Intellectual capital: company's invisible source of competitive advantage

Purpose - The purpose of this paper is to examine the individual contribution of intellectual capital elements to competitive advantage. It aims to explore the extent to which intellectual capital elements can explain competitive advantage in Uganda's microfinance industry. Design/methodology/approach - Hierarchical regression was used because of its capacity to indicate precisely what happens to the model as different predictor variables are introduced. Findings - This study confirms that the three intellectual capital elements are strong predictors of competitive advantage and they account up to 44 percent of variance in competitive advantage. Their order of importance in explaining the variance in competitive advantage (basing on their standardized beta values) is: structural capital, human capital and relational capital. Research limitations/implications - Only a single research methodological approach was employed and future research through interviews could be undertaken to triangulate. Furthermore, the findings from the present study are cross-sectional, future research should be undertaken to examine the effects of these variables across time. Practical implications - The managers of microfinance firms need to appreciate that the rise of intellectual capital in the industry is unavoidable, given the competitive and technological forces that are sweeping the twenty-first century. Originality/value - This is the first study that focuses on testing the individual influence of intellectual capital elements on competitive advantage in Uganda microfinance industry.