The importance of intellectual capital and the management of this resource is increasingly important to value creation owing to the shift from a product-based economy to a knowledge-based economy. The board of directors plays an important role in the management of intellectual capital and performs multiple roles simultaneously. These roles include the monitoring and control role, the stewardship role, the service role and the strategic role. The characteristics of the board of directors influence the performance of these roles and the effectiveness of the management of intellectual capital. Enhanced intellectual capital management has the potential to improve intellectual capital performance and create value for a company. A multi-theoretic contingency model was adopted to acknowledge the multiple roles of the board of directors by applying an integrated approach to agency theory, stewardship theory, resource dependence theory and stakeholder theory.
The multi-theoretic contingency model used ownership concentration as the contingent factor, to examine the relationships between the characteristics of the board of directors and intellectual capital performance, measured as the efficiency of value added by a company from its resources. A deeper understanding was obtained by considering the moderating effect of ownership concentration on these relationships. Ownership concentration may be viewed as a corporate governance mechanism that either reduces or aggravates the agency problem, impacting the resources available for the effective management of intellectual capital by the board of directors.
The estimated generalised least squares method was applied to the regression models, with period seemingly unrelated regressions weightings and using White (diagonal) standard errors and covariance estimation methods. This mitigated the problems associated with autocorrelation and heteroscedasticity. The estimation method was first applied, without any interaction terms, to examine the relationships of ownership concentration and the characteristics of the board of directors with the efficiency of value added by a company from its resources. Interaction terms, which were created by using ownership concentration as the potential moderating variable, were then individually introduced to the regression models. This was done for the full sample and also for the top industries on the Johannesburg Stock Exchange.
The findings of this study are important for the advancement of corporate governance policies that focus not only on the monitoring and control role, but also the service and strategic roles, of the board of directors. The study indicated that a higher level of ownership concentration had a moderating effect on the relationships between the characteristics of the board of directors and the efficiency of value added by a company from its resources in certain circumstances. However, the findings also indicated that the specific measure of ownership concentration was significant. In addition, the results differed between industries, suggesting that corporate governance policies should not be generic.