Enhancing Sustainable Growth in the Indian Pharma Industry: The Governance Role of Independent Directors and Intellectual Capital – A Study on NSE NIFTY Pharma Index Companies

Enhancing Sustainable Growth in the Indian Pharma Industry: The Governance Role of Independent Directors and Intellectual Capital – A Study on NSE NIFTY Pharma Index Companies | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Enhancing Sustainable Growth in the Indian Pharma Industry: The Governance Role of Independent Directors and Intellectual Capital – A Study on NSE NIFTY Pharma Index Companies Manigandan R, Vaishnavi Balaji, Supriya R, Shakti Priya A This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6268440/v1 This work is licensed under a CC BY 4.0 License Status: Published Journal Publication published 20 Jan, 2026 Read the published version in Discover Sustainability → Version 1 posted 11 You are reading this latest preprint version Abstract This research investigates how Intellectual Capital (IC) influences the Sustainable Growth Rate (SGR) of Indian pharmaceutical firms that are part of the NSE NIFTY Pharma index. This study delves deeper into the moderating influence of Independent Directors and examines the control effect of Leverage (Debt-Equity Ratio) on this relationship. A descriptive research design was utilized, employing panel data from FY 2015 to FY 2024. The dataset was obtained from the Prowess database (CMIE), and the Two-Step System GMM method was utilized with STATA 18 to guarantee a thorough econometric analysis. The findings indicate that Intellectual Capital (IC) plays a crucial role in enhancing SGR, thereby reinforcing the Resource-Based View (RBV). Independent Directors effectively moderate this relationship, strengthening Agency Theory. Nonetheless, leverage has a detrimental effect on SGR, consistent with Pecking Order Theory. Pharmaceutical companies ought to allocate resources towards Intellectual Capital, enhance corporate governance, and uphold appropriate debt levels to ensure sustained long-term growth. This study effectively combines IC, corporate governance, and financial leverage in the Indian pharmaceutical sector, providing valuable concrete insights for policymakers, academics, and industry experts. Independent Directors Intellectual Capital Leverage NSE NIFTY Pharma index Pharmaceutical companies Sustainable Growth Figures Figure 1 1 Introduction The Indian pharmaceutical industry plays a crucial role in advancing global healthcare innovation, making substantial contributions to both economic growth and public health (IMARC Report, 2024). “The Indian pharmaceutical market was estimated at USD 61.36 billion in 2024. IMARC Group projects the market would attain USD 174.31 billion by 2033, demonstrating a CAGR of 11.32% from 2025 to 2033 (IMARC Report, 2024)”. “The market stands as a prominent global provider of affordable medicines, propelled by strong generics production, a talented workforce, and efficient manufacturing processes. Furthermore, the rising domestic demand for healthcare, government backing for local API production, and progress in biotechnology establish the industry as a fundamental element of innovation and growth in healthcare solutions (IMARC Report, 2024”. Nonetheless, attaining sustainable growth in this sector continues to be difficult due to heightened regulatory scrutiny, market competition, and issues related to corporate governance (Khanna, 2012 ; Petrova, 2013 ; Bade et al., 2024 ). Intellectual Capital (IC), which includes human capital, structural capital, capital employed, innovation relational capital, is acknowledged as a vital factor influencing long-term firm performance and innovation (Ghazal and Aziz, 2025 ; Bontis, 1998; Edvinsson and Malone, 1997 ). Effective corporate governance, especially the independence of the board through the inclusion of independent directors, is crucial for fostering transparency, accountability, and strategic oversight within organizations (Fogel et al., 2021 ). Previous studies indicate that companies with greater board independence demonstrate improved financial performance and risk management (Sobhan et al., 2025 ; Farooq et al., 2025 ; Dunn and Sainty, 2009 ). Nonetheless, even with its potential, the moderating influence of independent directors on the association between IC and sustainable growth in Indian pharmaceutical firms has yet to be thoroughly examined. This study seeks to explore the impact of independent directors on the degree to which firms utilize intellectual capital for long-term sustainability, with a particular emphasis on companies within the NSE NIFTY Pharma Index. Sun Pharma, being the largest pharmaceutical company in India, has effectively utilized intellectual Capital components, Human Capital Efficiency (HCE) by making significant investments in research and development and acquiring top talent. The company allocated 6.7% of its global revenues to R&D in FY24, backed by a team of more than 3,000 scientists (Sun Pharmaceutical Industries Limited, Annual Report 2023–2024). Dr. Reddy’s Laboratories has enhanced Structural Capital Efficiency (SCE) through the optimization of manufacturing processes and the adoption of advanced technologies. Initiatives encompass a significant digital transformation, targeting more than 70% workload migration to the cloud by FY25, alongside the implementation of process automation to improve manufacturing efficiency. This has led to a 43% decrease in manufacturing costs per 1,000 pills and a 56% rise in factory output from 2017 to 2021 (Dr. Reddy’s Laboratories). The Indian pharmaceutical industry functions within a dynamic and intensely competitive landscape, where Intellectual Capital (IC)—including human capital, structural capital, and relational capital—serves a crucial role in fostering sustainable growth. Investing in IC components like employee expertise, strong organizational processes, and strategic partnerships has demonstrated the ability to boost innovation and financial performance (Ali et al., 2022 ; Castro et al., 2021 ). Studies on Indian pharmaceutical companies highlighted a notable positive correlation between IC efficiency and financial stability, emphasizing the necessity of proficiently managing intangible assets (Festa et al., 2021 ; Gupta et al., 2023 ). Research in the Bangladeshi pharmaceutical sector has shown that the effective use of IC components enhances organizational performance, underscoring the widespread significance of IC in various markets (Chowdhury et al., 2019 ). Furthermore, Independent Directors play a crucial role in governance, improving transparency, accountability, and risk management within organizations (Masulis and Zhang, 2019 ). Their oversight guarantees that IC resources are in harmony with strategic objectives, thus promoting sustainable growth (Shah et al., 2024 ). This study seeks to examine the effect of intellectual capital on the Sustainable Growth Rate of Indian pharmaceutical companies, emphasizing the moderating role of Independent Directors and the impact of leverage as a control variable. Pharmaceutical companies utilize Intellectual Capital (HCE, SCE, CEE, RDE, and RCE) to expedite drug research, clinical testing, and approval from regulators (Mehralian et al., 2013 ; Mehralian et al., 2024 ; Nazneen et al., 2025 ). Independent Directors enhance transparency, uphold ethical standards, and provide strategic oversight, guaranteeing the effective use of Intellectual Capital for sustainable long-term growth (Shah et al., 2024 ; Tumwebaze et al., 2021 ). While corporate governance mechanisms have been the subject of extensive study, the particular moderating effect of Independent Directors on the relationship among IC and SGR has not been thoroughly examined. Independent Directors offer impartial oversight and strategic direction, which may improve the effective use of IC. Nonetheless, there is a scarcity of empirical evidence regarding this moderating role in the Indian pharmaceutical industry. The current study has included leverage as a control variable, which is crucial for isolating the real impact of IC on SGR. The theoretical motivations of the present study are: Intellectual Capital acts as a vital resource that strengthens a firm's competitive edge by promoting innovation, improving operational efficiency, and driving financial growth. This research expands on the Resource-Based View by illustrating the impact of Intellectual Capital on the Sustainable Growth Rate of pharmaceutical companies in India. Independent Directors are essential in mitigating agency conflicts, enhancing governance structures, and ensuring the effective use of Intellectual Capital for sustainable growth. This study also incorporates agency theory to explore the role of corporate governance in moderating the IC-SGR relationship. The Research Questions of the present study are: How does Intellectual capital influence the Sustainable Growth rate (SGR) of Indian Pharmaceutical companies? What is the moderating effect of the Independent Directors on the relationship between Intellectual Capital and SGR? How does Leverage influence SGR, acting as a control variable in the Intellectual Capital-SGR relationship? 2 Literature Review 2.1 Theoretical Framework A strong theoretical foundation is crucial for comprehending the relationships examined in this study. This research is based on two fundamental theories: the Resource-Based View (RBV) and Agency Theory. Theories offer a conceptual framework for understanding the role of Intellectual Capital (IC) in influencing Sustainable Growth Rate (SGR), along with the moderating effect of Independent Directors, while accounting for Leverage as a financial constraint. The combination of these theories enhances the research framework by merging insights from both strategic resource management and corporate governance viewpoints. 2.1.1 Resource-Based View Theory The Resource-Based View (RBV) was initially presented by Wernerfelt in 1984 and subsequently elaborated upon by Barney in 1991. The theory suggests that companies achieve lasting competitive advantage through the effective management of their distinct resources and capabilities, especially those that are valuable, scarce, distinctive, and non-substitutable, as outlined in the VRIN framework (Barney, 1991 ). RBV posits that intellectual capital (IC)—which includes human capital, structural capital, relational capital, capital employed efficiency, and innovation capital—is an essential intangible resource that sets apart firms in knowledge-intensive sectors such as pharmaceuticals (Chen et al., 2005; Edvinsson & Malone, 1997 ). 2.1.2 Application to the present study Within the framework of this study, RBV supports the significance of Intellectual Capital (IC) as an independent variable, positing that companies that utilize their intellectual resources can attain a greater Sustainable Growth Rate (SGR). The pharmaceutical industry, characterized by its focus on research and development, relies significantly on knowledge-driven assets, including skilled personnel, advanced research capabilities, and robust relationships with regulatory bodies, research institutions, and international markets (Pulic, 2000 ; Sveiby, 1997 ). Intellectual capital serves as a strategic enabler that improves firms' long-term financial and innovation performance, consistent with the RBV's assertion that effective resource management results in sustained growth. 2.1.3 Agency Theory Agency Theory, as presented by Jensen and Meckling in 1976, explores the principal-agent dilemma that occurs when managers (agents) make decisions that might not reflect the best interests of shareholders (principals). The theory emphasizes the importance of corporate governance mechanisms, including board independence, in addressing agency conflicts, curbing managerial opportunism, and enhancing firm performance (Dalton et al., 1998 ; Bhagat & Black, 2001 ). 2.1.4 Application to the present study This study is grounded in Agency Theory, which highlights the moderating role of Independent Directors (IDIC). Independent directors improve board oversight, strategic decision-making, and transparency, ensuring that the firm’s intellectual capital is effectively leveraged for long-term sustainable growth instead of short-term managerial benefits (Jackling & Johl, 2009 ). Independent directors serve as external monitors, enhancing corporate governance and thereby fortifying the connection between Intellectual Capital (IC) and Sustainable Growth Rate (SGR). Furthermore, agency theory offers valuable insights regarding the function of leverage (debt-to-equity ratio) as a control variable. High leverage can intensify agency costs stemming from conflicts between debt holders and managers, which may limit investments in R&D and innovation (Myers & Majluf, 1984 ; Titman & Wessels, 1988 ). Effective corporate governance, especially via independent directors, can reduce these risks by promoting sound financial decision-making. 2.1.5 Integration of RBV and Agency Theory Although RBV elucidates the role of intellectual capital in fostering sustainable growth, it does not directly consider the corporate governance mechanisms that affect the management of these resources. Conversely, Agency Theory offers valuable perspectives on governance frameworks, yet it falls short of elucidating the role of intangible resources in fostering competitive advantage. The combination of RBV and Agency Theory is therefore crucial in this research due to the following reasons: The Resource-Based View illustrates how Intellectual Capital directly influences Sustainable Growth by framing IC as a strategic asset that improves firm performance. Agency Theory supports the moderating role of Independent Directors by demonstrating how governance mechanisms facilitate the effective use of IC. The integrated framework enhances the model by tackling both resource-based competitive advantage (RBV) and corporate oversight (Agency Theory), providing a comprehensive understanding of how pharmaceutical firms can achieve sustainable long-term growth. This theoretical integration holds significant importance for India’s pharmaceutical sector, where companies need robust intellectual capital to foster innovation while also establishing effective governance structures to handle risks and make strategic decisions (Chen et al., 2005; Jackling & Johl, 2009 ). Therefore, the integration of RBV and Agency Theory strengthens the explanatory capacity of the research model. 2.2 Variables 2.2.1 Intellectual Capital Intellectual Capital (IC) denotes the aggregate intangible assets of a firm that play a crucial role in generating value and establishing a competitive edge. This includes assets like knowledge, human capital, company capabilities, innovation perspective, and partnerships with stakeholders that allow firms to maintain long-term performance (Edvinsson & Malone, 1997 ; Sveiby, 1997 ; Pedro et al., 2025 ). Intellectual capital can be defined as non-monetary and non-physical resources that are fully or partly owned by the organization and contribute to the value-creation process of the organization (Pulido-López and López-Salazar, 2025 ; Romano et al., 2025 ). In industries that rely heavily on knowledge, like pharmaceuticals, IC is essential for fostering innovation, enhancing operational efficiency, and attaining sustainable growth (Chen et al., 2005; Lin and Lin, 2024). Pulic’s VAIC model and the evolution of EVAIC The Value-Added Intellectual Coefficient (VAIC) model, created by Pulic in 2000, stands out as one of the most recognized frameworks for assessing the efficiency of Intellectual Capital. The VAIC model assesses the effectiveness of three essential components: Human Capital Efficiency, Structural Capital Efficiency, and Capital Employed Efficiency. While the VAIC model offers a standardized approach to evaluate the contribution of Intellectual Capital to value creation, it fails to explicitly consider Relational Capital and Innovation Capital, both of which are essential for companies functioning in highly dynamic sectors such as pharmaceuticals (Chen et al., 2005). The Extended Value-Added Intellectual Coefficient (EVAIC) model was developed to address these limitations (Ulum et al., 2014 ). Through the integration of RCE and ICE, EVAIC offers a more thorough assessment of Intellectual Capital, rendering it particularly appropriate for sectors dependent on R&D, strategic alliances, and innovation driven by market demands, like pharmaceuticals (Gupta et al., 2023 ; Nazneen et al., 2025 ; Ståhle et al., 2011 ; Duan et al., 2024 ). 2.2.2 Sustainable Growth Rate The Sustainable Growth Rate (SGR) model, developed by Higgins in 1981, offers a framework for identifying the highest growth rate a company can achieve without relying on external financing, all while preserving a stable financial structure. This model is especially pertinent for companies seeking to harmonize growth with financial stability, guaranteeing that expansion does not exceed the firm's capacity to generate resources internally. Higgins ( 1981 ) highlighted the importance for firms to synchronize their strategic growth goals with their financial resources to prevent over-dependence on debt or equity financing, which could lead to financial risk and dilution of shareholder value. This model has been extensively utilized in corporate finance literature to evaluate growth sustainability and the efficiency of capital allocation (Higgins, 1981 ; Van Horne & Wachowicz, 2008). Recent studies have utilized SGR across different industries, affirming its significance in steering companies toward sustainable financial stability and measured growth (Chen et al., 2005). In the realm of pharmaceutical companies, sustainable growth relies significantly on investments in intellectual capital, expenditures on R&D, and strategies driven by innovation. The SGR model assists firms in evaluating if their profitability, asset utilization, and reinvestment strategies are adequate to maintain growth while avoiding excessive financial leverage (Myers & Majluf, 1984 ; Wang and Xu, 2024 ). Incorporating the SGR framework into this study offers a systematic method for assessing the impact of intellectual capital on fostering financially sustainable growth within the pharmaceutical sector. 2.2.3 Independent Directors Independent directors serve as non-executive members of a company's board, refraining from involvement in daily management activities and maintaining minimal financial connections to the organization (Merendino and Melville, 2019 ). Their main function is to offer impartial oversight and direction, thus improving corporate governance practices. Through the provision of independent judgment, they assist in averting conflicts of interest and guarantee that decisions are in harmony with the interests of shareholders (Reguera-Alvarado and Bravo, 2017 ). Studies show that having independent directors’ correlates positively with firm performance, as they play a crucial role in overseeing management actions and aiding in strategic decision-making (Prabowo and Simpson, 2011 ; Musallam, 2024 ; Islam et al., 2025 ). Nonetheless, obstacles like maintaining genuine independence and avoiding the formation of close relationships with management over time can influence their effectiveness. Ongoing efforts to uphold their independence are crucial for promoting transparency and accountability within organizations (Fuzi et al., 2016 ). ​​ 2.2.4 Leverage Leverage, indicated by the Debt-to-Equity (D/E) ratio, is a financial metric that assesses a company's total liabilities to its shareholders' equity, reflecting the extent to which debt is utilized to finance the company's assets compared to equity. An elevated D/E ratio indicates that a company has taken an assertive approach to financing its growth through debt, potentially resulting in greater returns on equity while simultaneously heightening the risk of financial distress. A lower D/E ratio may suggest a more cautious strategy, which could restrict growth opportunities while also minimizing risk. The D/E ratio plays a vital role in evaluating a company's financial leverage and risk profile, as high levels of debt can hinder a company's capacity to fulfil its financial commitments, particularly in times of economic decline. Research indicates that moderate debt levels can improve profitability via tax advantages, whereas excessively high debt levels tend to correlate with diminished firm performance due to heightened interest obligations and financial risk (Basdekis et al., 2020 ; Nukala and Prasada Rao, 2021 ). Thus, it is crucial to uphold an ideal D/E ratio to effectively balance the advantages and risks linked to debt financing. 2.3 Hypotheses Development The association between Intellectual Capital (IC) and a firm's Sustainable Growth Rate (SGR) has been thoroughly investigated in scholarly literature, demonstrating a positive relationship between the two (Lu et al., 2021 ). Intellectual Capital includes intangible assets like human capital, structural capital, and relational capital, all of which together improve a firm's ability to create value (Mukherjee and Sen, 2019 ). These components play a crucial role in driving innovation, enhancing operational efficiency, and sustaining competitive advantage, all of which are essential for sustainable growth (Balaji and Mamilla, 2023 ).