Performance of intellectual capital in Indian healthcare sector

TLDR: In this paper, an extended and modified version of the Value Added Intellectual Coefficient (VAIC) model has been presented, where relational capital has been added as a new variable.

Abstract: Measurement of intellectual capital efficiency and its impact on the financial performance of companies is a commonly researched domain. A significant section of researchers have used the Value Added Intellectual Coefficient (VAIC™) model – an accounting data-based measurement model, for this purpose. However, the contemporary literature criticises this model for non-inclusion of relational capital and perfect interdependency between intellectual capital components. This study addresses these shortcomings by presenting an extended and modified version of the VAIC™ model. Relational capital has been added as a new variable. This new model has been tested on the healthcare firms of India. A comparative analysis of the two models has also been done. Regression results do not encourage the inclusion of relational capital in VAIC™. During comparative study, the coefficient of determination values suggest that the proposed model may be preferred over VAIC™ for all the three performance variables – return on assets, return on equity and return on sales. These findings have academic as well as practical implications.