Intellectual capital and islamic social responsibility: An empirical study of Asean islamic banks

In recent years, much research has been conducted on, especially, how intellectual capital (IC) affects a company’s performance. However, little research has examined IC’s effect on a company’s sustainability. Therefore, this study tested whether IC and its components affect Islamic Social Responsibility (ISR) of Association of Southeast Asian Nations’ (ASEAN) Islamic banks. Conducted for the period 2014-2017, the study controlled certain variables, namely, bank age and the level of gross domestic product per capita (GDP). IC was measured using Pulic’s Value Added Intellectual Coefficient (VAIC) method, and ISR was measured by content analysis of 66 items. Results showed that IC had insignificant effect on ISR, due to lack of training or education for human capital, as IC’s main component regarding social activities and Islamic values. This study found that Human Capital Efficiency (HCE) and Capital Employed Efficiency (CEE) had insignificant effect on ISR, while Structural Capital Efficiency (SCE) had significant negative effect on ISR activity. This study’s results suggest that Islamic bank owners and managers should be encouraged to recognize the importance of managing intangible resources and physical capital embedded in their employees and processes.