The Impact of Intellectual Capital on Business Uncertainty and Business Performance of Small Enterprises: With Special Reference to Galle District in Sri Lanka

Abstract

This study aims to study the impact of Intellectual Capital (IC) on business uncertainty in the small-scale enterprises (SE) sector in Sri Lanka and, consequently, investigate the impact of business uncertainty on enhancing their business performance. The data were collected from a sample of 150 owners of SEs employing face-to-face and telephone interviews. Partial Least Square-Structural Equation Modelling (PLS-SEM) was used to analyse the data through SmartPLS V3 software. The study findings reveal a significant positive relationship between IC and the business performance of SEs. Moreover, IC significantly affects the uncertainty faced by these businesses. Results also claim that business uncertainty plays a complementary mediating role in the relationship between IC and the business performance of SEs. Consequently, the study concludes that enhancing the IC in small enterprises builds reconfigures the available resources of SEs, ensuring expected performance and survival in economic crises. The research design, the methodology utilised, and the findings of this study will benefit researchers, policymakers, and entrepreneurs and contribute to future studies regarding the development of SEs in a developing country like Sri Lanka.