​ Research has consistently shown that effective management of intellectual capital plays a crucial role in a company's sustainable growth (Ionita and Dinu, 2021 ). Human Capital Efficiency (HCE) and overall Intellectual Capital Efficiency (ICE) have a positive impact on both firm performance and SGR. This indicates that investing in employee development and knowledge management plays a vital role in fostering sustainable growth (Xu et al., 2020 ). A study on Indian agribusiness companies further supports this, indicating that Innovation Capital Efficiency and Human Capital Efficiency are significant variables influencing SGR. The results showed that companies that prioritize innovation and adeptly manage their human resources are more likely to attain sustainable growth (Balaji and Mamilla, 2024 ). Furthermore, an extensive examination of the current literature reveals that the majority of empirical studies indicate a beneficial impact of IC on sustainable growth (Xu and Wang, 2018 ; Xu et al., 2021 ). Nonetheless, the degree of this impact may differ based on the particular elements of IC and the techniques employed to assess them. In conclusion, the literature highlights that Intellectual Capital is essential for improving a firm's Sustainable Growth Rate. Through strategic management and investment in IC components like human capital, innovation, and structural processes, companies can attain lasting financial performance and uphold a competitive advantage within their industries. Based on the literature survey the following hypothesis have been proposed. H 1 : Intellectual Capital positively influences the Sustainable Growth rate of Indian Pharmaceutical companies. The role of independent directors in the governance of corporations and firm performance has been thoroughly examined in the literature, emphasizing their impact across different organizational settings (Duru et al., 2016 ). Independent directors play a vital role in corporate governance, promoting transparency, accountability, and informed strategic decision-making (Merendino and Melville, 2019 ). Studies show that board independence enhances corporate governance by reducing agency conflicts and aligning the decisions of management with the interests of shareholders (Merendino and Melville, 2019 ). Research indicates that independent directors are crucial in influencing relationships, including CEO duality and firm performance, board characteristics and business outcomes, as well as the quality of environmental disclosures and financial performance (Duru et al., 2016 ; Alipour et al., 2019 ). Their presence improves oversight, guaranteeing that governance mechanisms operate efficiently to promote sustainable growth. Furthermore, independent directors impact firm performance by promoting board diversity, enhancing internal audit functions, and refining strategic decision-making (Al-Matar et al., 2014; Ganesan et al., 2018 ). Nevertheless, the findings indicate that the effectiveness of independent directors is influenced by contextual factors, including industry dynamics, firm size, and regulatory frameworks. Independent directors play a crucial role in moderating factors that strengthen corporate governance structures, ultimately improving firm performance, transparency, and long-term sustainability. Following the literature survey, the subsequent hypotheses have been proposed. H 2 : Independent Directors positively moderate the relationship between Intellectual Capital and the Sustainable Growth rate of Indian Pharmaceutical companies. The association between leverage and a firm's sustainable development Rate has been extensively studied, revealing both beneficial and detrimental effects. Leverage, as indicated by the debt-to-equity ratio (D/E), is essential in a firm's financial decision-making, impacting both growth potential and risk exposure. Numerous studies indicate that moderate debt levels can improve firm performance by offering financial resources for investment and expansion, which ultimately supports sustainable growth (Salim & Yadav, 2012 ; Alvian and Munandar, 2022 ; Sukma et al., 2022 ). The Trade-Off Theory reinforces this idea, showing that companies weigh the tax advantages of debt against the costs of financial distress, implying that optimal levels of leverage can enhance financial performance (Myers, 1984 ). Furthermore, companies that maintain effective capital structures tend to see enhanced market valuation as a result of heightened investor trust in their financial strategies (Nazir et al., 2021 ). Nonetheless, high levels of leverage may result in financial difficulties and diminished profitability, constraining a company's capacity to maintain long-term growth (Yazdanfar and Öhman, 2015 ). Research shows that elevated debt levels frequently lead to a decrease in company performance, attributed to greater interest obligations, diminished operational flexibility, and an increased risk of bankruptcy. Research examining various market environments, including Sweden and Pakistan, demonstrates that excessive dependence on debt adversely impacts shareholder value and the sustainability of firms (Nazir et al., 2021 ). The findings indicate that although leverage can facilitate firm expansion, its effect on sustainable growth depends on proficient financial management. Companies need to refine their capital structure to harmonize the benefits of debt financing with the potential risks of financial instability, making certain that leverage enhances long-term value creation instead of acting as a limitation. Based on the literature review done the following hypothesis is being proposed. H 3 : Leverage positively influences the Sustainable Growth rate of Indian Pharmaceutical companies. 2.4 Research Model Figure 1 presents the proposed research model that showcases the interaction among Intellectual Capital (IC), Independent Directors, Leverage, and Sustainable Growth Rate (SGR). Intellectual Capital (H1) is proposed to have a favourable impact on sustainable growth, suggesting that the effective use of intangible resources boosts long-term growth potential. Independent Directors act as a moderating variable (H2), anticipated to enhance the association among Intellectual Capital and sustainable growth by bolstering governance mechanisms and strategic oversight. Furthermore, Leverage, serving as a control variable (H3), is proposed to positively impact the sustainable growth rate. This reflects the belief that the judicious use of debt financing can enable strategic investments, thereby potentially enhancing sustainable growth for pharmaceutical companies in India. 3 Research Methodology 3.1 Research Design This study employs a descriptive research design. The study population consists of companies that are listed on the National Stock Exchange (NSE). The sample specifically comprises pharmaceutical companies that are part of the NSE NIFTY Pharma index. This study utilized panel data spanning a decade, from FY 2015 to FY 2024. The main source of data is the Prowess database from the Centre for Monitoring Indian Economy (CMIE), offering comprehensive financial information on Indian listed companies, including in-depth reports, financial metrics, and company-specific details. Statistical software packages were utilized for data analysis and econometric modelling, with Excel employed for initial data organization and STATA 18 used for advanced analyses, which includes the Two-step System GMM method. 3.2 Sample Selection The cohort for this investigation encompasses all enterprises that are publicly traded on the National Stock Exchange (NSE). The study meticulously concentrates on the pharmaceutical sector in India, encompassing all companies that are part of the NSE NIFTY Pharma index. During the designated study period, spanning from the fiscal year 2015 to the fiscal year 2024, a comprehensive total of 20 pharmaceutical companies were catalogued within this index. All companies were incorporated into the analysis, with no exclusions stemming from issues of data completeness. As a result, the ultimate sample comprises 20 companies, yielding a total of 200 firm-year observations (20 companies multiplied by 10 years). While the sample size may seem confined, it comprehensively includes the entirety of the NSE NIFTY Pharma index, which embodies India's foremost, most impactful, and economically vital pharmaceutical companies. Consequently, the selected sample offers extensive representation and faithfully captures the nuances of industry dynamics, thereby guaranteeing substantial and significant empirical insights pertinent to the pharmaceutical sector in India. Table 1 below illustrates the sample selection process in a tabular format. Table 1 Sample Selection Process The sample selection criteria Numbers Agribusiness companies listed in the NIFTY Pharma index during the years 2015 to 2024. 20 Excluded companies: Companies with incomplete data 0 Final Sample Firm-year observations 20 200* Note: 20 companies × 10 years = 200* firm-year observations. Source: Author’s Compilation 3.3 Statistical Techniques This study rigorously applies a range of econometric techniques to analyze the interplay between intellectual capital, independent board members, leverage, and the sustainable growth rate of Indian pharmaceutical firms listed in the NSE NIFTY Pharma index. To begin with, we perform stationarity tests employing the Fisher-type Augmented Dickey-Fuller (ADF) test, thereby confirming that the panel data variables are free from unit-root complications. Thereafter, the research utilizes descriptive statistical analysis to investigate the essential distributional properties of the chosen variables. This phase is enhanced by Pearson’s correlation analysis, which uncovers initial associations and highlights potential issues related to multicollinearity. The process of selecting the suitable dynamic panel regression technique entails a series of methodical steps: Initially, a Pooled Ordinary Least Squares (POLS) regression is conducted, yielding a preliminary (upper-bound) estimate of the coefficient for the lagged dependent variable. Subsequently, a Fixed Effects (FE) model is employed, yielding a generally lower (lower-bound) estimate of the coefficient for the lagged dependent variable in comparison to POLS, as it accounts for unobserved firm-specific characteristics. The Difference Generalized Method of Moments (Difference-GMM) methodology is subsequently employed. Should the coefficient of the lagged dependent variable derived from Difference-GMM exceed that of the Fixed Effects estimate, it is deemed that the Difference-GMM model is suitable. On the other hand, should the coefficient of the lagged dependent variable in the Difference-GMM be less than that of the Fixed Effects estimate, the two-step System Generalized Method of Moments (System-GMM) model is considered more appropriate and is therefore utilized for the primary analysis in the study. Following estimation, diagnostic tests are conducted to confirm the strength and suitability of the chosen econometric approach. The Breusch-Pagan/Cook-Weisberg test is employed to identify the existence of heteroscedasticity. Finally, the Variance Inflation Factor (VIF) test is performed to detect any potential multicollinearity concerns, thereby ensuring that independent variables do not exhibit excessive correlation. 3.4 Variables 3.4.1 Dependent Variable Sustainable Growth rate (SGR) This research employs Higgins' (1981) model to compute the Sustainable Growth Rate (SGR), a framework that is extensively recognized for evaluating the long-term growth potential of companies. The Higgins model articulates sustainable growth as the maximum growth rate attainable without modifying a firm's financial leverage or dividend distribution strategy. SGR = Profit Margin * Retention Ratio * Equity Multiplier * Asset Turnover ratio 2 The profit margin serves as an indicator of the firm's profitability, while the asset turnover ratio reflects the efficiency of asset utilization. The retention rate assesses the reinvestment of earnings, and the equity multiplier illustrates the concept of financial leverage (Higgins, 1981 ; Van Horne & Wachowicz, 2008). 3.4.2 Independent Variable The measurement of Intellectual Capital (IC) in this study employs the Extended Value-Added Intellectual Coefficient (EVAIC) model, which is a more comprehensive iteration derived from Pulic’s original Value-Added Intellectual Coefficient (VAIC™). Pulic’s VAIC model, developed in 2000 and refined in 2004, fundamentally encompasses the dimensions of Human Capital Efficiency, Structural Capital Efficiency, and Capital Employed Efficiency. The EVAIC model, in contrast, enhances the foundational VAIC model by integrating two further essential dimensions pertinent to modern knowledge-intensive industries—Relational Capital Efficiency (RCE) and Innovation Capital Efficiency (RDE). The comprehensive computation of IC utilizing the EVAIC framework is delineated as follows: Value Added (VA) = Output – Input 3 Human Capital Efficiency (HCE) = VA / Human Capital 4 Structural Capital Efficiency (SCE) = Structural Capital (SC) / VA 5 where SC = VA – Human Capital Capital Employed Efficiency (CEE) = VA / Capital Employed 6 Relational Capital Efficiency (RCE) = Relational Capital / VA 7 Total Intellectual Capital (IC) = HCE + SCE + CEE + RCE + RDE 9 The EVAIC model offers a comprehensive assessment, addressing the shortcomings of Pulic’s original VAIC model, which mainly emphasizes human, structural, and capital-employed efficiencies, by explicitly integrating relational and innovation elements (Pulic, 2000 ; Chen, Cheng & Hwang, 2005; Sardo et al., 2018). 3.4.3 Moderating Variable- Independent Directors The measurement of Independent Directors (IDIC) is determined by the proportion of independent directors on the company's board. Independent directors are essential to corporate governance, as they offer impartial oversight, mitigate agency costs, enhance managerial accountability, and ensure that strategic decisions are in harmony with stakeholder interests. The role and efficacy of independent directors are broadly recognized as essential for improving corporate transparency, bolstering investor confidence, and fostering sustainable growth, especially in heavily regulated industries like pharmaceuticals (Jensen & Meckling, 2019 ; Dalton et al., 1998 ; Jackling & Johl, 2009 ). The role of independent directors is crucial for a company’s success and long term sustainability (Naciti, 2019 ; Liu et al., 2023 ). 3.4.4 Control Variable Finally, the control variable, Leverage, is articulated via the Debt-Equity Ratio (DER), which serves to quantify the financial leverage of firms. The Debt-Equity Ratio serves as a measure of a company's financial architecture, illustrating its dependence on debt financing and the corresponding risk it entails (Titman & Wessels, 1988 ; Myers & Majluf, 1984 ). 3.5 Regression Model $$\:{\varvec{S}\varvec{G}\varvec{R}}_{\varvec{i}\varvec{t}}=\:{\varvec{\alpha\:}}_{0}+\:\varvec{\delta\:}{\varvec{S}\varvec{G}\varvec{R}}_{\varvec{i}\varvec{t}-1}+{\varvec{\beta\:}}_{1}{\varvec{I}\varvec{C}}_{\varvec{i}\varvec{t}}+{\varvec{\beta\:}}_{2}{\varvec{I}\varvec{D}\varvec{I}\varvec{C}}_{\varvec{i}\varvec{t}}+{\varvec{\beta\:}}_{3}{\varvec{D}\varvec{E}\varvec{R}}_{\varvec{i}\varvec{t}}+{\varvec{\epsilon\:}}_{\varvec{i}\varvec{t}}\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:\:1$$ The regression Eq. 1 provided demonstrates the econometric model used to analyze the factors influencing the Sustainable Growth Rate (SGR) within NSE NIFTY Pharma companies. In this model, 𝑆𝐺𝑅 𝑖𝑡, SGR denotes the sustainable growth rate of firm 𝑖 i at time 𝑡 t, while the lagged dependent variable (𝑆𝐺𝑅 𝑖𝑡 − 1​) reflects growth persistence, indicating that prior growth rates affect the current sustainable growth. Intellectual Capital (IC it ) signifies the influence of intangible assets. Independent Directors (IDIC) signify the governance quality and oversight effectiveness of the firm, while Leverage (DER), assessed through the debt-equity ratio, is included as a control variable to consider the impact of firms' capital structure on growth. The coefficients (𝛿, β₁, β₂, and β₃) measure the size and direction of these effects, while the error term (𝜀 i ₜ) accounts for unobserved factors. This model explicitly assesses how previous performance, investments in intellectual capital, governance frameworks, and financial leverage together influence the long-term sustainable growth of pharmaceutical firms in India. 3.6 Model Specification Test Given the ever-evolving characteristics of sustainable growth rate and intellectual capital, along with the potential complications stemming from the lagged dependent variable, unobserved firm-specific heterogeneity, and reverse causality, the use of conventional estimation methods like Ordinary Least Squares or Fixed Effects is deemed unsuitable (Arellano & Bond, 1991 ; Blundell & Bond, 1998 ; Roodman, 2009 ). The conventional approaches are inadequate in yielding reliable and impartial estimates when confronted with dynamic effects and endogeneity (Baltagi, 2008 ; Wooldridge, 2010 ). To tackle these methodological issues, the current study employs the dynamic panel Generalized Method of Moments (GMM) estimation technique, particularly the two-step System GMM method introduced by Blundell and Bond ( 1998 ). The two-step System GMM is especially adept at addressing situations in which the dependent variable is affected by its own lagged values, as well as when independent variables may exhibit endogeneity or lack strict exogeneity (Roodman, 2009 ; Baltagi, 2008 ). Furthermore, System GMM yields reliable estimates by adeptly integrating the moment conditions derived from both the levels and differences of the regression equation, thus markedly improving estimation efficiency in comparison to Difference GMM (Arellano & Bond, 1991 ; Blundell & Bond, 1998 ). To ascertain the reliability and robustness of the System GMM estimation outcomes, a series of diagnostic tests are conducted. Initially, the Arellano-Bond tests for first-order AR(1) and second-order AR(2) autocorrelation are performed to ascertain the legitimacy of the instruments employed. The anticipated presence of AR(1) autocorrelation arises from first-differencing, while the lack of AR(2) autocorrelation suggests that the instruments have been accurately specified and are valid (Arellano & Bond, 1991 ; Baltagi, 2008 ). Secondly, the Sargan test, also known as the Hansen J test, is utilized to assess the comprehensive validity and suitability of the instrumental variables. A test result that lacks statistical significance for the Sargan or Hansen J test indicates that the instruments do not exhibit correlation with the error terms, thereby bolstering the robustness and consistency of the model's findings (Sargan, 1958 ; Hansen, 1982 ; Roodman, 2009 ). Moreover, the two-step System GMM method explicitly addresses issues of heteroscedasticity and autocorrelation by employing robust standard errors, thereby guaranteeing precise statistical inferences even in the presence of variance heterogeneity across panel data observations (Wooldridge, 2010 ; Roodman, 2009 ). As a result, this approach yields dependable, impartial, and effective parameter estimates, significantly enhancing the empirical credibility of the relationships examined between intellectual capital, independent directors, leverage, and sustainable growth rate among companies listed in the NSE NIFTY Pharma index in India. 4 Findings 4.1 Descriptive Statistics Table 2 Descriptive Statistics Variable Obs Mean Std.dev Min Max lnSGR 200 -2.427 0.897 -6.868 -1.061 lnIC 200 -5.117 1.480 -10.997 -2.628 lnIDIC 200 3.731 2.199 0.640 12.918 lnDER 200 -2.898 2.252 -11.492 0.252 Source: Author’s Compilation The descriptive statistics presented in Table 2 provide an overview of the distributional characteristics of the key variables utilized in this study, which investigates the influence of Intellectual Capital (IC) components on the Sustainable Growth Rate (SGR), with moderation by Independent Directors (IDIC) within NSE NIFTY Pharma index companies in India. The lagged dependent variable (lnSGR) has a mean of -2.427 (SD = 0.897), reflecting moderate variation in pharmaceutical firms' sustainable growth rates, ranging from − 6.868 to -1.061. This spread emphasizes the variability often observed in financial performance metrics (Gujarati & Porter, 2009 ). The independent variable, lagged Intellectual Capital (lnIC), which includes human, structural, capital employed, innovation, and relational capital, has a mean of -5.117 and a higher standard deviation of 1.480, indicating significant variation in the management of intangible resources among pharmaceutical companies (Edvinsson & Malone, 1997 ). The moderating variable (lnIDIC), which signifies Independent Directors, has a mean of 3.731 and a standard deviation of 2.199, indicating significant variations in corporate governance practices across firms, aligning with previous studies that highlight differences in board composition (Dalton et al., 1998 ). The control variable, leverage (lnDER), exhibits a mean of -2.898 and a standard deviation of 2.252, with values spanning a wide range from − 11.492 to 0.252. This variability corresponds with empirical finance research's usual diversity of financial leverage (Titman & Wessels, 1988 ). The variability observed in all variables is suitable and underpins a strong empirical analysis following established practices in financial research (Hair et al., 2010 ). 4.2 Stationarity Test Table 3 Fisher-Type ADF Test Variable P-value (Inversed chi-squared) P-value (Inverse normal) P-value (Inverse logit) P-value (Modified inv. chi-squared) Stationarity lnSGR 0.0001*** 0.0404** 0.0037*** 0.0000*** Stationary lnIC 0.0000*** 0.0058*** 0.0000*** 0.0000*** Stationary d_lnIDIC 0.0000*** 0.0009** 0.0000*** 0.0000*** Stationary lnDER 0.0000*** 0.0333*** 0.0000*** 0.0000*** Stationary The findings from the Fisher-type Augmented Dickey-Fuller (ADF) tests (Table 3 ) evaluate the stationarity characteristics of the variables utilized in this study. Stationarity is essential, as non-stationary variables may result in unreliable regression estimates and misleading relationships (Gujarati & Porter, 2009 ; Maddala & Kim, 1998 ). The Fisher-type tests, including Inverse Chi-squared, Inverse Normal, Inverse Logit, and Modified Inverse Chi-squared, consistently demonstrate that all variables—specifically the lagged sustainable growth rate (lnSGR), lagged intellectual capital (lnIC), the differenced moderating variable (d_lnIDIC), and leverage (lnDER)—exhibit stationarity at the 1% significance level (p-values < 0.01). Notably, slight deviations at the 5% level are observed for lnSGR when applying the inverse normal method (p = 0.0404). This indicates that these variables maintain stable means and variances throughout the observed period, fulfilling the essential criteria for effective and reliable econometric modelling (Wooldridge, 2013 ; MacKinnon, 1996 ). Consequently, the current research meets the econometric criteria for stationarity, which guarantees the dependability of the following regression analyses that investigate the influence of intellectual capital elements on sustainable growth, with independent directors acting as moderators in India's pharmaceutical industry. 4.3 Correlation Analysis Table 4 Pearson’s Correlation Test lnSGR lnIC lnIDIC lnDER lnSGR 1.0000 lnIC 0.0650 (0.3808) 1.0000 lnIDIC 0.1462 (0.0477) -0.7279 (0.0000) 1.0000 lnDER -0.2047 (0.0052) 0.2464 (0.0008) -0.1593 (0.0322) 1.0000 Source: Author’s Compilation Note: *p < 0.05 The correlation matrix shown in Table 4 illustrates Pearson's correlation coefficients between the variables analyzed in this study. The lagged sustainable growth rate (lnSGR) shows a positive and statistically significant relationship with the moderating variable for independent directors (lnIDIC, r = 0.1462, p = 0.0477). The findings indicate that companies characterized by a higher level of board independence are likely to attain elevated sustainable growth rates. This observation aligns with existing corporate governance literature, which posits that independent directors contribute positively to firm performance (Dalton et al., 1998 ; Bhagat & Black, 2001 ). It is noteworthy that the primary independent variable, intellectual capital (lnIC), does not exhibit a significant correlation with the sustainable growth rate (r = 0.0650, p = 0.3808). This suggests that intellectual capital by itself may not have a direct relationship with sustainable growth. However, it could potentially influence sustainable growth through moderating or mediating effects. This observation is consistent with the findings of Edvinsson and Malone ( 1997 ) and Sveiby ( 1997 ), who highlight the indirect effects of components of intellectual capital. The observed negative and significant correlation between intellectual capital (lnIC) and independent directors (lnIDIC, r = -0.7279, p = 0.0000) indicates an inverse relationship between the levels of intellectual capital and the independence of the board. This may imply that firms with diminished intellectual capital could depend more on governance structures to improve performance, thereby reinforcing the role of governance mechanisms as compensatory controls (Agrawal & Chadha, 2005 ). The leverage ratio (lnDER) shows a statistically significant negative correlation with sustainable growth (lnSGR, r = -0.2047, p = 0.0052). This finding aligns with existing literature that suggests elevated financial leverage may adversely impact growth potential due to heightened financial risk and constraints (Titman & Wessels, 1988 ; Myers & Majluf, 1984 ). Furthermore, leverage shows a positive correlation with intellectual capital (lnIC, r = 0.2464, p = 0.0008), suggesting that firms possessing greater intellectual capital tend to employ higher leverage. This observation aligns with capital structure theory, which posits that firms with intangible assets may approach debt financing in a distinct manner (Frank & Goyal, 2009 ). The observed moderate correlations in the analysis suggest that there are no significant multicollinearity issues (correlation values < 0.8), thereby meeting the methodological assumptions necessary for regression analyses (Gujarati & Porter, 2009 ). 