Intellectual capital, social capital components and internal control weaknesses: evidence from Iran’s business environment

Abstract

Purpose This paper aims to determine whether there is a relationship between intellectual capital and social capital and internal control weaknesses and assess the relationship between the variables of intellectual capital and social capital and internal control weaknesses. Design/methodology/approach The statistical population consists of 1,309 firm-year observations from 2014 to 2020. The research hypothesis is tested using statistical methods, including multivariate, least-squares and fixed-effects regression. Findings The results demonstrate a negative and significant relationship between intellectual capital, social capital and internal control weaknesses. The study also finds that increased intellectual and social capital quality improves human resource utilization, control mechanism, creativity and firm performance. The results also show that intellectual capital and social capital enhancement will reduce internal control weaknesses in the upcoming years. Originality/value This paper is the pioneer study on the relationship between intellectual capital and social capital and internal control weaknesses in Iran, carried out separately and in exploratory factor analysis. This paper considers intellectual capital components for theoretical factor analysis, including human capital, structural capital and customer capital. Internal control weakness is assessed based on financial, non-financial and information technology (IT) weaknesses.

The Effect of Company Leadership Narcissism on Internal Control

“…Referring to the results of the descriptive test, the average company leadership narcissism is 16,9%, which indicates that the company's leadership narcissism is low. However, the empirical results show an insignificant effect indicating that the company's leadership (Salehi, Rajaeei et al, 2021) which suggests that CEO narcissism has a significant positive effect on internal control weaknesses.…”

“…In addition, narcissistic CEOs often have overconfidence in the hope that their decisions will have a positive impact on the company's development. According to the upper echelons theory, organizational strategies reflect the characteristics of the firm's CEOs (Hambrick and Mason, 1984 ;Salehi, et al, 2021). Consistently, CEOs strongly influence the firms' "tone at the top" or ethical environment, reflecting the CEO's personality.…”

“…According to (Salehi, Rajaeei et al, 2021) narcissism is a psychological thing with the characteristics of people who are concerned with self-esteem, success, power, have the belief in being special, want others to feel admiration and attention for them, and desire to get compliments from other people. Based on previous research according to (Salehi, Rajaeei et al, 2021) it can be concluded that a narcissistic company leader has a tendency to make himself admired by those around him so that he often makes decisions in a hurry without assessing the risks of the decisions he makes. already made.…”

Are scholar-type CEOs more conducive to promoting industrial AI transformation of manufacturing companies?

“…Enterprise internal control is the system construction and implementation of “human” as the main body. The executive team, especially the CEO, bears the main responsibility of building the internal control system and maintaining its effectiveness (Salehi et al ., 2021), and CEO's personal characteristics have an important impact on the internal control quality of enterprise (Shen et al ., 2021). In this study, it is believed that scholar-type CEOs promote industrial AI transformation by improving internal control quality.…”

The impact of CEO age on a firm’s choice of global reporting initiative: moderating role of board social capital

“…The adoption of the GRI reporting framework for CSR reporting is a strategic decision that requires top management team (TMT) concerns. Upper echelons theory argues that TMT’s psychological traits affect organizational decisions, actions and outcomes (Hambrick, 2007; Naaman and Sun, 2021; Safari Gerayli et al , 2021; Salehi et al , 2021). Recent research suggests that chief executive officers (CEOs) differ in their attributes.…”