Revisiting the intellectual capital and sustainable financial growth relationship: the moderating role of GDP growth in the emerging economy

Abstract

Businesses are facing financial sustainability challenges, driven by economic volatility, underutilization of intangible resources, and limited understanding of how macroeconomic conditions affect the effectiveness of intellectual capital (IC). Thus, the current study aims to address these issues by investigating the effect of IC on sustainable financial growth (SFG) and the moderating role of GDP growth. Annual reports of listed firms at the Pakistan Stock Exchange (PSX) from 2016 to 2024 are used to collect secondary data. The modified value-added intellectual coefficient (MVAIC) model was used to measure the IC, and a composite index comprising profitability, operating capacity, solvency, and development ability indicators was used to measure SFG. Panel data techniques are used to analyze the data. The findings reveal that the MVAIC and its components have significant positive impacts on SFG. The results also show that GDP growth positively impacts SFG and significantly moderates the relationship between MVAIC and SFG. The Resource-Based View (RBV) theory supports these findings and posits that intangible resources can help firms enhance their long-term competitiveness and financial viability, especially in prosperous macroeconomic conditions. The results offer significant insights for managers and policymakers interested in improving SFG through effective MVAIC management.