4.4 Heteroscedasticity test Table 5 Breusch-Pagan / Cook-Weisberg test for heteroscedasticity Variable chi2 Prob.> chi2 lnSGR 13.39 0.0003 Source: Author’s Compilation The results of the Breusch-Pagan/Cook-Weisberg test presented in Table 5 reveal significant heteroscedasticity (χ² = 13.39, p-value = 0.0003) within the regression model employed in this study. This indicates that the assumption of constant variance of residuals has been breached, which is a prevalent issue in panel data analyses (Wooldridge, 2010 ; Gujarati & Porter, 2009 ). In this study, the two-step System Generalized Method of Moments (System-GMM) estimation technique is utilized, which is tailored to address challenges like heteroscedasticity, autocorrelation, and possible endogeneity in panel data models (Arellano & Bover, 1995 ; Blundell & Bond, 1998 ). Consequently, the heteroscedasticity detected in this initial analysis is effectively managed by the selected estimation method, which guarantees robust and dependable regression estimates along with valid statistical inferences (Roodman, 2009 ). 4.5 Collinearity Test Table 6 Multicollinearity Test Variable VIF 1/VIF lnIC 2.25 0.445 lnIDIC 2.13 0.469 lnDER 1.09 0.919 Mean VIF 1.82 Source: Author’s Compilation The results of the Variance Inflation Factor (VIF) test, as shown in Table 6 , evaluate the potential presence of multicollinearity among the independent variables used in this study. Multicollinearity occurs when predictor variables exhibit high correlation, which can lead to increased standard errors and inaccurate regression estimates (Gujarati & Porter, 2009 ; Hair et al., 2010 ). The VIF values recorded are 2.25 for intellectual capital (lnIC), 2.13 for independent directors (lnIDIC), and 1.09 for leverage (lnDER). These values are well below the commonly accepted threshold of 10, and the mean VIF of 1.82 further supports the conclusion that severe multicollinearity is absent (Gujarati & Porter, 2009 ; Wooldridge, 2013 ). Consequently, the findings suggest that multicollinearity does not pose a problem in this study, thereby ensuring reliable and robust parameter estimation in the forthcoming econometric analysis. 4.6 Difference or System GMM method Table 7 Choosing the Appropriate Regression Method (Difference/System) GMM Pooled OLS Fixed Effects Model Difference GMM 0.839 0.798 0.653 Source: Author’s Compilation Table 7 displays the coefficient estimates of the lagged dependent variable (lnSGR) derived from three distinct econometric methods—Pooled OLS (0.839), Fixed Effects model (0.798), and Difference GMM (0.653)—to assist in choosing a suitable regression methodology for the current study. In the realm of econometric research (Arellano & Bond, 1991 ; Blundell & Bond, 1998 ), it is suggested that the optimal estimate for dynamic panel models should fall between the Pooled OLS estimate, which often exhibits an upward bias due to the oversight of unobserved firm-specific effects, and the Fixed Effects estimate, which tends to show a downward bias as a result of its correlation with lagged dependent variables. The Difference GMM estimate of 0.653 is notably lower than both the Pooled OLS and Fixed Effects estimates, suggesting a downward bias or possible concerns regarding weak instrumentation. As a result, these findings support the use of the two-step System GMM method in this study, as it effectively integrates level and differenced equations to mitigate biases present in alternative approaches, yielding more robust and accurate estimations (Blundell & Bond, 1998 ; Roodman, 2009 ). 4.7 Dynamic Panel Regression Results Table 8 Panel Regression Results of the Two-Step System GMM Method lnSGR Coefficient Std.err. z P>|z| [95% conf.interval] lnSGR L1. 0.107 0.087 0.24 0.0430** -0.263 0.207 lnIC 0.207 0.056 3.65 0.0000*** 0.096 0.318 lnIDIC 0.319 0.057 5.59 0.0000*** 0.207 0.431 lnDER -0.127 0.025 -5.02 0.0000*** -0.177 -0.077 _cons -2.110 0.340 -6.19 0.0000*** -2.777 -1.442 Source: Author’s Compilation The findings shown in Table 8 demonstrate the two-step System GMM regression that investigates the influence of Intellectual Capital (IC), Independent Directors (IDIC), and leverage (DER) on the Sustainable Growth Rate (SGR) of companies within the NSE NIFTY Pharma index in India. The lagged sustainable growth rate (lnSGR L1) has a positive effect on the current sustainable growth rate, exhibiting a coefficient of 0.107, which is significant at the 5% level (p = 0.043). This finding affirms the presence of persistence or path dependency in sustainable growth, indicating that previous performance plays a role in shaping current sustainability prospects. This persistence is consistent with dynamic panel literature indicating that firm growth shows temporal continuity (Arellano & Bond, 1991 ; Blundell & Bond, 1998 ). Intellectual capital (lnIC) has a significant and positive effect on sustainable growth (coefficient = 0.207, p = 0.000). This suggests that pharmaceutical firms that invest more heavily in various components of intellectual capital—such as human, structural, relational, innovation capital, and capital employed—tend to achieve greater sustainable growth. This finding aligns with previous research highlighting that intellectual capital plays a crucial role in enhancing long-term financial performance and sustainability (Balaji and Mamilla, 2024 ; Balaji and Mamilla, 2023 ; Ionita and Dinu, 2021 ; Xu et al., 2021 ; Xu et al., 2020 ; Xu and Wang, 2018 ; Chen et al., 2005; Edvinsson & Malone, 1997 ; Sveiby, 1997 ). Independent directors (lnIDIC) demonstrate a significant positive impact (coefficient = 0.319, p = 0.000) on sustainable growth, affirming their moderating role in improving corporate governance effectiveness and firm performance. This aligns with earlier studies suggesting that greater board independence enhances firm outcomes by fostering better governance quality, diminishing agency conflicts, and elevating managerial accountability (Dalton et al., 1998 ; Bhagat & Black, 2001 ; Jackling & Johl, 2009 ). The leverage variable (lnDER) has a significant negative impact on sustainable growth (coefficient = -0.127, p = 0.000), indicating that firms with greater financial leverage face limitations that reduce their sustainable growth prospects. This finding closely aligns with the arguments presented by Ali et al., 2022 , Das et al. 2022 , Danso et al., 2021 , Titman and Wessels ( 1988 ), Myers and Majluf ( 1984 ), and Frank and Goyal ( 2009 ), who consistently identified a negative relationship between leverage and firm growth, attributing it to the financial risks and resource constraints linked to elevated debt levels. 4.8 Diagnostic Tests/Model fit results Table 9 Diagnostic Tests AR(1) AR(2) Sargan test Research Model 0.024 0.086 0.426 Source: Author’s Compilation The diagnostic test results in Table 9 offer significant evidence concerning the adequacy and validity of the Two-Step System GMM model utilized in this study. The Arellano–Bond test for first-order serial correlation, AR(1), indicates a significant p-value of 0.024 (< 0.05), thereby confirming the anticipated first-order autocorrelation commonly found in the residuals of differenced equations within dynamic panel models (Arellano & Bond, 1991 ). The second-order autocorrelation test, AR(2), shows a non-significant p-value (0.086 > 0.05), suggesting no issues with second-order autocorrelation, thereby confirming the appropriateness of the instrument selection and model specification (Roodman, 2009 ). The Sargan test result (p-value = 0.426 > 0.05) indicates that the instruments employed in the model are valid and not over-identified. A non-significant Sargan statistic is crucial for validating the suitability of instruments used in dynamic panel GMM estimation (Sargan, 1958 ; Roodman, 2009 ). The diagnostic test outcomes collectively affirm the appropriateness, robustness, and validity of the two-step System GMM model utilized in this analysis, thereby ensuring credible and reliable inferences about the relationship between intellectual capital, independent directors, leverage, and sustainable growth rates. Table 10 Hypotheses Testing results Hypothesis Result Evidence H 1 :Intellectual Capital positively impacts the Sustainable Growth rate of Indian Pharma companies. Supported Coefficient = 0.207, p = 0.000 Independent directors positively moderate the relationship between Intellectual Capital and the Sustainable Growth rate of Indian Pharma companies. Supported Coefficient = 0.319, p = 0.000 H 3 :Leverage (control variable) positively impacts the Sustainable Growth rate of Indian Pharma companies. Not Supported Coefficient = -0.127, p = 0.000 Source: Author’s Compilation 5 Discussion The empirical findings from the two-step System GMM analysis offer significant insights into the factors influencing the Sustainable Growth Rate (SGR) of pharmaceutical firms listed on India's NSE NIFTY Pharma index. The substantial positive influence of Intellectual Capital (IC) suggests that Indian pharmaceutical firms that utilize intangible assets, skilled personnel, strong R&D capabilities, and effective stakeholder relationships are more likely to achieve sustainable growth. In the competitive pharmaceutical sector, investments in intellectual capital enable companies to establish distinct market positions by developing innovative product pipelines, enhancing drug efficacy, expediting regulatory approvals, and strengthening market relationships. The positive correlation is consistent with existing literature that highlights intellectual capital as a key factor influencing sustainable financial and market performance, especially in knowledge-intensive sectors like pharmaceuticals (Chen et al., 2005; Sveiby, 1997 ; Edvinsson & Malone, 1997 ). For Indian pharmaceutical companies, intellectual capital serves as a strategic asset essential for maintaining competitive advantage and facilitating long-term growth. The analysis reveals a significant positive moderating effect of independent directors on sustainable growth, highlighting the crucial role of effective corporate governance practices in the Indian pharmaceutical industry. Pharmaceutical companies that have a greater percentage of independent directors tend to exhibit improved corporate governance quality, which supports strategic oversight, transparent decision-making processes, and effective management monitoring. This finding aligns with corporate governance theories that highlight the positive impact of independent directors on firm performance through the reduction of managerial entrenchment, enhancement of decision-making, and promotion of transparency (Dalton et al., 1998 ; Bhagat & Black, 2001 ; Jackling & Johl, 2009 ). The presence of independent directors enhances the positive effects of intellectual capital investments by promoting governance practices that align corporate activities with sustainable growth objectives. The analysis indicates a notable adverse effect of leverage on sustainable growth. This suggests that Indian pharmaceutical companies exhibiting elevated financial leverage (debt-to-equity ratio) encounter reduced sustainable growth. High leverage in this context indicates a heightened risk of financial distress, diminished financial flexibility, and constraints on investment in essential sectors such as research and development and the advancement of intellectual capital (Myers & Majluf, 1984 ; Titman & Wessels, 1988 ; Frank & Goyal, 2009 ). The significant investment and ongoing innovation demand in the pharmaceutical sector suggest that high leverage could restrict companies' strategic flexibility and reduce their potential for sustainable growth. Therefore, pharmaceutical companies need to maintain moderate leverage levels to ensure adequate liquidity and sustainable long-term performance. This study highlights the essential function of intellectual capital and robust corporate governance via independent directors in fostering sustainable growth in India's pharmaceutical sector. Prudent management of financial leverage is essential for preventing potential limitations on growth. The findings offer strategic direction for pharmaceutical companies, policymakers, and corporate governance authorities seeking to enhance sustainable industry performance. 6 Implications and Scope for Further Research 6.1 Theoretical Implications The results of this study have important theoretical implications, particularly in relation to the Resource-Based View (RBV) and Agency Theory frameworks. This study enhances the applicability of the Resource-Based View (RBV) by presenting empirical evidence from India's pharmaceutical industry. It demonstrates that intellectual capital, is a vital intangible asset that drives sustainable growth. This study emphasizes the beneficial role of intellectual capital in enhancing sustainable growth rates, thereby broadening the Resource-Based View's relevance, especially in knowledge-intensive industries like pharmaceuticals, where competitive advantage is intricately linked to innovation and the use of intangible resources. Furthermore, the important moderating function of independent directors highlights the significance and explanatory capacity of Agency Theory in analyzing sustainable firm performance. The research demonstrates that independent board structures serve as essential governance mechanisms that mitigate managerial agency conflicts, improve accountability, and align strategies with shareholder interests, thereby positively impacting long-term sustainability and growth. This study enhances the agency-theoretic literature by empirically demonstrating that governance structures, particularly board independence, significantly improve the relationship between intellectual capital and sustainable firm performance in emerging markets. Finally, the identified adverse effect of leverage on sustainable growth enhances theoretical understanding of capital structure theories, particularly the pecking-order and trade-off theories. The study empirically demonstrates that excessive leverage adversely impacts sustainable growth, reinforcing theoretical arguments that high debt levels limit strategic flexibility and investments in innovation, both of which are essential for sustained performance and growth. This empirical validation in the Indian pharmaceutical sector provides important insights into financial theories regarding the risks and limitations associated with increased leverage in growth-oriented, innovation-driven industries. This study integrates Resource-Based View and Agency Theory perspectives while considering capital structure, thereby enhancing theoretical understanding and offering a nuanced explanation of the determinants affecting sustainable growth in dynamic industry contexts. 6.2 Practical Implications The findings concerning the components of Intellectual Capital (IC) particularly highlight practical insights for pharmaceutical companies listed in the NSE NIFTY Pharma index. Intellectual Capital plays a crucial role in fostering sustainable growth. Therefore, companies in this innovation-driven sector ought to strategically allocate resources towards Human Capital and also specialized training programs for scientists and researchers, enhance internal knowledge management systems, and systematically improve their R&D infrastructure. Additionally, pharmaceutical companies ought to focus on establishing robust external networks and collaborations with academic institutions, research laboratories, and healthcare organizations to effectively utilize relational capital. By investing in these specific intangible assets, pharmaceutical firms in India can enhance innovation, create competitive pharmaceutical products, effectively commercialize new formulations, and bolster their market position, ultimately transforming these intellectual capabilities into lasting competitive advantage and growth. Furthermore, the notable positive moderating influence of independent directors highlights the necessity for pharmaceutical companies to enhance board independence. Companies can improve the effectiveness and transparency of corporate governance by bringing on board qualified independent directors. These directors provide objective oversight, mitigate agency conflicts, and encourage strategic decision-making that aligns with long-term sustainability objectives. This method enhances corporate governance while also conveying increased credibility to investors, which may lead to improved market valuation and greater investor confidence. The observed negative impact of leverage on sustainable growth underscores the significance of careful management of capital structure. Companies need to closely observe and manage their leverage levels, understanding that an overdependence on debt financing can restrict financial flexibility and impede sustainable growth potential because of increased financial distress risk. Pharmaceutical firms should strategically manage leverage, balancing debt utilization with adequate internal funding to ensure long-term growth and stability. 6.3 Societal Implications This study's findings provide significant insights for both corporate stakeholders and society as a whole. Intellectual capital plays a crucial role in fostering sustainable growth within pharmaceutical companies. Therefore, firms listed in the NSE NIFTY Pharma Index have the potential to make a meaningful impact on societal well-being by strategically investing in their intellectual assets. Human capital development, achieved through ongoing employee training and knowledge enhancement, fosters greater innovation capacities, allowing firms to deliver affordable, accessible, and high-quality healthcare solutions for society. Investing in structural capital can lead to the establishment of effective systems and processes, enhancing efficiencies and lowering costs, which ultimately benefits consumers by making medicine more affordable. Increased investment in relational capital fosters stronger collaborations with hospitals, universities, research institutions, regulatory agencies, and communities, enabling partnerships that promote quicker and more effective responses to public health challenges. Investing in innovation and research and development can lead to the prompt launch of new pharmaceutical products, meeting unmet medical needs and enhancing public health standards. As a result, nurturing the elements of intellectual capital can empower Indian pharmaceutical companies to more effectively tackle public health challenges, improve social welfare, and support the United Nations Sustainable Development Goal of good health and well-being (SDG-3). 6.4 Policy Maker’s Implications As Indian pharmaceutical companies listed on the NSE NIFTY Pharma index have begun to disclose components of Intellectual Capital in their integrated reports, it may be beneficial for policymakers and regulatory bodies, including the Securities and Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), and other financial regulators, to explore the creation of standardized frameworks and guidelines for the assessment and disclosure of Intellectual Capital (IC) in corporate reporting. While integrated reporting is becoming more common, establishing standards for measuring and reporting on components of intellectual capital—like human capital efficiency, structural capital efficiency, relational capital, and innovation capacity—could improve transparency, comparability, and boost investor confidence. Additionally, regulators and policymakers might implement guidelines or incentives that motivate firms to enhance governance standards, particularly in relation to board independence. The study’s findings indicate that independent directors play a crucial role in enhancing the connection between intellectual capital and sustainable firm growth. Therefore, implementing policy interventions that encourage higher standards of independence and effective governance practices could prove advantageous. Policymakers, including the Securities and Exchange Board of India (SEBI), might reevaluate current governance codes to clearly outline ideal board composition, with a particular focus on independence criteria suited to the innovation-driven pharmaceutical sector. Furthermore, in light of the negative impacts of high leverage on sustainable growth emphasized by this study, financial regulators and policymakers could contemplate the creation of careful leverage guidelines tailored to the pharmaceutical sector, ensuring a balance in debt levels to uphold financial stability while fostering long-term investments in innovation. These measures may assist pharmaceutical companies in sustaining robust financial frameworks, allowing for ongoing investment in essential research, development, and innovation efforts that support long-term industry viability and competitive edge. 7 Conclusion This study empirically examines the influence of Intellectual Capital on the Sustainable Growth Rate of pharmaceutical firms listed on the NSE NIFTY Pharma index in India, integrating Independent Directors as a moderating factor and Leverage (Debt-Equity Ratio) as a control variable. The study employed a descriptive research design utilizing panel data from FY 2015 to FY 2024, implementing the Two-Step System GMM method for a thorough econometric analysis. The findings make a substantial contribution to the existing body of knowledge regarding corporate governance, financial sustainability, and the nuances of capital management, especially within the context of the Indian pharmaceutical sector. The findings support the Resource-Based View (RBV) by illustrating that Intellectual Capital acts as a strategic asset that greatly contributes to sustainable growth. The positive and significant coefficient for IC suggests that companies that invest in human expertise, structural effectiveness, and relational networks attain enhanced long-term performance. This is consistent with previous research indicating that intellectual capital is a crucial factor in achieving competitive advantage, especially in knowledge-driven sectors like pharmaceuticals. The empirical findings support the notion that investments in R&D, robust organizational processes, and strategic collaborations play a crucial role in fostering innovation, ensuring regulatory compliance, and facilitating market expansion, ultimately resulting in an increased SGR. The research further supports Agency Theory, emphasizing the crucial function of Independent Directors in enhancing corporate governance. The notable and affirmative coefficient for Independent Directors indicates that Independent Directors play a crucial role in moderating the relationship between Intellectual Capital and SGR, thereby enhancing risk management, compliance with ethical standards, and strategic oversight. This finding reinforces the corporate governance literature, highlighting that a structured board reduces agency conflicts, improves accountability for managers, and corresponds company conduct with sustainable growth goals. Pharmaceutical companies that have a greater percentage of independent directors demonstrate enhanced governance practices that promote effective resource use, greater transparency, and informed decision-making, all of which support long-term financial sustainability. The study, on the other hand, reveals that Leverage (Debt-Equity Ratio) has a negative impact on SGR. This is consistent with capital structure theories, especially Pecking Order Theory, which indicates that high levels of debt elevate financial risk, diminish investment flexibility, and restrict firms' capacity to seize growth opportunities. The significant leverage present in pharmaceutical companies, where ongoing investments in research and development are essential, can limit innovation, postpone regulatory approvals, and obstruct market growth, ultimately affecting long-term sustainability. The findings align with previous research indicating that effective capital structure management is crucial for maintaining growth and reducing financial distress risks in high-growth industries. The study highlights the strategic significance of investments in Intellectual Capital for pharmaceutical companies in India. Companies ought to focus on attracting top talent, streamlining processes, and forming strategic partnerships to strengthen their competitive edge. Furthermore, the study highlights the importance of robust corporate governance frameworks, promoting strong board independence and regulatory oversight to encourage ethical business practices and reduce managerial opportunism. The findings provide important insights for financial decision-makers, emphasizing the need to maintain a balanced debt structure to prevent liquidity constraints while fostering innovation-driven growth. In summary, this study offers both theoretical and empirical insights that underscore the significance of Intellectual Capital and corporate governance in fostering sustainable growth in the Indian pharmaceutical sector. Declarations Funding Declaration : ‘No funding was received to assist with the preparation of this manuscript.’ Clinical Trial Number: ‘Clinical trial number: not applicable’. Consent to Participate declaration: ‘Consent to Participate declaration: not applicable’. Consent to Publish: ‘Consent to Publish declaration: not applicable’. Data Availability Statements: ‘ The research is purely based on secondary data. The data will be made available on request’. Ethics Declaration : ‘The manuscript has not been submitted to any other journal for simultaneous consideration. The Research does not involve Human Participants or Animals’. Competing Interest Declaration: ‘ The authors declare that they have no competing interests.’ Authors Contribution: Conceptualization: [Manigandan R, Vaishnavi Balaji] Methodology: [Manigandan R, Vaishnavi Balaji, Supriya R, Shakti Priya A] Formal analysis and investigation: [Manigandan R, Vaishnavi Balaji] Data curation: [Manigandan R, Vaishnavi Balaji] Writing – original draft preparation: [Manigandan R, Vaishnavi Balaji] Writing – review and editing: [Supriya R, Shakti Priya A] Visualization: [Vaishnavi Balaji, Shakti Priya A] Resources: [Manigandan R, Vaishnavi Balaji, Supriya R] Supervision: [Supriya R, Shakti Priya A] References Agrawal A, Chadha S. 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IMARC Group projects the market would attain USD 174.31\u0026nbsp;billion by 2033, demonstrating a CAGR of 11.32% from 2025 to 2033 (IMARC Report, 2024)\u0026rdquo;. \u0026ldquo;The market stands as a prominent global provider of affordable medicines, propelled by strong generics production, a talented workforce, and efficient manufacturing processes. Furthermore, the rising domestic demand for healthcare, government backing for local API production, and progress in biotechnology establish the industry as a fundamental element of innovation and growth in healthcare solutions (IMARC Report, 2024\u0026rdquo;. Nonetheless, attaining sustainable growth in this sector continues to be difficult due to heightened regulatory scrutiny, market competition, and issues related to corporate governance (Khanna, \u003cspan citationid=\"CR42\" class=\"CitationRef\"\u003e2012\u003c/span\u003e; Petrova, \u003cspan citationid=\"CR61\" class=\"CitationRef\"\u003e2013\u003c/span\u003e; Bade et al., \u003cspan citationid=\"CR9\" class=\"CitationRef\"\u003e2024\u003c/span\u003e). Intellectual Capital (IC), which includes human capital, structural capital, capital employed, innovation relational capital, is acknowledged as a vital factor influencing long-term firm performance and innovation (Ghazal and Aziz, \u003cspan citationid=\"CR32\" class=\"CitationRef\"\u003e2025\u003c/span\u003e; Bontis, 1998; Edvinsson and Malone, \u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e1997\u003c/span\u003e). Effective corporate governance, especially the independence of the board through the inclusion of independent directors, is crucial for fostering transparency, accountability, and strategic oversight within organizations (Fogel et al., \u003cspan citationid=\"CR28\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). Previous studies indicate that companies with greater board independence demonstrate improved financial performance and risk management (Sobhan et al., \u003cspan citationid=\"CR71\" class=\"CitationRef\"\u003e2025\u003c/span\u003e; Farooq et al., \u003cspan citationid=\"CR26\" class=\"CitationRef\"\u003e2025\u003c/span\u003e; Dunn and Sainty, \u003cspan citationid=\"CR23\" class=\"CitationRef\"\u003e2009\u003c/span\u003e). Nonetheless, even with its potential, the moderating influence of independent directors on the association between IC and sustainable growth in Indian pharmaceutical firms has yet to be thoroughly examined. This study seeks to explore the impact of independent directors on the degree to which firms utilize intellectual capital for long-term sustainability, with a particular emphasis on companies within the NSE NIFTY Pharma Index.\u003c/p\u003e \u003cp\u003eSun Pharma, being the largest pharmaceutical company in India, has effectively utilized intellectual Capital components, Human Capital Efficiency (HCE) by making significant investments in research and development and acquiring top talent. The company allocated 6.7% of its global revenues to R\u0026amp;D in FY24, backed by a team of more than 3,000 scientists (Sun Pharmaceutical Industries Limited, Annual Report 2023\u0026ndash;2024). Dr. Reddy\u0026rsquo;s Laboratories has enhanced Structural Capital Efficiency (SCE) through the optimization of manufacturing processes and the adoption of advanced technologies. Initiatives encompass a significant digital transformation, targeting more than 70% workload migration to the cloud by FY25, alongside the implementation of process automation to improve manufacturing efficiency. This has led to a 43% decrease in manufacturing costs per 1,000 pills and a 56% rise in factory output from 2017 to 2021 (Dr. Reddy\u0026rsquo;s Laboratories).\u003c/p\u003e \u003cp\u003eThe Indian pharmaceutical industry functions within a dynamic and intensely competitive landscape, where Intellectual Capital (IC)\u0026mdash;including human capital, structural capital, and relational capital\u0026mdash;serves a crucial role in fostering sustainable growth. Investing in IC components like employee expertise, strong organizational processes, and strategic partnerships has demonstrated the ability to boost innovation and financial performance (Ali et al., \u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2022\u003c/span\u003e; Castro et al., \u003cspan citationid=\"CR17\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). Studies on Indian pharmaceutical companies highlighted a notable positive correlation between IC efficiency and financial stability, emphasizing the necessity of proficiently managing intangible assets (Festa et al., \u003cspan citationid=\"CR27\" class=\"CitationRef\"\u003e2021\u003c/span\u003e; Gupta et al., \u003cspan citationid=\"CR34\" class=\"CitationRef\"\u003e2023\u003c/span\u003e). Research in the Bangladeshi pharmaceutical sector has shown that the effective use of IC components enhances organizational performance, underscoring the widespread significance of IC in various markets (Chowdhury et al., \u003cspan citationid=\"CR18\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). Furthermore, Independent Directors play a crucial role in governance, improving transparency, accountability, and risk management within organizations (Masulis and Zhang, \u003cspan citationid=\"CR48\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). Their oversight guarantees that IC resources are in harmony with strategic objectives, thus promoting sustainable growth (Shah et al., \u003cspan citationid=\"CR70\" class=\"CitationRef\"\u003e2024\u003c/span\u003e). This study seeks to examine the effect of intellectual capital on the Sustainable Growth Rate of Indian pharmaceutical companies, emphasizing the moderating role of Independent Directors and the impact of leverage as a control variable.\u003c/p\u003e \u003cp\u003ePharmaceutical companies utilize Intellectual Capital (HCE, SCE, CEE, RDE, and RCE) to expedite drug research, clinical testing, and approval from regulators (Mehralian et al., \u003cspan citationid=\"CR51\" class=\"CitationRef\"\u003e2013\u003c/span\u003e; Mehralian et al., \u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e2024\u003c/span\u003e; Nazneen et al., \u003cspan citationid=\"CR58\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). Independent Directors enhance transparency, uphold ethical standards, and provide strategic oversight, guaranteeing the effective use of Intellectual Capital for sustainable long-term growth (Shah et al., \u003cspan citationid=\"CR70\" class=\"CitationRef\"\u003e2024\u003c/span\u003e; Tumwebaze et al., \u003cspan citationid=\"CR76\" class=\"CitationRef\"\u003e2021\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eWhile corporate governance mechanisms have been the subject of extensive study, the particular moderating effect of Independent Directors on the relationship among IC and SGR has not been thoroughly examined. Independent Directors offer impartial oversight and strategic direction, which may improve the effective use of IC. Nonetheless, there is a scarcity of empirical evidence regarding this moderating role in the Indian pharmaceutical industry. The current study has included leverage as a control variable, which is crucial for isolating the real impact of IC on SGR. The theoretical motivations of the present study are: Intellectual Capital acts as a vital resource that strengthens a firm's competitive edge by promoting innovation, improving operational efficiency, and driving financial growth. This research expands on the Resource-Based View by illustrating the impact of Intellectual Capital on the Sustainable Growth Rate of pharmaceutical companies in India. Independent Directors are essential in mitigating agency conflicts, enhancing governance structures, and ensuring the effective use of Intellectual Capital for sustainable growth. This study also incorporates agency theory to explore the role of corporate governance in moderating the IC-SGR relationship.\u003c/p\u003e \u003cp\u003eThe Research Questions of the present study are:\u003c/p\u003e\u003col\u003e\n \u003cli\u003eHow does Intellectual capital influence the Sustainable Growth rate (SGR) of Indian Pharmaceutical companies?\u003c/li\u003e\n \u003cli\u003eWhat is the moderating effect of the Independent Directors on the relationship between Intellectual Capital and SGR?\u003c/li\u003e\n \u003cli\u003eHow does Leverage influence SGR, acting as a control variable in the Intellectual Capital-SGR relationship?\u003c/li\u003e\n\u003c/ol\u003e"},{"header":"2 Literature Review","content":"\u003cdiv id=\"Sec5\" class=\"Section2\"\u003e \u003ch2\u003e2.1 Theoretical Framework\u003c/h2\u003e \u003cp\u003eA strong theoretical foundation is crucial for comprehending the relationships examined in this study. This research is based on two fundamental theories: the Resource-Based View (RBV) and Agency Theory. Theories offer a conceptual framework for understanding the role of Intellectual Capital (IC) in influencing Sustainable Growth Rate (SGR), along with the moderating effect of Independent Directors, while accounting for Leverage as a financial constraint. The combination of these theories enhances the research framework by merging insights from both strategic resource management and corporate governance viewpoints.\u003c/p\u003e \u003cdiv id=\"Sec6\" class=\"Section3\"\u003e \u003ch2\u003e2.1.1 Resource-Based View Theory\u003c/h2\u003e \u003cp\u003eThe Resource-Based View (RBV) was initially presented by Wernerfelt in 1984 and subsequently elaborated upon by Barney in 1991. The theory suggests that companies achieve lasting competitive advantage through the effective management of their distinct resources and capabilities, especially those that are valuable, scarce, distinctive, and non-substitutable, as outlined in the VRIN framework (Barney, \u003cspan citationid=\"CR13\" class=\"CitationRef\"\u003e1991\u003c/span\u003e). RBV posits that intellectual capital (IC)\u0026mdash;which includes human capital, structural capital, relational capital, capital employed efficiency, and innovation capital\u0026mdash;is an essential intangible resource that sets apart firms in knowledge-intensive sectors such as pharmaceuticals (Chen et al., 2005; Edvinsson \u0026amp; Malone, \u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e1997\u003c/span\u003e).\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec7\" class=\"Section3\"\u003e \u003ch2\u003e2.1.2 Application to the present study\u003c/h2\u003e \u003cp\u003eWithin the framework of this study, RBV supports the significance of Intellectual Capital (IC) as an independent variable, positing that companies that utilize their intellectual resources can attain a greater Sustainable Growth Rate (SGR). The pharmaceutical industry, characterized by its focus on research and development, relies significantly on knowledge-driven assets, including skilled personnel, advanced research capabilities, and robust relationships with regulatory bodies, research institutions, and international markets (Pulic, \u003cspan citationid=\"CR63\" class=\"CitationRef\"\u003e2000\u003c/span\u003e; Sveiby, \u003cspan citationid=\"CR74\" class=\"CitationRef\"\u003e1997\u003c/span\u003e). Intellectual capital serves as a strategic enabler that improves firms' long-term financial and innovation performance, consistent with the RBV's assertion that effective resource management results in sustained growth.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec8\" class=\"Section3\"\u003e \u003ch2\u003e2.1.3 Agency Theory\u003c/h2\u003e \u003cp\u003eAgency Theory, as presented by Jensen and Meckling in 1976, explores the principal-agent dilemma that occurs when managers (agents) make decisions that might not reflect the best interests of shareholders (principals). The theory emphasizes the importance of corporate governance mechanisms, including board independence, in addressing agency conflicts, curbing managerial opportunism, and enhancing firm performance (Dalton et al., \u003cspan citationid=\"CR19\" class=\"CitationRef\"\u003e1998\u003c/span\u003e; Bhagat \u0026amp; Black, \u003cspan citationid=\"CR15\" class=\"CitationRef\"\u003e2001\u003c/span\u003e).\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec9\" class=\"Section3\"\u003e \u003ch2\u003e2.1.4 Application to the present study\u003c/h2\u003e \u003cp\u003eThis study is grounded in Agency Theory, which highlights the moderating role of Independent Directors (IDIC). Independent directors improve board oversight, strategic decision-making, and transparency, ensuring that the firm\u0026rsquo;s intellectual capital is effectively leveraged for long-term sustainable growth instead of short-term managerial benefits (Jackling \u0026amp; Johl, \u003cspan citationid=\"CR40\" class=\"CitationRef\"\u003e2009\u003c/span\u003e). Independent directors serve as external monitors, enhancing corporate governance and thereby fortifying the connection between Intellectual Capital (IC) and Sustainable Growth Rate (SGR).\u003c/p\u003e \u003cp\u003eFurthermore, agency theory offers valuable insights regarding the function of leverage (debt-to-equity ratio) as a control variable. High leverage can intensify agency costs stemming from conflicts between debt holders and managers, which may limit investments in R\u0026amp;D and innovation (Myers \u0026amp; Majluf, \u003cspan citationid=\"CR55\" class=\"CitationRef\"\u003e1984\u003c/span\u003e; Titman \u0026amp; Wessels, \u003cspan citationid=\"CR75\" class=\"CitationRef\"\u003e1988\u003c/span\u003e). Effective corporate governance, especially via independent directors, can reduce these risks by promoting sound financial decision-making.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec10\" class=\"Section3\"\u003e \u003ch2\u003e2.1.5 Integration of RBV and Agency Theory\u003c/h2\u003e \u003cp\u003eAlthough RBV elucidates the role of intellectual capital in fostering sustainable growth, it does not directly consider the corporate governance mechanisms that affect the management of these resources. Conversely, Agency Theory offers valuable perspectives on governance frameworks, yet it falls short of elucidating the role of intangible resources in fostering competitive advantage.\u003c/p\u003e \u003cp\u003eThe combination of RBV and Agency Theory is therefore crucial in this research due to the following reasons:\u003c/p\u003e \u003cp\u003e \u003cul\u003e \u003cli\u003e \u003cp\u003eThe Resource-Based View illustrates how Intellectual Capital directly influences Sustainable Growth by framing IC as a strategic asset that improves firm performance.\u003c/p\u003e \u003c/li\u003e \u003cli\u003e \u003cp\u003eAgency Theory supports the moderating role of Independent Directors by demonstrating how governance mechanisms facilitate the effective use of IC.\u003c/p\u003e \u003c/li\u003e \u003cli\u003e \u003cp\u003eThe integrated framework enhances the model by tackling both resource-based competitive advantage (RBV) and corporate oversight (Agency Theory), providing a comprehensive understanding of how pharmaceutical firms can achieve sustainable long-term growth.\u003c/p\u003e \u003c/li\u003e \u003cli\u003e \u003cp\u003eThis theoretical integration holds significant importance for India\u0026rsquo;s pharmaceutical sector, where companies need robust intellectual capital to foster innovation while also establishing effective governance structures to handle risks and make strategic decisions (Chen et al., 2005; Jackling \u0026amp; Johl, \u003cspan citationid=\"CR40\" class=\"CitationRef\"\u003e2009\u003c/span\u003e). Therefore, the integration of RBV and Agency Theory strengthens the explanatory capacity of the research model.\u003c/p\u003e \u003c/li\u003e \u003c/ul\u003e \u003c/p\u003e \u003c/div\u003e \u003c/div\u003e \u003cdiv id=\"Sec11\" class=\"Section2\"\u003e \u003ch2\u003e2.2 Variables\u003c/h2\u003e \u003cdiv id=\"Sec12\" class=\"Section3\"\u003e \u003ch2\u003e2.2.1 Intellectual Capital\u003c/h2\u003e \u003cp\u003eIntellectual Capital (IC) denotes the aggregate intangible assets of a firm that play a crucial role in generating value and establishing a competitive edge. This includes assets like knowledge, human capital, company capabilities, innovation perspective, and partnerships with stakeholders that allow firms to maintain long-term performance (Edvinsson \u0026amp; Malone, \u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e1997\u003c/span\u003e; Sveiby, \u003cspan citationid=\"CR74\" class=\"CitationRef\"\u003e1997\u003c/span\u003e; Pedro et al., \u003cspan citationid=\"CR60\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). Intellectual capital can be defined as non-monetary and non-physical resources that are fully or partly owned by the organization and contribute to the value-creation process of the organization (Pulido-L\u0026oacute;pez and L\u0026oacute;pez-Salazar, \u003cspan citationid=\"CR64\" class=\"CitationRef\"\u003e2025\u003c/span\u003e; Romano et al., \u003cspan citationid=\"CR66\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). In industries that rely heavily on knowledge, like pharmaceuticals, IC is essential for fostering innovation, enhancing operational efficiency, and attaining sustainable growth (Chen et al., 2005; Lin and Lin, 2024).\u003c/p\u003e \u003cp\u003e \u003cb\u003ePulic\u0026rsquo;s VAIC model and the evolution of EVAIC\u003c/b\u003e \u003c/p\u003e \u003cp\u003eThe Value-Added Intellectual Coefficient (VAIC) model, created by Pulic in 2000, stands out as one of the most recognized frameworks for assessing the efficiency of Intellectual Capital. The VAIC model assesses the effectiveness of three essential components: Human Capital Efficiency, Structural Capital Efficiency, and Capital Employed Efficiency. While the VAIC model offers a standardized approach to evaluate the contribution of Intellectual Capital to value creation, it fails to explicitly consider Relational Capital and Innovation Capital, both of which are essential for companies functioning in highly dynamic sectors such as pharmaceuticals (Chen et al., 2005). The Extended Value-Added Intellectual Coefficient (EVAIC) model was developed to address these limitations (Ulum et al., \u003cspan citationid=\"CR77\" class=\"CitationRef\"\u003e2014\u003c/span\u003e). Through the integration of RCE and ICE, EVAIC offers a more thorough assessment of Intellectual Capital, rendering it particularly appropriate for sectors dependent on R\u0026amp;D, strategic alliances, and innovation driven by market demands, like pharmaceuticals (Gupta et al., \u003cspan citationid=\"CR34\" class=\"CitationRef\"\u003e2023\u003c/span\u003e; Nazneen et al., \u003cspan citationid=\"CR58\" class=\"CitationRef\"\u003e2025\u003c/span\u003e; St\u0026aring;hle et al., \u003cspan citationid=\"CR72\" class=\"CitationRef\"\u003e2011\u003c/span\u003e; Duan et al., \u003cspan citationid=\"CR22\" class=\"CitationRef\"\u003e2024\u003c/span\u003e).\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec13\" class=\"Section3\"\u003e \u003ch2\u003e2.2.2 Sustainable Growth Rate\u003c/h2\u003e \u003cp\u003eThe Sustainable Growth Rate (SGR) model, developed by Higgins in 1981, offers a framework for identifying the highest growth rate a company can achieve without relying on external financing, all while preserving a stable financial structure. This model is especially pertinent for companies seeking to harmonize growth with financial stability, guaranteeing that expansion does not exceed the firm's capacity to generate resources internally.\u003c/p\u003e \u003cp\u003eHiggins (\u003cspan citationid=\"CR37\" class=\"CitationRef\"\u003e1981\u003c/span\u003e) highlighted the importance for firms to synchronize their strategic growth goals with their financial resources to prevent over-dependence on debt or equity financing, which could lead to financial risk and dilution of shareholder value. This model has been extensively utilized in corporate finance literature to evaluate growth sustainability and the efficiency of capital allocation (Higgins, \u003cspan citationid=\"CR37\" class=\"CitationRef\"\u003e1981\u003c/span\u003e; Van Horne \u0026amp; Wachowicz, 2008). Recent studies have utilized SGR across different industries, affirming its significance in steering companies toward sustainable financial stability and measured growth (Chen et al., 2005).