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Social Indicators Research

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27.02.2017

Measuring Human, Physical and Structural Capital Efficiency Performance of Insurance Companies

verfasst von: Mohammad Nourani, VGR Chandran, Qian Long Kweh, Wen-Min Lu

Erschienen in: Social Indicators Research | Ausgabe 1/2018

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Abstract

Based on the strategy perspective of intellectual capital, this paper proposes an integrated framework that is practical to estimate the human, physical, and structural capitals (intellectual capital) efficiency performance, at firm level. This paper uses a dynamic network data envelopment analysis model to estimate the intellectual capital efficiency at three levels in the insurance industry over the period of 2005–2012. Within the insurance industry, deficiencies occurred in the human and structural capital stages as opposed to the physical capital stage. A further investigation indicates that total investment is the major concern for the deficiencies. Moreover, the cluster analysis highlights the strengths and weaknesses of the insurers based on their inherently similar efficiencies. Malaysian insurance industry need to translate and promote the existing knowledge-based economy agenda lauded by the government to improve the intellectual capital efficiency, particularly at the human capital level.

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Similarly, refer to the more deliberate work of the three resources by Williamson (1975) for physical capital, Becker (1964) for human capital and Tomer (1987) for structural or organizational capital.

In this aspect, this study incorporates the time dimension to qualify for the evolutionary perspective of the firm. Refer to Hodgson (1998) for more details on the evolutionary and competence-based theory of firms. Nelson and Winter (1982) provide a detailed discussion on the evolutionary perspective.

Farrell (1957) proposed that evaluation results would be significant only when firms are homogenous. Considering that firms of a DEA model must possess identical attributes, similar objectives and same market conditions (Golany and Roll 1989), this study therefore only selects the conventional insurers publicly traded in Malaysian market. In this vein, the remaining general, composite and life insurers aim at profit maximization objective which are working in the same market conditions.

As of 2012, total number of insurers in Malaysia is 33.

In order to verify that the cluster tree is cosistent with the original distance function, we used the cophenetic correlation. Larger values indicate that the tree is fitted to distance function well. Our results support the correlation distance function fitting to the tree as the cophenetic value is high at 0.8940.

The Mann–Whitney U test is a statistical hypothesis test that is used to interpret a single decision rule where the null hypothesis assumes the equality of means for two groups, and in general, this test will often be asymptotically more powerful than t test for real data (Fay and Proschan 2010).

The dataset will be available upon request.

Te Velde et al. (2009) argued that global crisis also to some extent impacted the developing countries.

Authors computed the investment growth from the dataset collected for this study.

All this while, given the long history of manufacturing, the emphasis of training and education is towards the manufacturing sectors.

Based on the data in our sample, the average of foreign insurers’ total investment is 4.3 times higher than that of the domestic insurers.

“The [free] link flow may increase or decrease in the optimal solution of the linear programs” (Tone and Tsutsui 2014, p. 126).

We thank an anonymous reviewer for the insightful suggestion; however, to the best of our awareness, this study is limited by the current technological constraint to dig further the real improvement percentages.

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Titel: Measuring Human, Physical and Structural Capital Efficiency Performance of Insurance Companies
verfasst von: Mohammad Nourani
VGR Chandran
Qian Long Kweh
Wen-Min Lu
Publikationsdatum: 27.02.2017
Verlag: Springer Netherlands
Erschienen in: Social Indicators Research / Ausgabe 1/2018
Print ISSN: 0303-8300
Elektronische ISSN: 1573-0921
DOI: https://doi.org/10.1007/s11205-017-1584-6

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