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Journal ArticleDOI

Intellectual capital and performance of pharmaceutical firms in India

23 Jul 2014-Journal of Intellectual Capital (Emerald Group Publishing Limited)-Vol. 15, Iss: 1, pp 83-99
TL;DR: In this paper, the relationship between intellectual capital (IC) and performance of pharmaceutical firms in India was studied and three extended and modified models of Value Added Intellectual Coefficient (VAIC) method were proposed.
Abstract: Purpose – The purpose of this paper is to study the relationship between intellectual capital (IC) and performance of pharmaceutical firms in India. The secondary objective is to propose and test modified models of Value Added Intellectual Coefficient (VAIC™) method. Design/methodology/approach – Data on 22 large pharmaceutical firms collected for empirical investigation. Return on assets and return on sales are performance variables. IC and its components – human capital, structural capital and relational capital (RC), are predictor variables. Three extended and modified VAIC™ models (e-VAIC™) are proposed. Multiple regression technique is applied on pooled data to draw inferences. Findings – Results show instances of positive relationship between IC and performance variables. RC, the new variable, does not demonstrate statistically significant relationship with performance variables. Research limitations/implications – Due to inadequate reporting of IC and its components, availability of data on various...
Citations
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Journal ArticleDOI
TL;DR: In this paper, the authors examined the degree to which intellectual capital and its key components affect the financial performance of selected ICT companies compared to effects on physical and financial capital in the Serbian information communication technology (ICT) sector.
Abstract: Purpose – The purpose of this paper is to examine whether intellectual capital (IC) creates value in the Serbian information communication technology (ICT) sector. More specifically, it examines the degree to which IC and its key components affect the financial performance of selected ICT companies compared to effects on physical and financial capital. Design/methodology/approach – The analysis included 13,989 Serbian ICT companies during 2009-2013. Value-added intellectual coefficient (VAIC) was used to measure the level of IC contribution to value creation. Measures of financial performance used in the study were return on equity, return on assets, return on invested capital, profitability, and asset turnover. Findings – Results indicate that, when using firm size and leverage as control variables, only capital-employed efficiency has significant effect on financial performance. Finally, the research confirms that there were no significant differences in financial performance among different ICT subsect...

165 citations

Journal ArticleDOI
TL;DR: In this paper, the impact of IC on financial performance and sustainable growth in the Korean manufacturing industry was investigated using multiple regression models with data collected from 390 manufacturing companies listed on the Korean Stock Exchange during 2012-2016.
Abstract: Intellectual capital (IC) is considered to be a wealth generator and driver of financial performance thus creating competitive advantage and sustainability in business. This paper empirically investigates the impact of IC on financial performance and sustainable growth in the Korean manufacturing industry. Multiple regression models are applied with data collected from 390 manufacturing companies listed on the Korean Stock Exchange during 2012–2016. The results of the analysis show that IC has a positive impact on financial performance and companies’ sustainable growth. In addition, companies’ performance and sustainable growth are positively related to physical capital, human capital (HC), and relational capital (RC). RC is found to be the most influencing factor. Finally, innovative capital captures additional information on structural capital (SC) which negatively affects the performance of Korean manufacturing companies. The results extend the understanding of IC in creating corporate value and building sustainable advantages in emerging economies.

159 citations

Journal ArticleDOI
TL;DR: In this article, the authors examined the effect of intellectual capital (IC) on financial performance (FP) for Indian companies listed on the Centre for Monitoring Indian Economy Overall Share Price Index (COSPI).
Abstract: The purpose of this paper is to examine the effect of intellectual capital (IC) on financial performance (FP) for Indian companies listed on the Centre for Monitoring Indian Economy Overall Share Price Index (COSPI).,Hypotheses were developed according to theories and literature review. Secondary data were collected from Indian companies listed on the COSPI between 2001 and 2016, and the value-added intellectual coefficient (VAIC) of Pulic (2000) was used to measure IC and its components. A dynamic system generalized method of moments (SGMM) estimator was employed to identify the variables that significantly contribute to firm performance.,Indian listed firms appear to be performing well and efficiently utilizing their IC. Overall, human capital had a major impact on firm productivity during the study period. Furthermore, the empirical analysis showed that structural capital efficiency and capital employed efficiency were equally important contributors to firm’s sales growth and market value. The growing importance of the contribution of IC to value creation was consistently reflected in the FP of these Indian companies.,This study has robust theoretical grounds and employs a validated methodology. The present study extends knowledge of IC among academicians and managers and highlights its contribution to value creation. The findings may help stakeholders and policymakers in developing countries properly reallocate intellectual resources.,This study is the first study to evaluate IC and its relationship with traditional measures of firm performance among Indian listed firms using dynamic SGMM and VAIC models.