\u003c/p\u003e \u003cp\u003eIn the realm of pharmaceutical companies, sustainable growth relies significantly on investments in intellectual capital, expenditures on R\u0026amp;D, and strategies driven by innovation. The SGR model assists firms in evaluating if their profitability, asset utilization, and reinvestment strategies are adequate to maintain growth while avoiding excessive financial leverage (Myers \u0026amp; Majluf, \u003cspan citationid=\"CR55\" class=\"CitationRef\"\u003e1984\u003c/span\u003e; Wang and Xu, \u003cspan citationid=\"CR79\" class=\"CitationRef\"\u003e2024\u003c/span\u003e). Incorporating the SGR framework into this study offers a systematic method for assessing the impact of intellectual capital on fostering financially sustainable growth within the pharmaceutical sector.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec14\" class=\"Section3\"\u003e \u003ch2\u003e2.2.3 Independent Directors\u003c/h2\u003e \u003cp\u003eIndependent directors serve as non-executive members of a company's board, refraining from involvement in daily management activities and maintaining minimal financial connections to the organization (Merendino and Melville, \u003cspan citationid=\"CR52\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). Their main function is to offer impartial oversight and direction, thus improving corporate governance practices. Through the provision of independent judgment, they assist in averting conflicts of interest and guarantee that decisions are in harmony with the interests of shareholders (Reguera-Alvarado and Bravo, \u003cspan citationid=\"CR65\" class=\"CitationRef\"\u003e2017\u003c/span\u003e). Studies show that having independent directors\u0026rsquo; correlates positively with firm performance, as they play a crucial role in overseeing management actions and aiding in strategic decision-making (Prabowo and Simpson, \u003cspan citationid=\"CR62\" class=\"CitationRef\"\u003e2011\u003c/span\u003e; Musallam, \u003cspan citationid=\"CR54\" class=\"CitationRef\"\u003e2024\u003c/span\u003e; Islam et al., \u003cspan citationid=\"CR39\" class=\"CitationRef\"\u003e2025\u003c/span\u003e). Nonetheless, obstacles like maintaining genuine independence and avoiding the formation of close relationships with management over time can influence their effectiveness. Ongoing efforts to uphold their independence are crucial for promoting transparency and accountability within organizations (Fuzi et al., \u003cspan citationid=\"CR30\" class=\"CitationRef\"\u003e2016\u003c/span\u003e). \u003cb\u003e​​\u003c/b\u003e\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec15\" class=\"Section3\"\u003e \u003ch2\u003e2.2.4 Leverage\u003c/h2\u003e \u003cp\u003eLeverage, indicated by the Debt-to-Equity (D/E) ratio, is a financial metric that assesses a company's total liabilities to its shareholders' equity, reflecting the extent to which debt is utilized to finance the company's assets compared to equity. An elevated D/E ratio indicates that a company has taken an assertive approach to financing its growth through debt, potentially resulting in greater returns on equity while simultaneously heightening the risk of financial distress. A lower D/E ratio may suggest a more cautious strategy, which could restrict growth opportunities while also minimizing risk. The D/E ratio plays a vital role in evaluating a company's financial leverage and risk profile, as high levels of debt can hinder a company's capacity to fulfil its financial commitments, particularly in times of economic decline. Research indicates that moderate debt levels can improve profitability via tax advantages, whereas excessively high debt levels tend to correlate with diminished firm performance due to heightened interest obligations and financial risk (Basdekis et al., \u003cspan citationid=\"CR14\" class=\"CitationRef\"\u003e2020\u003c/span\u003e; Nukala and Prasada Rao, \u003cspan citationid=\"CR59\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). Thus, it is crucial to uphold an ideal D/E ratio to effectively balance the advantages and risks linked to debt financing.\u003c/p\u003e \u003c/div\u003e \u003c/div\u003e \u003cdiv id=\"Sec16\" class=\"Section2\"\u003e \u003ch2\u003e2.3 Hypotheses Development\u003c/h2\u003e \u003cp\u003eThe association between Intellectual Capital (IC) and a firm's Sustainable Growth Rate (SGR) has been thoroughly investigated in scholarly literature, demonstrating a positive relationship between the two (Lu et al., \u003cspan citationid=\"CR45\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). Intellectual Capital includes intangible assets like human capital, structural capital, and relational capital, all of which together improve a firm's ability to create value (Mukherjee and Sen, \u003cspan citationid=\"CR53\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). These components play a crucial role in driving innovation, enhancing operational efficiency, and sustaining competitive advantage, all of which are essential for sustainable growth (Balaji and Mamilla, \u003cspan citationid=\"CR10\" class=\"CitationRef\"\u003e2023\u003c/span\u003e).​\u003c/p\u003e \u003cp\u003eResearch has consistently shown that effective management of intellectual capital plays a crucial role in a company's sustainable growth (Ionita and Dinu, \u003cspan citationid=\"CR38\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). Human Capital Efficiency (HCE) and overall Intellectual Capital Efficiency (ICE) have a positive impact on both firm performance and SGR. This indicates that investing in employee development and knowledge management plays a vital role in fostering sustainable growth (Xu et al., \u003cspan citationid=\"CR84\" class=\"CitationRef\"\u003e2020\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eA study on Indian agribusiness companies further supports this, indicating that Innovation Capital Efficiency and Human Capital Efficiency are significant variables influencing SGR. The results showed that companies that prioritize innovation and adeptly manage their human resources are more likely to attain sustainable growth (Balaji and Mamilla, \u003cspan citationid=\"CR11\" class=\"CitationRef\"\u003e2024\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eFurthermore, an extensive examination of the current literature reveals that the majority of empirical studies indicate a beneficial impact of IC on sustainable growth (Xu and Wang, \u003cspan citationid=\"CR83\" class=\"CitationRef\"\u003e2018\u003c/span\u003e; Xu et al., \u003cspan citationid=\"CR85\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). Nonetheless, the degree of this impact may differ based on the particular elements of IC and the techniques employed to assess them. In conclusion, the literature highlights that Intellectual Capital is essential for improving a firm's Sustainable Growth Rate. Through strategic management and investment in IC components like human capital, innovation, and structural processes, companies can attain lasting financial performance and uphold a competitive advantage within their industries. Based on the literature survey the following hypothesis have been proposed.\u003c/p\u003e \u003cp\u003e \u003cem\u003eH\u003c/em\u003e \u003csub\u003e \u003cem\u003e1\u003c/em\u003e \u003c/sub\u003e: \u003cem\u003eIntellectual Capital positively influences the Sustainable Growth rate of Indian Pharmaceutical companies.\u003c/em\u003e\u003c/p\u003e \u003cp\u003eThe role of independent directors in the governance of corporations and firm performance has been thoroughly examined in the literature, emphasizing their impact across different organizational settings (Duru et al., \u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e2016\u003c/span\u003e). Independent directors play a vital role in corporate governance, promoting transparency, accountability, and informed strategic decision-making (Merendino and Melville, \u003cspan citationid=\"CR52\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). Studies show that board independence enhances corporate governance by reducing agency conflicts and aligning the decisions of management with the interests of shareholders (Merendino and Melville, \u003cspan citationid=\"CR52\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). Research indicates that independent directors are crucial in influencing relationships, including CEO duality and firm performance, board characteristics and business outcomes, as well as the quality of environmental disclosures and financial performance (Duru et al., \u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e2016\u003c/span\u003e; Alipour et al., \u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e2019\u003c/span\u003e). Their presence improves oversight, guaranteeing that governance mechanisms operate efficiently to promote sustainable growth. Furthermore, independent directors impact firm performance by promoting board diversity, enhancing internal audit functions, and refining strategic decision-making (Al-Matar et al., 2014; Ganesan et al., \u003cspan citationid=\"CR31\" class=\"CitationRef\"\u003e2018\u003c/span\u003e). Nevertheless, the findings indicate that the effectiveness of independent directors is influenced by contextual factors, including industry dynamics, firm size, and regulatory frameworks. Independent directors play a crucial role in moderating factors that strengthen corporate governance structures, ultimately improving firm performance, transparency, and long-term sustainability. Following the literature survey, the subsequent hypotheses have been proposed.\u003c/p\u003e \u003cp\u003e \u003cem\u003eH\u003c/em\u003e \u003csub\u003e \u003cem\u003e2\u003c/em\u003e \u003c/sub\u003e: \u003cem\u003eIndependent Directors positively moderate the relationship between Intellectual Capital and the Sustainable Growth rate of Indian Pharmaceutical companies.\u003c/em\u003e\u003c/p\u003e \u003cp\u003eThe association between leverage and a firm's sustainable development Rate has been extensively studied, revealing both beneficial and detrimental effects. Leverage, as indicated by the debt-to-equity ratio (D/E), is essential in a firm's financial decision-making, impacting both growth potential and risk exposure. Numerous studies indicate that moderate debt levels can improve firm performance by offering financial resources for investment and expansion, which ultimately supports sustainable growth (Salim \u0026amp; Yadav, \u003cspan citationid=\"CR68\" class=\"CitationRef\"\u003e2012\u003c/span\u003e; Alvian and Munandar, \u003cspan citationid=\"CR6\" class=\"CitationRef\"\u003e2022\u003c/span\u003e; Sukma et al., \u003cspan citationid=\"CR73\" class=\"CitationRef\"\u003e2022\u003c/span\u003e). The Trade-Off Theory reinforces this idea, showing that companies weigh the tax advantages of debt against the costs of financial distress, implying that optimal levels of leverage can enhance financial performance (Myers, \u003cspan citationid=\"CR55\" class=\"CitationRef\"\u003e1984\u003c/span\u003e). Furthermore, companies that maintain effective capital structures tend to see enhanced market valuation as a result of heightened investor trust in their financial strategies (Nazir et al., \u003cspan citationid=\"CR57\" class=\"CitationRef\"\u003e2021\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eNonetheless, high levels of leverage may result in financial difficulties and diminished profitability, constraining a company's capacity to maintain long-term growth (Yazdanfar and \u0026Ouml;hman, \u003cspan citationid=\"CR86\" class=\"CitationRef\"\u003e2015\u003c/span\u003e). Research shows that elevated debt levels frequently lead to a decrease in company performance, attributed to greater interest obligations, diminished operational flexibility, and an increased risk of bankruptcy. Research examining various market environments, including Sweden and Pakistan, demonstrates that excessive dependence on debt adversely impacts shareholder value and the sustainability of firms (Nazir et al., \u003cspan citationid=\"CR57\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). The findings indicate that although leverage can facilitate firm expansion, its effect on sustainable growth depends on proficient financial management. Companies need to refine their capital structure to harmonize the benefits of debt financing with the potential risks of financial instability, making certain that leverage enhances long-term value creation instead of acting as a limitation. Based on the literature review done the following hypothesis is being proposed.\u003c/p\u003e \u003cp\u003e \u003cem\u003eH\u003c/em\u003e \u003csub\u003e \u003cem\u003e3\u003c/em\u003e \u003c/sub\u003e: \u003cem\u003eLeverage positively influences the Sustainable Growth rate of Indian Pharmaceutical companies.\u003c/em\u003e\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec17\" class=\"Section2\"\u003e \u003ch2\u003e2.4 Research Model\u003c/h2\u003e \u003cp\u003e \u003c/p\u003e \u003cp\u003eFigure \u003cspan refid=\"Fig1\" class=\"InternalRef\"\u003e1\u003c/span\u003e presents the proposed research model that showcases the interaction among Intellectual Capital (IC), Independent Directors, Leverage, and Sustainable Growth Rate (SGR). Intellectual Capital (H1) is proposed to have a favourable impact on sustainable growth, suggesting that the effective use of intangible resources boosts long-term growth potential. Independent Directors act as a moderating variable (H2), anticipated to enhance the association among Intellectual Capital and sustainable growth by bolstering governance mechanisms and strategic oversight. Furthermore, Leverage, serving as a control variable (H3), is proposed to positively impact the sustainable growth rate. This reflects the belief that the judicious use of debt financing can enable strategic investments, thereby potentially enhancing sustainable growth for pharmaceutical companies in India.\u003c/p\u003e \u003c/div\u003e"},{"header":"3 Research Methodology","content":"\u003cdiv id=\"Sec19\" class=\"Section2\"\u003e \u003ch2\u003e3.1 Research Design\u003c/h2\u003e \u003cp\u003eThis study employs a descriptive research design. The study population consists of companies that are listed on the National Stock Exchange (NSE). The sample specifically comprises pharmaceutical companies that are part of the NSE NIFTY Pharma index. This study utilized panel data spanning a decade, from FY 2015 to FY 2024. The main source of data is the Prowess database from the Centre for Monitoring Indian Economy (CMIE), offering comprehensive financial information on Indian listed companies, including in-depth reports, financial metrics, and company-specific details. Statistical software packages were utilized for data analysis and econometric modelling, with Excel employed for initial data organization and STATA 18 used for advanced analyses, which includes the Two-step System GMM method.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec20\" class=\"Section2\"\u003e \u003ch2\u003e3.2 Sample Selection\u003c/h2\u003e \u003cp\u003eThe cohort for this investigation encompasses all enterprises that are publicly traded on the National Stock Exchange (NSE). The study meticulously concentrates on the pharmaceutical sector in India, encompassing all companies that are part of the NSE NIFTY Pharma index. During the designated study period, spanning from the fiscal year 2015 to the fiscal year 2024, a comprehensive total of 20 pharmaceutical companies were catalogued within this index. All companies were incorporated into the analysis, with no exclusions stemming from issues of data completeness. As a result, the ultimate sample comprises 20 companies, yielding a total of 200 firm-year observations (20 companies multiplied by 10 years). While the sample size may seem confined, it comprehensively includes the entirety of the NSE NIFTY Pharma index, which embodies India's foremost, most impactful, and economically vital pharmaceutical companies. Consequently, the selected sample offers extensive representation and faithfully captures the nuances of industry dynamics, thereby guaranteeing substantial and significant empirical insights pertinent to the pharmaceutical sector in India. Table\u0026nbsp;\u003cspan refid=\"Tab1\" class=\"InternalRef\"\u003e1\u003c/span\u003e below illustrates the sample selection process in a tabular format.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab1\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 1\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eSample Selection Process\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"2\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003eThe sample selection criteria\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eNumbers\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eAgribusiness companies listed in the NIFTY Pharma index during the years 2015 to 2024.\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e20\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eExcluded companies: Companies with incomplete data\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFinal Sample\u003c/p\u003e \u003cp\u003eFirm-year observations\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e20\u003c/p\u003e \u003cp\u003e200*\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"2\"\u003eNote: 20 companies \u0026times; 10 years\u0026thinsp;=\u0026thinsp;200* firm-year observations.\u003c/td\u003e\u003c/tr\u003e \u003ctr\u003e\u003ctd colspan=\"2\"\u003e\u003cb\u003eSource: Author\u0026rsquo;s Compilation\u003c/b\u003e\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec21\" class=\"Section2\"\u003e \u003ch2\u003e3.3 Statistical Techniques\u003c/h2\u003e \u003cp\u003eThis study rigorously applies a range of econometric techniques to analyze the interplay between intellectual capital, independent board members, leverage, and the sustainable growth rate of Indian pharmaceutical firms listed in the NSE NIFTY Pharma index. To begin with, we perform stationarity tests employing the Fisher-type Augmented Dickey-Fuller (ADF) test, thereby confirming that the panel data variables are free from unit-root complications. Thereafter, the research utilizes descriptive statistical analysis to investigate the essential distributional properties of the chosen variables. This phase is enhanced by Pearson\u0026rsquo;s correlation analysis, which uncovers initial associations and highlights potential issues related to multicollinearity.\u003c/p\u003e \u003cp\u003eThe process of selecting the suitable dynamic panel regression technique entails a series of methodical steps:\u003c/p\u003e \u003cp\u003e \u003cul\u003e \u003cli\u003e \u003cp\u003eInitially, a Pooled Ordinary Least Squares (POLS) regression is conducted, yielding a preliminary (upper-bound) estimate of the coefficient for the lagged dependent variable.\u003c/p\u003e \u003c/li\u003e \u003cli\u003e \u003cp\u003eSubsequently, a Fixed Effects (FE) model is employed, yielding a generally lower (lower-bound) estimate of the coefficient for the lagged dependent variable in comparison to POLS, as it accounts for unobserved firm-specific characteristics.\u003c/p\u003e \u003c/li\u003e \u003cli\u003e \u003cp\u003eThe Difference Generalized Method of Moments (Difference-GMM) methodology is subsequently employed. Should the coefficient of the lagged dependent variable derived from Difference-GMM exceed that of the Fixed Effects estimate, it is deemed that the Difference-GMM model is suitable.\u003c/p\u003e \u003c/li\u003e \u003cli\u003e \u003cp\u003eOn the other hand, should the coefficient of the lagged dependent variable in the Difference-GMM be less than that of the Fixed Effects estimate, the two-step System Generalized Method of Moments (System-GMM) model is considered more appropriate and is therefore utilized for the primary analysis in the study.\u003c/p\u003e \u003c/li\u003e \u003cli\u003e \u003cp\u003eFollowing estimation, diagnostic tests are conducted to confirm the strength and suitability of the chosen econometric approach. The Breusch-Pagan/Cook-Weisberg test is employed to identify the existence of heteroscedasticity.\u003c/p\u003e \u003c/li\u003e \u003cli\u003e \u003cp\u003eFinally, the Variance Inflation Factor (VIF) test is performed to detect any potential multicollinearity concerns, thereby ensuring that independent variables do not exhibit excessive correlation.\u003c/p\u003e \u003c/li\u003e \u003c/ul\u003e \u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec22\" class=\"Section2\"\u003e \u003ch2\u003e3.4 Variables\u003c/h2\u003e \u003cdiv id=\"Sec23\" class=\"Section3\"\u003e \u003ch2\u003e3.4.1 Dependent Variable\u003c/h2\u003e \u003cp\u003e \u003cstrong\u003eSustainable Growth rate (SGR)\u003c/strong\u003e \u003cp\u003eThis research employs Higgins' (1981) model to compute the Sustainable Growth Rate (SGR), a framework that is extensively recognized for evaluating the long-term growth potential of companies. The Higgins model articulates sustainable growth as the maximum growth rate attainable without modifying a firm's financial leverage or dividend distribution strategy.\u003c/p\u003e \u003c/p\u003e \u003cp\u003e \u003cb\u003eSGR\u0026thinsp;=\u0026thinsp;Profit Margin * Retention Ratio * Equity Multiplier * Asset Turnover ratio 2\u003c/b\u003e \u003c/p\u003e \u003cp\u003eThe profit margin serves as an indicator of the firm's profitability, while the asset turnover ratio reflects the efficiency of asset utilization. The retention rate assesses the reinvestment of earnings, and the equity multiplier illustrates the concept of financial leverage (Higgins, \u003cspan citationid=\"CR37\" class=\"CitationRef\"\u003e1981\u003c/span\u003e; Van Horne \u0026amp; Wachowicz, 2008).\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec24\" class=\"Section3\"\u003e \u003ch2\u003e3.4.2 Independent Variable\u003c/h2\u003e \u003cp\u003eThe measurement of Intellectual Capital (IC) in this study employs the Extended Value-Added Intellectual Coefficient (EVAIC) model, which is a more comprehensive iteration derived from Pulic\u0026rsquo;s original Value-Added Intellectual Coefficient (VAIC\u0026trade;). Pulic\u0026rsquo;s VAIC model, developed in 2000 and refined in 2004, fundamentally encompasses the dimensions of Human Capital Efficiency, Structural Capital Efficiency, and Capital Employed Efficiency. The EVAIC model, in contrast, enhances the foundational VAIC model by integrating two further essential dimensions pertinent to modern knowledge-intensive industries\u0026mdash;Relational Capital Efficiency (RCE) and Innovation Capital Efficiency (RDE). The comprehensive computation of IC utilizing the EVAIC framework is delineated as follows:\u003c/p\u003e \u003cp\u003e \u003cb\u003eValue Added (VA)\u0026thinsp;=\u0026thinsp;Output \u0026ndash; Input 3\u003c/b\u003e \u003c/p\u003e \u003cp\u003e \u003cb\u003eHuman Capital Efficiency (HCE)\u0026thinsp;=\u0026thinsp;VA / Human Capital 4\u003c/b\u003e \u003c/p\u003e \u003cp\u003e \u003cb\u003eStructural Capital Efficiency (SCE)\u0026thinsp;=\u0026thinsp;Structural Capital (SC) / VA 5\u003c/b\u003e \u003c/p\u003e \u003cp\u003e \u003cb\u003ewhere SC\u0026thinsp;=\u0026thinsp;VA \u0026ndash; Human Capital\u003c/b\u003e \u003c/p\u003e \u003cp\u003e \u003cb\u003eCapital Employed Efficiency (CEE)\u0026thinsp;=\u0026thinsp;VA / Capital Employed 6\u003c/b\u003e \u003c/p\u003e \u003cp\u003e \u003cb\u003eRelational Capital Efficiency (RCE)\u0026thinsp;=\u0026thinsp;Relational Capital / VA 7\u003c/b\u003e \u003c/p\u003e \u003cp\u003e \u003c/p\u003e \u003cp\u003e \u003cb\u003eTotal Intellectual Capital (IC)\u0026thinsp;=\u0026thinsp;HCE\u0026thinsp;+\u0026thinsp;SCE\u0026thinsp;+\u0026thinsp;CEE\u0026thinsp;+\u0026thinsp;RCE\u0026thinsp;+\u0026thinsp;RDE 9\u003c/b\u003e \u003c/p\u003e \u003cp\u003eThe EVAIC model offers a comprehensive assessment, addressing the shortcomings of Pulic\u0026rsquo;s original VAIC model, which mainly emphasizes human, structural, and capital-employed efficiencies, by explicitly integrating relational and innovation elements (Pulic, \u003cspan citationid=\"CR63\" class=\"CitationRef\"\u003e2000\u003c/span\u003e; Chen, Cheng \u0026amp; Hwang, 2005; Sardo et al., 2018).