi: 10.1108/jeas-06-2016-0016.
    73. Nuryaman, “The Influence of Intellectual Capital on The Firm’s Value with The Financial Performance as Intervening Variable,” Procedia - Soc. Behav. Sci., vol. 211, no. September, pp. 292–298, 2015, doi: 10.1016/j.sbspro.2015.11.037.
    74. R. V. D. Jordao and V. R. de Almeida, “Performance measurement, intellectual capital and financial sustainability,” J. Intellect. Cap., vol. 18, no. 3, pp. 643–666, 2017, doi: 10.1108/JIC-11-2016-0115.
    75. A. N. Petrov, Human Capital and Sustainable Development in the Arctic: Towards Intellectual and Empirical Framing. 2017. doi: 10.1007/978-3-319-46150-2_16.
    76. M. Nadeem, R. Zaman, T. Suleman, and N. Atawnah, “CEO ability, career concerns, firms’ lifecycle and investments in intellectu-al capital,” Int. Rev. Econ. Financ., vol. 75, pp. 237–251, 2021, doi: 10.1016/j.iref.2021.04.023.
    77. X. Wang, R. Sadiq, T. M. Khan, and R. Wang, “Industry 4.0 and intellectual capital in the age of FinTech,” Technol. Forecast. Soc. Change, vol. 166, p. 120598, 2021, doi: 10.1016/j.techfore.2021.120598.
    78. S. S. Jain, G. D. Fernando, A. Tripathy, and S. Bhatia, “Closing the gender gap in top management teams: An examination of diversity and com-pensation parity in family and non-family firms,” J. Fam. Bus. Strateg., vol. 12, no. 4, p. 100388, 2021, doi: 10.1016/j.jfbs.2020.100388.
    79. vol. 2, no. 3, pp. 201–215, 2009.
    80. Herri, A. P. Johan, R. F. Handika, and Yulihasri, “Ceos characteristics and the successful of turnaround strategy: Evidences from Indonesia,” Acad. Strateg. Manag. J., vol. 16, no. 1, pp. 69–80, 2017.
    81. M. C. Diaz-Fernandez, M. R. Gonzalez-Rodriguez, and B. Simonetti, “Top management team’s intellectual capital and firm per-formance,” Eur. Manag. J., vol. 33, no. 5, pp. 322–331, 2015, doi: 10.1016/j.emj.2015.03.004.
    82. X. Wang, L. Ma, and Y. Wang, “The impact of TMT functional background on firm performance: Evidence from listed companies in China’s IT industry,” Nankai Bus. Rev. Int., vol. 6, no. 3, pp. 281–311, 2015, doi: 10.1108/NBRI-11-2013-0040.
    83. C. Camelo, M. Fernández-Alles, and A. B. Hernández, “Strategic consensus, top management teams, and innovation perfor-mance,” Int. J. Man-pow., vol. 31, no. 6, pp. 678–695, 2010, doi: 10.1108/01437721011073373.
    84. C. Camelo-Ordaz, A. B. Hernández-Lara, and R. Valle-Cabrera, “The relationship between top management teams and innovative capacity in com-panies,” J. Manag. Dev., vol. 24, no. 8, pp. 683–705, 2005, doi: 10.1108/02621710510613726.
    85. L. A. M. Chowdhury, T. Rana, and M. I. Azim, “Intellectual capital efficiency and organisational performance: In the context of the pharmaceuti-cal industry in Bangladesh,” J. Intellect. Cap., vol. 20, no. 6, pp. 784–806, 2019, doi: 10.1108/JIC-10-2018-0171.

  • Downloads

  • How to Cite

    Arif, R., Bandi, Probohudono, A. N., & , D. (2025). Intellectual Capital and Financial Sustainability During The Covid-19 Outbreak. International Journal of Accounting and Economics Studies, 12(2), 185-193. https://doi.org/10.14419/ygyzg193