149 citations

Journal ArticleDOI
TL;DR: In this paper, an extended and modified value-added (VA) intellectual coefficient (VAIC) model was proposed to explore the relationship between IC and firm performance for Turkish manufacturing firms on a more detailed level.
Abstract: The purpose of this paper is to propose an extended and modified value-added (VA) intellectual coefficient (VAIC) model, which includes intellectual capital (IC) components which were missing in the original VAIC approach. The proposed model has been used to explore the relationship between IC and firm performance for Turkish manufacturing firms on a more detailed level.,Multiple regression analysis has been employed to identify the IC components, which predict the performance of the firm and the moderating effect of some IC components on IC components–firm performance relationship. Data are required to calculate the IC components, and firm performance variables have been obtained from the financial reports of the Turkish manufacturing firms for the period 2003–2013.,According to the results for Turkish manufacturing sector innovation capital efficiency has a moderating effect on the relationship between structural capital efficiency (SCE) and profitability, meaning, depending on an increase in R&D expenses, the effect of SCE on profitability also increases. On the other hand, it has been found that innovation capital efficiency has a direct impact on firms’ productivity. The results also showed that IC efficiency components have a moderating role on the relationship between capital employed efficiency and profitability.,There might be a time lag until the effect of R&D investments can be observed in firms’ performance. However, this lagged impact of innovation capital and also other IC components on future firm performance has not been investigated due to concerns related to sample size.,The proposed model differs from the original VAIC model in three ways: it, namely, includes two additional IC components, customer capital (CC) and innovation capital. It explores the moderating effect of innovation capital on structural capital–firm performance relationship and the moderating effect of IC components on employed capital–firm performance relationship. As the last difference, it proposes an alteration in the VA calculation due to newly added IC components, CC and innovation capital.

138 citations

Journal ArticleDOI
TL;DR: In this article, an empirical study was carried out on data collected from CMIE database Prowess and VAIC was calculated on a select sample of 105, pharmaceutical companies and 102, textile companies.
Abstract: Purpose – The purpose of the present study is to make a comparison of intellectual capital performance between Indian pharmaceutical and textile industry. Further, the study attempts to investigate association between intellectual capital efficiency with financial performance and market valuation.Design/methodology/approach – An empirical study was carried out on data collected from CMIE database Prowess. VAIC was calculated on a select sample of 105, pharmaceutical companies and 102, textile companies. Correlation and OLS regressions models are used on panel data for the analysis.Findings – Results indicated that profitability and intellectual capital are positively associated but no significant relationship is observed between intellectual capital with productivity and market valuation in both industries. In spite of the growing importance of intellectual capital, its reflection is not proportionally observed in the financial performance of the select sample of companies.Research limitations/implication...

120 citations

References
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Book
01 Apr 1997
TL;DR: In this paper, Sveiby assembles a veritable toolbox of knowledge-based management techniques to enable managers to meet the new business challenges of the coming century and offers practical advice and rules of thumb for designing a business strategy that focuses on knowledge as an intangible asset.
Abstract: From the Publisher: This groundbreaking book offers practical advice and rules of thumb for designing a business strategy that focuses on knowledge as an intangible asset. In eight chapters, Sveiby assembles a veritable toolbox of knowledge-based management techniques to enable managers to meet the new business challenges of the coming century. 28 charts; 16 tables.

3,401 citations

Book
06 Mar 1997
TL;DR: In this article, the authors define the concept of intellectual capital as a phrase covering corporate brainpower, information technology, and relationships with customers and suppliers, all of which influence a company's ability to make money.
Abstract: Intellectual capital is a phrase covering corporate brainpower, information technology, and relationships with customers and suppliers, all of which influence a company's ability to make money They are all factors which tend to get overlooked because they are intangible and do not show up on a balance sheet Yet without them, a good company can founder This guide shows how to measure, manage and grow these hidden values as if they were money and takes accounting to a new level It establishes the need for identifying hidden assets, develops principles for intellectual accounting, explains the metrics, applies the model with real examples and provides an action plan for managing development and growth of intellectual capital

3,159 citations

Book
01 Jan 1997
TL;DR: In this article, the authors argue that knowledge has become the most important fact of economic life and that knowledge is the chief ingredient of what is bought and sold, the raw material people work with.
Abstract: This work argues that knowledge has become the most important fact of economic life. It is the chief ingredient of what is bought and sold, the raw material people work with. In the new economy, intellectual capital - not natural resources, machinery or financial capital - has become the one indispensable asset of corporations. The volume shows how the emergence of the information age has changed the nature of wealth, and it offers new ways of looking at what companies do and how to lead them. In an economy based on knowledge, intellectual capital - the untapped, unmapped knowledge of organizations - has become a company's most useful tool. It is found in: the talent of the people who work there; the loyalty of the customers it serves and learns from; the value of its brands, copyrights, patents and other intellectual capital; and the collective knowledge embodied in its systems, management techniques and history - vital assets that are rarely managed and almost never managed skilfully. Readers should learn how to discover and map the human, structural and customer assets that are the knowledge based of a corporation; how General Electric, Hewlett-Packard, McKinsey, Merck & Co manage intellectual capital to improve performance; how intellectual capital can dramatically increase profitability; why the information economy demands new principles of managing people and working with customers; and how the knowledge economy affects readers personally, in their career, and how to capitalize on the opportunities it presents.

3,142 citations

Journal ArticleDOI
Nick Bontis1
TL;DR: A review of the literature pertaining to the assessment of knowledge assets can be found in this article, where a variety of models have surfaced in an attempt to measure IC and this paper aims to highlight their strengths, weaknesses and operationalizations.
Abstract: This paper reviews the literature pertaining to the assessment of knowledge assets. Since knowledge assets are at the crux of sustainable competitive advantage, the burgeoning field of intellectual capital is an exciting area for both researchers and practitioners. Unfortunately, the measurement of such intangible assets is difficult. A variety of models have surfaced in an attempt to measure IC and this paper aims to highlight their strengths, weaknesses and operationalizations.

1,594 citations

Journal ArticleDOI
TL;DR: In this paper, the authors provide an overview of the concept of Intellectual Capital and its relationship to other elements of a knowledge company, as well as its management activities used in each of the component areas.

1,075 citations