\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec25\" class=\"Section3\"\u003e \u003ch2\u003e3.4.3 Moderating Variable- Independent Directors\u003c/h2\u003e \u003cp\u003eThe measurement of Independent Directors (IDIC) is determined by the proportion of independent directors on the company's board. Independent directors are essential to corporate governance, as they offer impartial oversight, mitigate agency costs, enhance managerial accountability, and ensure that strategic decisions are in harmony with stakeholder interests. The role and efficacy of independent directors are broadly recognized as essential for improving corporate transparency, bolstering investor confidence, and fostering sustainable growth, especially in heavily regulated industries like pharmaceuticals (Jensen \u0026amp; Meckling, \u003cspan citationid=\"CR41\" class=\"CitationRef\"\u003e2019\u003c/span\u003e; Dalton et al., \u003cspan citationid=\"CR19\" class=\"CitationRef\"\u003e1998\u003c/span\u003e; Jackling \u0026amp; Johl, \u003cspan citationid=\"CR40\" class=\"CitationRef\"\u003e2009\u003c/span\u003e). The role of independent directors is crucial for a company\u0026rsquo;s success and long term sustainability (Naciti, \u003cspan citationid=\"CR56\" class=\"CitationRef\"\u003e2019\u003c/span\u003e; Liu et al., \u003cspan citationid=\"CR44\" class=\"CitationRef\"\u003e2023\u003c/span\u003e).\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec26\" class=\"Section3\"\u003e \u003ch2\u003e3.4.4 Control Variable\u003c/h2\u003e \u003cp\u003eFinally, the control variable, Leverage, is articulated via the Debt-Equity Ratio (DER), which serves to quantify the financial leverage of firms. The Debt-Equity Ratio serves as a measure of a company's financial architecture, illustrating its dependence on debt financing and the corresponding risk it entails (Titman \u0026amp; Wessels, \u003cspan citationid=\"CR75\" class=\"CitationRef\"\u003e1988\u003c/span\u003e; Myers \u0026amp; Majluf, \u003cspan citationid=\"CR55\" class=\"CitationRef\"\u003e1984\u003c/span\u003e).\u003c/p\u003e \u003c/div\u003e \u003c/div\u003e \u003cdiv id=\"Sec27\" class=\"Section2\"\u003e \u003ch2\u003e3.5 Regression Model\u003c/h2\u003e \u003cp\u003e \u003cdiv id=\"Equa\" class=\"Equation\"\u003e \u003cdiv format=\"TEX\" class=\"mathdisplay\" id=\"FileID_Equa\" name=\"EquationSource\"\u003e\n$$\\:{\\varvec{S}\\varvec{G}\\varvec{R}}_{\\varvec{i}\\varvec{t}}=\\:{\\varvec{\\alpha\\:}}_{0}+\\:\\varvec{\\delta\\:}{\\varvec{S}\\varvec{G}\\varvec{R}}_{\\varvec{i}\\varvec{t}-1}+{\\varvec{\\beta\\:}}_{1}{\\varvec{I}\\varvec{C}}_{\\varvec{i}\\varvec{t}}+{\\varvec{\\beta\\:}}_{2}{\\varvec{I}\\varvec{D}\\varvec{I}\\varvec{C}}_{\\varvec{i}\\varvec{t}}+{\\varvec{\\beta\\:}}_{3}{\\varvec{D}\\varvec{E}\\varvec{R}}_{\\varvec{i}\\varvec{t}}+{\\varvec{\\epsilon\\:}}_{\\varvec{i}\\varvec{t}}\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:\\:1$$\u003c/div\u003e \u003c/div\u003e \u003c/p\u003e \u003cp\u003eThe regression Eq.\u0026nbsp;1 provided demonstrates the econometric model used to analyze the factors influencing the Sustainable Growth Rate (SGR) within NSE NIFTY Pharma companies. In this model, \u0026#119878;\u0026#119866;\u0026#119877;\u003csub\u003e\u0026#119894;\u0026#119905;,\u003c/sub\u003e SGR denotes the sustainable growth rate of firm \u0026#119894; i at time \u0026#119905; t, while the lagged dependent variable (\u0026#119878;\u0026#119866;\u0026#119877;\u003csub\u003e\u0026#119894;\u0026#119905;\u003c/sub\u003e \u0026minus; 1​) reflects growth persistence, indicating that prior growth rates affect the current sustainable growth. Intellectual Capital (IC\u003cem\u003eit\u003c/em\u003e) signifies the influence of intangible assets. Independent Directors (IDIC) signify the governance quality and oversight effectiveness of the firm, while Leverage (DER), assessed through the debt-equity ratio, is included as a control variable to consider the impact of firms' capital structure on growth. The coefficients (\u0026#120575;, β₁, β₂, and β₃) measure the size and direction of these effects, while the error term (\u0026#120576;\u003csub\u003ei\u003c/sub\u003eₜ) accounts for unobserved factors. This model explicitly assesses how previous performance, investments in intellectual capital, governance frameworks, and financial leverage together influence the long-term sustainable growth of pharmaceutical firms in India.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec28\" class=\"Section2\"\u003e \u003ch2\u003e3.6 Model Specification Test\u003c/h2\u003e \u003cp\u003eGiven the ever-evolving characteristics of sustainable growth rate and intellectual capital, along with the potential complications stemming from the lagged dependent variable, unobserved firm-specific heterogeneity, and reverse causality, the use of conventional estimation methods like Ordinary Least Squares or Fixed Effects is deemed unsuitable (Arellano \u0026amp; Bond, \u003cspan citationid=\"CR7\" class=\"CitationRef\"\u003e1991\u003c/span\u003e; Blundell \u0026amp; Bond, \u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e1998\u003c/span\u003e; Roodman, \u003cspan citationid=\"CR67\" class=\"CitationRef\"\u003e2009\u003c/span\u003e). The conventional approaches are inadequate in yielding reliable and impartial estimates when confronted with dynamic effects and endogeneity (Baltagi, \u003cspan citationid=\"CR12\" class=\"CitationRef\"\u003e2008\u003c/span\u003e; Wooldridge, \u003cspan citationid=\"CR81\" class=\"CitationRef\"\u003e2010\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eTo tackle these methodological issues, the current study employs the dynamic panel Generalized Method of Moments (GMM) estimation technique, particularly the two-step System GMM method introduced by Blundell and Bond (\u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e1998\u003c/span\u003e). The two-step System GMM is especially adept at addressing situations in which the dependent variable is affected by its own lagged values, as well as when independent variables may exhibit endogeneity or lack strict exogeneity (Roodman, \u003cspan citationid=\"CR67\" class=\"CitationRef\"\u003e2009\u003c/span\u003e; Baltagi, \u003cspan citationid=\"CR12\" class=\"CitationRef\"\u003e2008\u003c/span\u003e). Furthermore, System GMM yields reliable estimates by adeptly integrating the moment conditions derived from both the levels and differences of the regression equation, thus markedly improving estimation efficiency in comparison to Difference GMM (Arellano \u0026amp; Bond, \u003cspan citationid=\"CR7\" class=\"CitationRef\"\u003e1991\u003c/span\u003e; Blundell \u0026amp; Bond, \u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e1998\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eTo ascertain the reliability and robustness of the System GMM estimation outcomes, a series of diagnostic tests are conducted. Initially, the Arellano-Bond tests for first-order AR(1) and second-order AR(2) autocorrelation are performed to ascertain the legitimacy of the instruments employed. The anticipated presence of AR(1) autocorrelation arises from first-differencing, while the lack of AR(2) autocorrelation suggests that the instruments have been accurately specified and are valid (Arellano \u0026amp; Bond, \u003cspan citationid=\"CR7\" class=\"CitationRef\"\u003e1991\u003c/span\u003e; Baltagi, \u003cspan citationid=\"CR12\" class=\"CitationRef\"\u003e2008\u003c/span\u003e). Secondly, the Sargan test, also known as the Hansen J test, is utilized to assess the comprehensive validity and suitability of the instrumental variables. A test result that lacks statistical significance for the Sargan or Hansen J test indicates that the instruments do not exhibit correlation with the error terms, thereby bolstering the robustness and consistency of the model's findings (Sargan, \u003cspan citationid=\"CR69\" class=\"CitationRef\"\u003e1958\u003c/span\u003e; Hansen, \u003cspan citationid=\"CR36\" class=\"CitationRef\"\u003e1982\u003c/span\u003e; Roodman, \u003cspan citationid=\"CR67\" class=\"CitationRef\"\u003e2009\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eMoreover, the two-step System GMM method explicitly addresses issues of heteroscedasticity and autocorrelation by employing robust standard errors, thereby guaranteeing precise statistical inferences even in the presence of variance heterogeneity across panel data observations (Wooldridge, \u003cspan citationid=\"CR81\" class=\"CitationRef\"\u003e2010\u003c/span\u003e; Roodman, \u003cspan citationid=\"CR67\" class=\"CitationRef\"\u003e2009\u003c/span\u003e). As a result, this approach yields dependable, impartial, and effective parameter estimates, significantly enhancing the empirical credibility of the relationships examined between intellectual capital, independent directors, leverage, and sustainable growth rate among companies listed in the NSE NIFTY Pharma index in India.\u003c/p\u003e \u003c/div\u003e"},{"header":"4 Findings","content":"\u003cdiv id=\"Sec30\" class=\"Section2\"\u003e \u003ch2\u003e4.1 Descriptive Statistics\u003c/h2\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab2\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 2\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eDescriptive Statistics\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"6\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c6\" colnum=\"6\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eObs\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eMean\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eStd.dev\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003eMin\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c6\"\u003e \u003cp\u003eMax\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnSGR\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e200\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e-2.427\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.897\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e-6.868\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e-1.061\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnIC\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e200\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e-5.117\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e1.480\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e-10.997\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e-2.628\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnIDIC\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e200\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e3.731\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e2.199\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.640\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e12.918\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnDER\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e200\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e-2.898\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e2.252\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e-11.492\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e0.252\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"6\"\u003e\u003cb\u003eSource: Author\u0026rsquo;s Compilation\u003c/b\u003e\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eThe descriptive statistics presented in Table\u0026nbsp;\u003cspan refid=\"Tab2\" class=\"InternalRef\"\u003e2\u003c/span\u003e provide an overview of the distributional characteristics of the key variables utilized in this study, which investigates the influence of Intellectual Capital (IC) components on the Sustainable Growth Rate (SGR), with moderation by Independent Directors (IDIC) within NSE NIFTY Pharma index companies in India. The lagged dependent variable (lnSGR) has a mean of -2.427 (SD\u0026thinsp;=\u0026thinsp;0.897), reflecting moderate variation in pharmaceutical firms' sustainable growth rates, ranging from \u0026minus;\u0026thinsp;6.868 to -1.061. This spread emphasizes the variability often observed in financial performance metrics (Gujarati \u0026amp; Porter, \u003cspan citationid=\"CR33\" class=\"CitationRef\"\u003e2009\u003c/span\u003e). The independent variable, lagged Intellectual Capital (lnIC), which includes human, structural, capital employed, innovation, and relational capital, has a mean of -5.117 and a higher standard deviation of 1.480, indicating significant variation in the management of intangible resources among pharmaceutical companies (Edvinsson \u0026amp; Malone, \u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e1997\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eThe moderating variable (lnIDIC), which signifies Independent Directors, has a mean of 3.731 and a standard deviation of 2.199, indicating significant variations in corporate governance practices across firms, aligning with previous studies that highlight differences in board composition (Dalton et al., \u003cspan citationid=\"CR19\" class=\"CitationRef\"\u003e1998\u003c/span\u003e). The control variable, leverage (lnDER), exhibits a mean of -2.898 and a standard deviation of 2.252, with values spanning a wide range from \u0026minus;\u0026thinsp;11.492 to 0.252. This variability corresponds with empirical finance research's usual diversity of financial leverage (Titman \u0026amp; Wessels, \u003cspan citationid=\"CR75\" class=\"CitationRef\"\u003e1988\u003c/span\u003e). The variability observed in all variables is suitable and underpins a strong empirical analysis following established practices in financial research (Hair et al., \u003cspan citationid=\"CR35\" class=\"CitationRef\"\u003e2010\u003c/span\u003e).\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec31\" class=\"Section2\"\u003e \u003ch2\u003e4.2 Stationarity Test\u003c/h2\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab3\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 3\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eFisher-Type ADF Test\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"6\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c6\" colnum=\"6\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eP-value\u003c/p\u003e \u003cp\u003e(Inversed chi-squared)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eP-value (Inverse normal)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eP-value (Inverse logit)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003eP-value (Modified inv. chi-squared)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c6\"\u003e \u003cp\u003eStationarity\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnSGR\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0001***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.0404**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.0037***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003eStationary\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnIC\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.0058***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003eStationary\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003ed_lnIDIC\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.0009**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003eStationary\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnDER\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.0333***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003eStationary\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eThe findings from the Fisher-type Augmented Dickey-Fuller (ADF) tests (Table\u0026nbsp;\u003cspan refid=\"Tab3\" class=\"InternalRef\"\u003e3\u003c/span\u003e) evaluate the stationarity characteristics of the variables utilized in this study. Stationarity is essential, as non-stationary variables may result in unreliable regression estimates and misleading relationships (Gujarati \u0026amp; Porter, \u003cspan citationid=\"CR33\" class=\"CitationRef\"\u003e2009\u003c/span\u003e; Maddala \u0026amp; Kim, \u003cspan citationid=\"CR47\" class=\"CitationRef\"\u003e1998\u003c/span\u003e). The Fisher-type tests, including Inverse Chi-squared, Inverse Normal, Inverse Logit, and Modified Inverse Chi-squared, consistently demonstrate that all variables\u0026mdash;specifically the lagged sustainable growth rate (lnSGR), lagged intellectual capital (lnIC), the differenced moderating variable (d_lnIDIC), and leverage (lnDER)\u0026mdash;exhibit stationarity at the 1% significance level (p-values\u0026thinsp;\u0026lt;\u0026thinsp;0.01). Notably, slight deviations at the 5% level are observed for lnSGR when applying the inverse normal method (p\u0026thinsp;=\u0026thinsp;0.0404). This indicates that these variables maintain stable means and variances throughout the observed period, fulfilling the essential criteria for effective and reliable econometric modelling (Wooldridge, \u003cspan citationid=\"CR82\" class=\"CitationRef\"\u003e2013\u003c/span\u003e; MacKinnon, \u003cspan citationid=\"CR46\" class=\"CitationRef\"\u003e1996\u003c/span\u003e). Consequently, the current research meets the econometric criteria for stationarity, which guarantees the dependability of the following regression analyses that investigate the influence of intellectual capital elements on sustainable growth, with independent directors acting as moderators in India's pharmaceutical industry.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec32\" class=\"Section2\"\u003e \u003ch2\u003e4.3 Correlation Analysis\u003c/h2\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab4\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 4\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003ePearson\u0026rsquo;s Correlation Test\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"5\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003elnSGR\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003elnIC\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003elnIDIC\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003elnDER\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnSGR\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1.0000\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnIC\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.0650\u003c/p\u003e \u003cp\u003e(0.3808)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e1.0000\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnIDIC\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.1462\u003c/p\u003e \u003cp\u003e(0.0477)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e-0.7279\u003c/p\u003e \u003cp\u003e(0.0000)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e1.0000\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnDER\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e-0.2047\u003c/p\u003e \u003cp\u003e(0.0052)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.2464\u003c/p\u003e \u003cp\u003e(0.0008)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e-0.1593\u003c/p\u003e \u003cp\u003e(0.0322)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e1.0000\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"5\"\u003e\u003cb\u003eSource: Author\u0026rsquo;s Compilation\u003c/b\u003e\u003c/td\u003e\u003c/tr\u003e \u003ctr\u003e\u003ctd colspan=\"5\"\u003eNote: *p\u0026thinsp;\u0026lt;\u0026thinsp;0.05\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eThe correlation matrix shown in Table\u0026nbsp;\u003cspan refid=\"Tab4\" class=\"InternalRef\"\u003e4\u003c/span\u003e illustrates Pearson's correlation coefficients between the variables analyzed in this study. The lagged sustainable growth rate (lnSGR) shows a positive and statistically significant relationship with the moderating variable for independent directors (lnIDIC, r\u0026thinsp;=\u0026thinsp;0.1462, p\u0026thinsp;=\u0026thinsp;0.0477). The findings indicate that companies characterized by a higher level of board independence are likely to attain elevated sustainable growth rates. This observation aligns with existing corporate governance literature, which posits that independent directors contribute positively to firm performance (Dalton et al., \u003cspan citationid=\"CR19\" class=\"CitationRef\"\u003e1998\u003c/span\u003e; Bhagat \u0026amp; Black, \u003cspan citationid=\"CR15\" class=\"CitationRef\"\u003e2001\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eIt is noteworthy that the primary independent variable, intellectual capital (lnIC), does not exhibit a significant correlation with the sustainable growth rate (r\u0026thinsp;=\u0026thinsp;0.0650, p\u0026thinsp;=\u0026thinsp;0.3808). This suggests that intellectual capital by itself may not have a direct relationship with sustainable growth. However, it could potentially influence sustainable growth through moderating or mediating effects. This observation is consistent with the findings of Edvinsson and Malone (\u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e1997\u003c/span\u003e) and Sveiby (\u003cspan citationid=\"CR74\" class=\"CitationRef\"\u003e1997\u003c/span\u003e), who highlight the indirect effects of components of intellectual capital. The observed negative and significant correlation between intellectual capital (lnIC) and independent directors (lnIDIC, r = -0.7279, p\u0026thinsp;=\u0026thinsp;0.0000) indicates an inverse relationship between the levels of intellectual capital and the independence of the board. This may imply that firms with diminished intellectual capital could depend more on governance structures to improve performance, thereby reinforcing the role of governance mechanisms as compensatory controls (Agrawal \u0026amp; Chadha, \u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e2005\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eThe leverage ratio (lnDER) shows a statistically significant negative correlation with sustainable growth (lnSGR, r = -0.2047, p\u0026thinsp;=\u0026thinsp;0.0052). This finding aligns with existing literature that suggests elevated financial leverage may adversely impact growth potential due to heightened financial risk and constraints (Titman \u0026amp; Wessels, \u003cspan citationid=\"CR75\" class=\"CitationRef\"\u003e1988\u003c/span\u003e; Myers \u0026amp; Majluf, \u003cspan citationid=\"CR55\" class=\"CitationRef\"\u003e1984\u003c/span\u003e). Furthermore, leverage shows a positive correlation with intellectual capital (lnIC, r\u0026thinsp;=\u0026thinsp;0.2464, p\u0026thinsp;=\u0026thinsp;0.0008), suggesting that firms possessing greater intellectual capital tend to employ higher leverage. This observation aligns with capital structure theory, which posits that firms with intangible assets may approach debt financing in a distinct manner (Frank \u0026amp; Goyal, \u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e2009\u003c/span\u003e). The observed moderate correlations in the analysis suggest that there are no significant multicollinearity issues (correlation values\u0026thinsp;\u0026lt;\u0026thinsp;0.8), thereby meeting the methodological assumptions necessary for regression analyses (Gujarati \u0026amp; Porter, \u003cspan citationid=\"CR33\" class=\"CitationRef\"\u003e2009\u003c/span\u003e).\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec33\" class=\"Section2\"\u003e \u003ch2\u003e4.4 Heteroscedasticity test\u003c/h2\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab5\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 5\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eBreusch-Pagan / Cook-Weisberg test for heteroscedasticity\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"3\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003echi2\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eProb.\u0026gt; chi2\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnSGR\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e13.39\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.0003\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"3\"\u003e\u003cb\u003eSource: Author\u0026rsquo;s Compilation\u003c/b\u003e\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eThe results of the Breusch-Pagan/Cook-Weisberg test presented in Table\u0026nbsp;\u003cspan refid=\"Tab5\" class=\"InternalRef\"\u003e5\u003c/span\u003e reveal significant heteroscedasticity (χ\u0026sup2; = 13.39, p-value\u0026thinsp;=\u0026thinsp;0.0003) within the regression model employed in this study. This indicates that the assumption of constant variance of residuals has been breached, which is a prevalent issue in panel data analyses (Wooldridge, \u003cspan citationid=\"CR81\" class=\"CitationRef\"\u003e2010\u003c/span\u003e; Gujarati \u0026amp; Porter, \u003cspan citationid=\"CR33\" class=\"CitationRef\"\u003e2009\u003c/span\u003e). In this study, the two-step System Generalized Method of Moments (System-GMM) estimation technique is utilized, which is tailored to address challenges like heteroscedasticity, autocorrelation, and possible endogeneity in panel data models (Arellano \u0026amp; Bover, \u003cspan citationid=\"CR8\" class=\"CitationRef\"\u003e1995\u003c/span\u003e; Blundell \u0026amp; Bond, \u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e1998\u003c/span\u003e). Consequently, the heteroscedasticity detected in this initial analysis is effectively managed by the selected estimation method, which guarantees robust and dependable regression estimates along with valid statistical inferences (Roodman, \u003cspan citationid=\"CR67\" class=\"CitationRef\"\u003e2009\u003c/span\u003e).\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec34\" class=\"Section2\"\u003e \u003ch2\u003e4.5 Collinearity Test\u003c/h2\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab6\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 6\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eMulticollinearity Test\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"3\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003eVariable\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eVIF\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003e1/VIF\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnIC\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e2.25\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.445\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnIDIC\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e2.13\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.469\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnDER\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1.09\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.919\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003eMean VIF\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1.82\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"3\"\u003e\u003cb\u003eSource: Author\u0026rsquo;s Compilation\u003c/b\u003e\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eThe results of the Variance Inflation Factor (VIF) test, as shown in Table\u0026nbsp;\u003cspan refid=\"Tab6\" class=\"InternalRef\"\u003e6\u003c/span\u003e, evaluate the potential presence of multicollinearity among the independent variables used in this study. Multicollinearity occurs when predictor variables exhibit high correlation, which can lead to increased standard errors and inaccurate regression estimates (Gujarati \u0026amp; Porter, \u003cspan citationid=\"CR33\" class=\"CitationRef\"\u003e2009\u003c/span\u003e; Hair et al., \u003cspan citationid=\"CR35\" class=\"CitationRef\"\u003e2010\u003c/span\u003e). The VIF values recorded are 2.25 for intellectual capital (lnIC), 2.13 for independent directors (lnIDIC), and 1.09 for leverage (lnDER). These values are well below the commonly accepted threshold of 10, and the mean VIF of 1.82 further supports the conclusion that severe multicollinearity is absent (Gujarati \u0026amp; Porter, \u003cspan citationid=\"CR33\" class=\"CitationRef\"\u003e2009\u003c/span\u003e; Wooldridge, \u003cspan citationid=\"CR82\" class=\"CitationRef\"\u003e2013\u003c/span\u003e). Consequently, the findings suggest that multicollinearity does not pose a problem in this study, thereby ensuring reliable and robust parameter estimation in the forthcoming econometric analysis.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec35\" class=\"Section2\"\u003e \u003ch2\u003e4.6 Difference or System GMM method\u003c/h2\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab7\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 7\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eChoosing the Appropriate Regression Method (Difference/System) GMM\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"3\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003ePooled OLS\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eFixed Effects Model\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eDifference GMM\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e0.839\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.798\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.653\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"3\"\u003e\u003cb\u003eSource: Author\u0026rsquo;s Compilation\u003c/b\u003e\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eTable\u0026nbsp;\u003cspan refid=\"Tab7\" class=\"InternalRef\"\u003e7\u003c/span\u003e displays the coefficient estimates of the lagged dependent variable (lnSGR) derived from three distinct econometric methods\u0026mdash;Pooled OLS (0.839), Fixed Effects model (0.798), and Difference GMM (0.653)\u0026mdash;to assist in choosing a suitable regression methodology for the current study. In the realm of econometric research (Arellano \u0026amp; Bond, \u003cspan citationid=\"CR7\" class=\"CitationRef\"\u003e1991\u003c/span\u003e; Blundell \u0026amp; Bond, \u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e1998\u003c/span\u003e), it is suggested that the optimal estimate for dynamic panel models should fall between the Pooled OLS estimate, which often exhibits an upward bias due to the oversight of unobserved firm-specific effects, and the Fixed Effects estimate, which tends to show a downward bias as a result of its correlation with lagged dependent variables. The Difference GMM estimate of 0.653 is notably lower than both the Pooled OLS and Fixed Effects estimates, suggesting a downward bias or possible concerns regarding weak instrumentation. As a result, these findings support the use of the two-step System GMM method in this study, as it effectively integrates level and differenced equations to mitigate biases present in alternative approaches, yielding more robust and accurate estimations (Blundell \u0026amp; Bond, \u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e1998\u003c/span\u003e; Roodman, \u003cspan citationid=\"CR67\" class=\"CitationRef\"\u003e2009\u003c/span\u003e).\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec36\" class=\"Section2\"\u003e \u003ch2\u003e4.7 Dynamic Panel Regression Results\u003c/h2\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab8\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 8\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003ePanel Regression Results of the Two-Step System GMM Method\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"7\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c6\" colnum=\"6\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c7\" colnum=\"7\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003elnSGR\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eCoefficient\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eStd.err.\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003ez\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003eP\u0026gt;|z|\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colspan=\"2\" nameend=\"c7\" namest=\"c6\"\u003e \u003cp\u003e[95% conf.interval]\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnSGR L1.\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.107\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.087\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e0.24\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.0430**\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e-0.263\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c7\"\u003e \u003cp\u003e0.207\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnIC\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.207\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.056\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e3.65\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e0.096\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c7\"\u003e \u003cp\u003e0.318\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnIDIC\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e0.319\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.057\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e5.59\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e0.207\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c7\"\u003e \u003cp\u003e0.431\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003elnDER\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e-0.127\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.025\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e-5.02\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e-0.177\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c7\"\u003e \u003cp\u003e-0.077\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e_cons\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e-2.110\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.340\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e-6.19\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.0000***\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e-2.777\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c7\"\u003e \u003cp\u003e-1.442\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"7\"\u003e\u003cb\u003eSource: Author\u0026rsquo;s Compilation\u003c/b\u003e\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eThe findings shown in Table\u0026nbsp;\u003cspan refid=\"Tab8\" class=\"InternalRef\"\u003e8\u003c/span\u003e demonstrate the two-step System GMM regression that investigates the influence of Intellectual Capital (IC), Independent Directors (IDIC), and leverage (DER) on the Sustainable Growth Rate (SGR) of companies within the NSE NIFTY Pharma index in India.\u003c/p\u003e \u003cp\u003eThe lagged sustainable growth rate (lnSGR L1) has a positive effect on the current sustainable growth rate, exhibiting a coefficient of 0.107, which is significant at the 5% level (p\u0026thinsp;=\u0026thinsp;0.043). This finding affirms the presence of persistence or path dependency in sustainable growth, indicating that previous performance plays a role in shaping current sustainability prospects. This persistence is consistent with dynamic panel literature indicating that firm growth shows temporal continuity (Arellano \u0026amp; Bond, \u003cspan citationid=\"CR7\" class=\"CitationRef\"\u003e1991\u003c/span\u003e; Blundell \u0026amp; Bond, \u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e1998\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eIntellectual capital (lnIC) has a significant and positive effect on sustainable growth (coefficient\u0026thinsp;=\u0026thinsp;0.207, p\u0026thinsp;=\u0026thinsp;0.000). This suggests that pharmaceutical firms that invest more heavily in various components of intellectual capital\u0026mdash;such as human, structural, relational, innovation capital, and capital employed\u0026mdash;tend to achieve greater sustainable growth. This finding aligns with previous research highlighting that intellectual capital plays a crucial role in enhancing long-term financial performance and sustainability (Balaji and Mamilla, \u003cspan citationid=\"CR11\" class=\"CitationRef\"\u003e2024\u003c/span\u003e; Balaji and Mamilla, \u003cspan citationid=\"CR10\" class=\"CitationRef\"\u003e2023\u003c/span\u003e; Ionita and Dinu, \u003cspan citationid=\"CR38\" class=\"CitationRef\"\u003e2021\u003c/span\u003e; Xu et al., \u003cspan citationid=\"CR85\" class=\"CitationRef\"\u003e2021\u003c/span\u003e; Xu et al., \u003cspan citationid=\"CR84\" class=\"CitationRef\"\u003e2020\u003c/span\u003e; Xu and Wang, \u003cspan citationid=\"CR83\" class=\"CitationRef\"\u003e2018\u003c/span\u003e; Chen et al., 2005; Edvinsson \u0026amp; Malone, \u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e1997\u003c/span\u003e; Sveiby, \u003cspan citationid=\"CR74\" class=\"CitationRef\"\u003e1997\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eIndependent directors (lnIDIC) demonstrate a significant positive impact (coefficient\u0026thinsp;=\u0026thinsp;0.319, p\u0026thinsp;=\u0026thinsp;0.000) on sustainable growth, affirming their moderating role in improving corporate governance effectiveness and firm performance. This aligns with earlier studies suggesting that greater board independence enhances firm outcomes by fostering better governance quality, diminishing agency conflicts, and elevating managerial accountability (Dalton et al., \u003cspan citationid=\"CR19\" class=\"CitationRef\"\u003e1998\u003c/span\u003e; Bhagat \u0026amp; Black, \u003cspan citationid=\"CR15\" class=\"CitationRef\"\u003e2001\u003c/span\u003e; Jackling \u0026amp; Johl, \u003cspan citationid=\"CR40\" class=\"CitationRef\"\u003e2009\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eThe leverage variable (lnDER) has a significant negative impact on sustainable growth (coefficient = -0.127, p\u0026thinsp;=\u0026thinsp;0.000), indicating that firms with greater financial leverage face limitations that reduce their sustainable growth prospects. This finding closely aligns with the arguments presented by Ali et al., \u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2022\u003c/span\u003e, Das et al. \u003cspan citationid=\"CR21\" class=\"CitationRef\"\u003e2022\u003c/span\u003e, Danso et al., \u003cspan citationid=\"CR20\" class=\"CitationRef\"\u003e2021\u003c/span\u003e, Titman and Wessels (\u003cspan citationid=\"CR75\" class=\"CitationRef\"\u003e1988\u003c/span\u003e), Myers and Majluf (\u003cspan citationid=\"CR55\" class=\"CitationRef\"\u003e1984\u003c/span\u003e), and Frank and Goyal (\u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e2009\u003c/span\u003e), who consistently identified a negative relationship between leverage and firm growth, attributing it to the financial risks and resource constraints linked to elevated debt levels.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec37\" class=\"Section2\"\u003e \u003ch2\u003e4.8 Diagnostic Tests/Model fit results\u003c/h2\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab9\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 9\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eDiagnostic Tests\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"4\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eAR(1)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eAR(2)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eSargan test\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eResearch Model\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e0.024\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e0.086\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e0.426\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"4\"\u003e\u003cb\u003eSource: Author\u0026rsquo;s Compilation\u003c/b\u003e\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eThe diagnostic test results in Table\u0026nbsp;\u003cspan refid=\"Tab9\" class=\"InternalRef\"\u003e9\u003c/span\u003e offer significant evidence concerning the adequacy and validity of the Two-Step System GMM model utilized in this study. The Arellano\u0026ndash;Bond test for first-order serial correlation, AR(1), indicates a significant p-value of 0.024 (\u0026lt;\u0026thinsp;0.05), thereby confirming the anticipated first-order autocorrelation commonly found in the residuals of differenced equations within dynamic panel models (Arellano \u0026amp; Bond, \u003cspan citationid=\"CR7\" class=\"CitationRef\"\u003e1991\u003c/span\u003e). The second-order autocorrelation test, AR(2), shows a non-significant p-value (0.086\u0026thinsp;\u0026gt;\u0026thinsp;0.05), suggesting no issues with second-order autocorrelation, thereby confirming the appropriateness of the instrument selection and model specification (Roodman, \u003cspan citationid=\"CR67\" class=\"CitationRef\"\u003e2009\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eThe Sargan test result (p-value\u0026thinsp;=\u0026thinsp;0.426\u0026thinsp;\u0026gt;\u0026thinsp;0.05) indicates that the instruments employed in the model are valid and not over-identified. A non-significant Sargan statistic is crucial for validating the suitability of instruments used in dynamic panel GMM estimation (Sargan, \u003cspan citationid=\"CR69\" class=\"CitationRef\"\u003e1958\u003c/span\u003e; Roodman, \u003cspan citationid=\"CR67\" class=\"CitationRef\"\u003e2009\u003c/span\u003e). The diagnostic test outcomes collectively affirm the appropriateness, robustness, and validity of the two-step System GMM model utilized in this analysis, thereby ensuring credible and reliable inferences about the relationship between intellectual capital, independent directors, leverage, and sustainable growth rates.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab10\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 10\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eHypotheses Testing results\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"3\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003eHypothesis\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eResult\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eEvidence\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eH\u003csub\u003e1\u003c/sub\u003e:Intellectual Capital positively impacts the Sustainable Growth rate of Indian Pharma companies.\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e\u003cb\u003eSupported\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eCoefficient\u0026thinsp;=\u0026thinsp;0.207, p\u0026thinsp;=\u0026thinsp;0.000\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eIndependent directors positively moderate the relationship between Intellectual Capital and the Sustainable Growth rate of Indian Pharma companies.\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e\u003cb\u003eSupported\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eCoefficient\u0026thinsp;=\u0026thinsp;0.319, p\u0026thinsp;=\u0026thinsp;0.000\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eH\u003csub\u003e3\u003c/sub\u003e:Leverage (control variable) positively impacts the Sustainable Growth rate of Indian Pharma companies.\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e\u003cb\u003eNot Supported\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eCoefficient = -0.127, p\u0026thinsp;=\u0026thinsp;0.000\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003ctfoot\u003e \u003ctr\u003e\u003ctd colspan=\"3\"\u003e\u003cb\u003eSource: Author\u0026rsquo;s Compilation\u003c/b\u003e\u003c/td\u003e\u003c/tr\u003e \u003c/tfoot\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003c/div\u003e"},{"header":"5 Discussion","content":"\u003cp\u003eThe empirical findings from the two-step System GMM analysis offer significant insights into the factors influencing the Sustainable Growth Rate (SGR) of pharmaceutical firms listed on India's NSE NIFTY Pharma index. The substantial positive influence of Intellectual Capital (IC) suggests that Indian pharmaceutical firms that utilize intangible assets, skilled personnel, strong R\u0026amp;D capabilities, and effective stakeholder relationships are more likely to achieve sustainable growth. In the competitive pharmaceutical sector, investments in intellectual capital enable companies to establish distinct market positions by developing innovative product pipelines, enhancing drug efficacy, expediting regulatory approvals, and strengthening market relationships. The positive correlation is consistent with existing literature that highlights intellectual capital as a key factor influencing sustainable financial and market performance, especially in knowledge-intensive sectors like pharmaceuticals (Chen et al., 2005; Sveiby, \u003cspan citationid=\"CR74\" class=\"CitationRef\"\u003e1997\u003c/span\u003e; Edvinsson \u0026amp; Malone, \u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e1997\u003c/span\u003e). For Indian pharmaceutical companies, intellectual capital serves as a strategic asset essential for maintaining competitive advantage and facilitating long-term growth.\u003c/p\u003e \u003cp\u003eThe analysis reveals a significant positive moderating effect of independent directors on sustainable growth, highlighting the crucial role of effective corporate governance practices in the Indian pharmaceutical industry. Pharmaceutical companies that have a greater percentage of independent directors tend to exhibit improved corporate governance quality, which supports strategic oversight, transparent decision-making processes, and effective management monitoring. This finding aligns with corporate governance theories that highlight the positive impact of independent directors on firm performance through the reduction of managerial entrenchment, enhancement of decision-making, and promotion of transparency (Dalton et al., \u003cspan citationid=\"CR19\" class=\"CitationRef\"\u003e1998\u003c/span\u003e; Bhagat \u0026amp; Black, \u003cspan citationid=\"CR15\" class=\"CitationRef\"\u003e2001\u003c/span\u003e; Jackling \u0026amp; Johl, \u003cspan citationid=\"CR40\" class=\"CitationRef\"\u003e2009\u003c/span\u003e). The presence of independent directors enhances the positive effects of intellectual capital investments by promoting governance practices that align corporate activities with sustainable growth objectives.\u003c/p\u003e \u003cp\u003eThe analysis indicates a notable adverse effect of leverage on sustainable growth. This suggests that Indian pharmaceutical companies exhibiting elevated financial leverage (debt-to-equity ratio) encounter reduced sustainable growth. High leverage in this context indicates a heightened risk of financial distress, diminished financial flexibility, and constraints on investment in essential sectors such as research and development and the advancement of intellectual capital (Myers \u0026amp; Majluf, \u003cspan citationid=\"CR55\" class=\"CitationRef\"\u003e1984\u003c/span\u003e; Titman \u0026amp; Wessels, \u003cspan citationid=\"CR75\" class=\"CitationRef\"\u003e1988\u003c/span\u003e; Frank \u0026amp; Goyal, \u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e2009\u003c/span\u003e). The significant investment and ongoing innovation demand in the pharmaceutical sector suggest that high leverage could restrict companies' strategic flexibility and reduce their potential for sustainable growth. Therefore, pharmaceutical companies need to maintain moderate leverage levels to ensure adequate liquidity and sustainable long-term performance.\u003c/p\u003e \u003cp\u003eThis study highlights the essential function of intellectual capital and robust corporate governance via independent directors in fostering sustainable growth in India's pharmaceutical sector. Prudent management of financial leverage is essential for preventing potential limitations on growth. The findings offer strategic direction for pharmaceutical companies, policymakers, and corporate governance authorities seeking to enhance sustainable industry performance.\u003c/p\u003e"},{"header":"6 Implications and Scope for Further Research","content":"\u003cdiv id=\"Sec40\" class=\"Section2\"\u003e \u003ch2\u003e6.1 Theoretical Implications\u003c/h2\u003e \u003cp\u003eThe results of this study have important theoretical implications, particularly in relation to the Resource-Based View (RBV) and Agency Theory frameworks. This study enhances the applicability of the Resource-Based View (RBV) by presenting empirical evidence from India's pharmaceutical industry. It demonstrates that intellectual capital, is a vital intangible asset that drives sustainable growth. This study emphasizes the beneficial role of intellectual capital in enhancing sustainable growth rates, thereby broadening the Resource-Based View's relevance, especially in knowledge-intensive industries like pharmaceuticals, where competitive advantage is intricately linked to innovation and the use of intangible resources.\u003c/p\u003e \u003cp\u003eFurthermore, the important moderating function of independent directors highlights the significance and explanatory capacity of Agency Theory in analyzing sustainable firm performance. The research demonstrates that independent board structures serve as essential governance mechanisms that mitigate managerial agency conflicts, improve accountability, and align strategies with shareholder interests, thereby positively impacting long-term sustainability and growth. This study enhances the agency-theoretic literature by empirically demonstrating that governance structures, particularly board independence, significantly improve the relationship between intellectual capital and sustainable firm performance in emerging markets.\u003c/p\u003e \u003cp\u003eFinally, the identified adverse effect of leverage on sustainable growth enhances theoretical understanding of capital structure theories, particularly the pecking-order and trade-off theories. The study empirically demonstrates that excessive leverage adversely impacts sustainable growth, reinforcing theoretical arguments that high debt levels limit strategic flexibility and investments in innovation, both of which are essential for sustained performance and growth. This empirical validation in the Indian pharmaceutical sector provides important insights into financial theories regarding the risks and limitations associated with increased leverage in growth-oriented, innovation-driven industries.\u003c/p\u003e \u003cp\u003eThis study integrates Resource-Based View and Agency Theory perspectives while considering capital structure, thereby enhancing theoretical understanding and offering a nuanced explanation of the determinants affecting sustainable growth in dynamic industry contexts.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec41\" class=\"Section2\"\u003e \u003ch2\u003e6.2 Practical Implications\u003c/h2\u003e \u003cp\u003eThe findings concerning the components of Intellectual Capital (IC) particularly highlight practical insights for pharmaceutical companies listed in the NSE NIFTY Pharma index. Intellectual Capital plays a crucial role in fostering sustainable growth. Therefore, companies in this innovation-driven sector ought to strategically allocate resources towards Human Capital and also specialized training programs for scientists and researchers, enhance internal knowledge management systems, and systematically improve their R\u0026amp;D infrastructure. Additionally, pharmaceutical companies ought to focus on establishing robust external networks and collaborations with academic institutions, research laboratories, and healthcare organizations to effectively utilize relational capital. By investing in these specific intangible assets, pharmaceutical firms in India can enhance innovation, create competitive pharmaceutical products, effectively commercialize new formulations, and bolster their market position, ultimately transforming these intellectual capabilities into lasting competitive advantage and growth.\u003c/p\u003e \u003cp\u003eFurthermore, the notable positive moderating influence of independent directors highlights the necessity for pharmaceutical companies to enhance board independence. Companies can improve the effectiveness and transparency of corporate governance by bringing on board qualified independent directors. These directors provide objective oversight, mitigate agency conflicts, and encourage strategic decision-making that aligns with long-term sustainability objectives. This method enhances corporate governance while also conveying increased credibility to investors, which may lead to improved market valuation and greater investor confidence.\u003c/p\u003e \u003cp\u003eThe observed negative impact of leverage on sustainable growth underscores the significance of careful management of capital structure. Companies need to closely observe and manage their leverage levels, understanding that an overdependence on debt financing can restrict financial flexibility and impede sustainable growth potential because of increased financial distress risk. Pharmaceutical firms should strategically manage leverage, balancing debt utilization with adequate internal funding to ensure long-term growth and stability.\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec42\" class=\"Section2\"\u003e \u003ch2\u003e6.3 Societal Implications\u003c/h2\u003e \u003cp\u003eThis study's findings provide significant insights for both corporate stakeholders and society as a whole. Intellectual capital plays a crucial role in fostering sustainable growth within pharmaceutical companies. Therefore, firms listed in the NSE NIFTY Pharma Index have the potential to make a meaningful impact on societal well-being by strategically investing in their intellectual assets. Human capital development, achieved through ongoing employee training and knowledge enhancement, fosters greater innovation capacities, allowing firms to deliver affordable, accessible, and high-quality healthcare solutions for society. Investing in structural capital can lead to the establishment of effective systems and processes, enhancing efficiencies and lowering costs, which ultimately benefits consumers by making medicine more affordable. Increased investment in relational capital fosters stronger collaborations with hospitals, universities, research institutions, regulatory agencies, and communities, enabling partnerships that promote quicker and more effective responses to public health challenges. Investing in innovation and research and development can lead to the prompt launch of new pharmaceutical products, meeting unmet medical needs and enhancing public health standards. As a result, nurturing the elements of intellectual capital can empower Indian pharmaceutical companies to more effectively tackle public health challenges, improve social welfare, and support the United Nations Sustainable Development Goal of good health and well-being (SDG-3).\u003c/p\u003e \u003c/div\u003e \u003cdiv id=\"Sec43\" class=\"Section2\"\u003e \u003ch2\u003e6.4 Policy Maker\u0026rsquo;s Implications\u003c/h2\u003e \u003cp\u003eAs Indian pharmaceutical companies listed on the NSE NIFTY Pharma index have begun to disclose components of Intellectual Capital in their integrated reports, it may be beneficial for policymakers and regulatory bodies, including the Securities and Exchange Board of India (SEBI), Ministry of Corporate Affairs (MCA), and other financial regulators, to explore the creation of standardized frameworks and guidelines for the assessment and disclosure of Intellectual Capital (IC) in corporate reporting. While integrated reporting is becoming more common, establishing standards for measuring and reporting on components of intellectual capital\u0026mdash;like human capital efficiency, structural capital efficiency, relational capital, and innovation capacity\u0026mdash;could improve transparency, comparability, and boost investor confidence.\u003c/p\u003e \u003cp\u003eAdditionally, regulators and policymakers might implement guidelines or incentives that motivate firms to enhance governance standards, particularly in relation to board independence. The study\u0026rsquo;s findings indicate that independent directors play a crucial role in enhancing the connection between intellectual capital and sustainable firm growth. Therefore, implementing policy interventions that encourage higher standards of independence and effective governance practices could prove advantageous. Policymakers, including the Securities and Exchange Board of India (SEBI), might reevaluate current governance codes to clearly outline ideal board composition, with a particular focus on independence criteria suited to the innovation-driven pharmaceutical sector.\u003c/p\u003e \u003cp\u003eFurthermore, in light of the negative impacts of high leverage on sustainable growth emphasized by this study, financial regulators and policymakers could contemplate the creation of careful leverage guidelines tailored to the pharmaceutical sector, ensuring a balance in debt levels to uphold financial stability while fostering long-term investments in innovation. These measures may assist pharmaceutical companies in sustaining robust financial frameworks, allowing for ongoing investment in essential research, development, and innovation efforts that support long-term industry viability and competitive edge.\u003c/p\u003e \u003c/div\u003e"},{"header":"7 Conclusion","content":"\u003cp\u003eThis study empirically examines the influence of Intellectual Capital on the Sustainable Growth Rate of pharmaceutical firms listed on the NSE NIFTY Pharma index in India, integrating Independent Directors as a moderating factor and Leverage (Debt-Equity Ratio) as a control variable. The study employed a descriptive research design utilizing panel data from FY 2015 to FY 2024, implementing the Two-Step System GMM method for a thorough econometric analysis. The findings make a substantial contribution to the existing body of knowledge regarding corporate governance, financial sustainability, and the nuances of capital management, especially within the context of the Indian pharmaceutical sector. The findings support the Resource-Based View (RBV) by illustrating that Intellectual Capital acts as a strategic asset that greatly contributes to sustainable growth. The positive and significant coefficient for IC suggests that companies that invest in human expertise, structural effectiveness, and relational networks attain enhanced long-term performance. This is consistent with previous research indicating that intellectual capital is a crucial factor in achieving competitive advantage, especially in knowledge-driven sectors like pharmaceuticals. The empirical findings support the notion that investments in R\u0026amp;D, robust organizational processes, and strategic collaborations play a crucial role in fostering innovation, ensuring regulatory compliance, and facilitating market expansion, ultimately resulting in an increased SGR.\u003c/p\u003e \u003cp\u003eThe research further supports Agency Theory, emphasizing the crucial function of Independent Directors in enhancing corporate governance. The notable and affirmative coefficient for Independent Directors indicates that Independent Directors play a crucial role in moderating the relationship between Intellectual Capital and SGR, thereby enhancing risk management, compliance with ethical standards, and strategic oversight. This finding reinforces the corporate governance literature, highlighting that a structured board reduces agency conflicts, improves accountability for managers, and corresponds company conduct with sustainable growth goals. Pharmaceutical companies that have a greater percentage of independent directors demonstrate enhanced governance practices that promote effective resource use, greater transparency, and informed decision-making, all of which support long-term financial sustainability. The study, on the other hand, reveals that Leverage (Debt-Equity Ratio) has a negative impact on SGR. This is consistent with capital structure theories, especially Pecking Order Theory, which indicates that high levels of debt elevate financial risk, diminish investment flexibility, and restrict firms' capacity to seize growth opportunities. The significant leverage present in pharmaceutical companies, where ongoing investments in research and development are essential, can limit innovation, postpone regulatory approvals, and obstruct market growth, ultimately affecting long-term sustainability. The findings align with previous research indicating that effective capital structure management is crucial for maintaining growth and reducing financial distress risks in high-growth industries.\u003c/p\u003e \u003cp\u003eThe study highlights the strategic significance of investments in Intellectual Capital for pharmaceutical companies in India. Companies ought to focus on attracting top talent, streamlining processes, and forming strategic partnerships to strengthen their competitive edge. Furthermore, the study highlights the importance of robust corporate governance frameworks, promoting strong board independence and regulatory oversight to encourage ethical business practices and reduce managerial opportunism. The findings provide important insights for financial decision-makers, emphasizing the need to maintain a balanced debt structure to prevent liquidity constraints while fostering innovation-driven growth. In summary, this study offers both theoretical and empirical insights that underscore the significance of Intellectual Capital and corporate governance in fostering sustainable growth in the Indian pharmaceutical sector.\u003c/p\u003e"},{"header":"Declarations","content":"\u003cp\u003e\u003cstrong\u003eFunding Declaration\u003c/strong\u003e: \u0026lsquo;No funding was received to assist with the preparation of this manuscript.\u0026rsquo;\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eClinical Trial Number:\u0026nbsp;\u003c/strong\u003e\u0026lsquo;Clinical trial number: not applicable\u0026rsquo;.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eConsent to Participate declaration:\u003c/strong\u003e \u0026lsquo;Consent to Participate declaration: not applicable\u0026rsquo;.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eConsent to Publish:\u0026nbsp;\u003c/strong\u003e\u0026lsquo;Consent to Publish declaration: not applicable\u0026rsquo;.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eData Availability Statements: \u0026lsquo;\u003c/strong\u003eThe research is purely based on secondary data. The data will\u003c/p\u003e\n\u003cp\u003ebe made available on request\u0026rsquo;.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eEthics Declaration\u003c/strong\u003e: \u0026lsquo;The manuscript has not been submitted to any other journal for simultaneous consideration. The Research does not involve Human Participants or Animals\u0026rsquo;.\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eCompeting Interest Declaration: \u0026lsquo;\u003c/strong\u003eThe authors declare that they have no competing interests.\u0026rsquo;\u003c/p\u003e\n\u003cp\u003e\u003cstrong\u003eAuthors Contribution:\u003c/strong\u003e\u003c/p\u003e\n\u003cp\u003eConceptualization: [Manigandan R, Vaishnavi Balaji]\u003c/p\u003e\n\u003cp\u003eMethodology: [Manigandan R, Vaishnavi Balaji, Supriya R, Shakti Priya A]\u003c/p\u003e\n\u003cp\u003eFormal analysis and investigation: [Manigandan R, Vaishnavi Balaji]\u003c/p\u003e\n\u003cp\u003eData curation: [Manigandan R, Vaishnavi Balaji]\u003c/p\u003e\n\u003cp\u003eWriting \u0026ndash; original draft preparation: [Manigandan R, Vaishnavi Balaji]\u003c/p\u003e\n\u003cp\u003eWriting \u0026ndash; review and editing: [Supriya R, Shakti Priya A]\u003c/p\u003e\n\u003cp\u003eVisualization: [Vaishnavi Balaji, Shakti Priya A]\u003c/p\u003e\n\u003cp\u003eResources: [Manigandan R, Vaishnavi Balaji, Supriya R]\u003c/p\u003e\n\u003cp\u003eSupervision: [Supriya R, Shakti Priya A]\u003c/p\u003e\n"},{"header":"References","content":"\u003col\u003e\u003cli\u003e\u003cspan\u003eAgrawal A, Chadha S. 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Intellectual capital, financial performance and companies\u0026rsquo; sustainable growth: Evidence from the Korean manufacturing industry. Sustainability. 2018;10(12):4651.\u003c/span\u003e\u003c/li\u003e \u003cli\u003e\u003cspan\u003eXu XL, Chen HH, Zhang RR. The impact of intellectual capital efficiency on corporate sustainable growth-evidence from smart agriculture in China. Agriculture. 2020;10(6):199.\u003c/span\u003e\u003c/li\u003e \u003cli\u003e\u003cspan\u003eXu XL, Li J, Wu D, Zhang X. (2021). The intellectual capital efficiency and corporate sustainable growth nexus: comparison from agriculture, tourism and renewable energy sector. Environ Dev Sustain, 1\u0026ndash;19.\u003c/span\u003e\u003c/li\u003e \u003cli\u003e\u003cspan\u003eYazdanfar D, \u0026Ouml;hman P. Debt financing and firm performance: an empirical study based on Swedish data. J Risk Finance. 2015;16(1):102\u0026ndash;18.\u003c/span\u003e\u003c/li\u003e\u003c/ol\u003e"}],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":true,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":true,"isAuthorSuppliedPdf":false,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":false,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"discover-sustainability","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"disu","sideBox":"Learn more about [Discover Sustainability](https://www.springer.com/43621)","snPcode":"","submissionUrl":"","title":"Discover Sustainability","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"stoa","reportingPortfolio":"Discover Series","inReviewEnabled":true,"inReviewRevisionsEnabled":true},"keywords":"Independent Directors, Intellectual Capital, Leverage, NSE NIFTY Pharma index, Pharmaceutical companies, Sustainable Growth","lastPublishedDoi":"10.21203/rs.3.rs-6268440/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-6268440/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis research investigates how Intellectual Capital (IC) influences the Sustainable Growth Rate (SGR) of Indian pharmaceutical firms that are part of the NSE NIFTY Pharma index. This study delves deeper into the moderating influence of Independent Directors and examines the control effect of Leverage (Debt-Equity Ratio) on this relationship. A descriptive research design was utilized, employing panel data from FY 2015 to FY 2024. The dataset was obtained from the Prowess database (CMIE), and the Two-Step System GMM method was utilized with STATA 18 to guarantee a thorough econometric analysis. The findings indicate that Intellectual Capital (IC) plays a crucial role in enhancing SGR, thereby reinforcing the Resource-Based View (RBV). Independent Directors effectively moderate this relationship, strengthening Agency Theory. Nonetheless, leverage has a detrimental effect on SGR, consistent with Pecking Order Theory. Pharmaceutical companies ought to allocate resources towards Intellectual Capital, enhance corporate governance, and uphold appropriate debt levels to ensure sustained long-term growth. This study effectively combines IC, corporate governance, and financial leverage in the Indian pharmaceutical sector, providing valuable concrete insights for policymakers, academics, and industry experts.\u003c/p\u003e","manuscriptTitle":"Enhancing Sustainable Growth in the Indian Pharma Industry: The Governance Role of Independent Directors and Intellectual Capital – A Study on NSE NIFTY Pharma Index Companies","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2025-05-12 18:43:50","doi":"10.21203/rs.3.rs-6268440/v1","editorialEvents":[{"type":"communityComments","content":0},{"type":"decision","content":"Revision requested","date":"2025-06-06T11:15:16+00:00","index":"","fulltext":""},{"type":"editorInvitedReview","content":"","date":"2025-06-02T01:33:10+00:00","index":"hide","fulltext":""},{"type":"reviewerAgreed","content":"20461314464825019515092838789743411441","date":"2025-06-02T00:28:05+00:00","index":"hide","fulltext":""},{"type":"reviewerAgreed","content":"62734304918769731586095348244237223151","date":"2025-06-01T05:28:05+00:00","index":"hide","fulltext":""},{"type":"reviewerAgreed","content":"89841123684684631091098672225624892840","date":"2025-05-31T11:25:25+00:00","index":"hide","fulltext":""},{"type":"editorInvitedReview","content":"","date":"2025-05-29T15:33:24+00:00","index":"hide","fulltext":""},{"type":"reviewerAgreed","content":"113235578775476446295555920033704119258","date":"2025-05-26T12:36:49+00:00","index":"hide","fulltext":""},{"type":"reviewersInvited","content":"","date":"2025-05-07T05:21:29+00:00","index":"","fulltext":""},{"type":"editorAssigned","content":"","date":"2025-04-16T06:23:25+00:00","index":"","fulltext":""},{"type":"checksComplete","content":"","date":"2025-04-16T06:22:53+00:00","index":"","fulltext":""},{"type":"submitted","content":"Discover Sustainability","date":"2025-03-20T09:48:42+00:00","index":"","fulltext":""}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"discover-sustainability","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"disu","sideBox":"Learn more about [Discover Sustainability](https://www.springer.com/43621)","snPcode":"","submissionUrl":"","title":"Discover Sustainability","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"stoa","reportingPortfolio":"Discover Series","inReviewEnabled":true,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"5c6fc92f-3101-44d0-a5ed-e0f18e314ab9","owner":[],"postedDate":"May 12th, 2025","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"published-in-journal","subjectAreas":[],"tags":[],"updatedAt":"2026-01-26T16:02:11+00:00","versionOfRecord":{"articleIdentity":"rs-6268440","link":"https://doi.org/10.1007/s43621-025-02546-2","journal":{"identity":"discover-sustainability","isVorOnly":false,"title":"Discover Sustainability"},"publishedOn":"2026-01-20 15:58:49","publishedOnDateReadable":"January 20th, 2026"},"versionCreatedAt":"2025-05-12 18:43:50","video":"","vorDoi":"10.1007/s43621-025-02546-2","vorDoiUrl":"https://doi.org/10.1007/s43621-025-02546-2","workflowStages":[]},"version":"v1","identity":"rs-6268440","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-6268440","identity":"rs-6268440","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}