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Article
Publication date: 7 January 2014

Sriranga Vishnu and Vijay Kumar Gupta

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…

2925

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 proxies is difficult. The new models proposed in this paper can be a template for future research and model development.

Practical implications

VAIC™ model, the proposed models (e-VAIC™) and the result analysis can be useful for evaluation and value creation purposes.

Originality/value

Previous researchers use original VAIC™ model. This paper modifies and extends the model in accordance with contemporary description and typology of IC. Inclusion of RC as a variable in VAIC™ model and use of new proxies for components of IC are the novelties of this paper.

Details

Journal of Intellectual Capital, vol. 15 no. 1
Type: Research Article
ISSN: 1469-1930

Keywords

Article
Publication date: 9 January 2009

Kin Hang Chan

The purpose of this paper, which is written in two parts, is to investigate empirically if intellectual capital (IC) has an impact on the financial aspects of…

3975

Abstract

Purpose

The purpose of this paper, which is written in two parts, is to investigate empirically if intellectual capital (IC) has an impact on the financial aspects of organisational performance as well as attempting to identify the IC components that may be the drivers for the leading financial indicators of listed companies. The study sought evidence from the companies of the Hong Kong Stock Exchange.

Design/methodology/approach

Using data of all the constituent companies of the Hang Seng Index of the Hong Kong Stock Exchange from 2001 to 2005 and the VAIC™ methodology used in the measurement of IC by Pulic, regression models were constructed to examine the relationships between IC and the selected financial performance measures of these companies. Part 1 of the paper first explores a working definition of IC as well as appraising some of the methods in IC measurement. After advocating the use of VAIC™ and reviewing the relevant prior studies, research hypotheses are developed for this study. Part 1 of the paper concludes with a discussion of the research method and regression models used in investigating the hypotheses.

Findings

The results of the analysis is presented in Part 2 of the paper, which examines the association between IC, as measured by VAIC™, and the four measures of financial performance in the sample companies surveyed in Hong Kong. Part 1 of the paper develops the hypotheses for the study and establishes the research method used to investigate these hypotheses.

Originality/value

It is believed that this is the first study conducted in Hong Kong involving the use of VAIC™ for the measurement of IC. It not only contributes to the knowledge of IC research, but adds to the existing literature of the progress of IC development in relation to financial performance in companies internationally.

Details

The Learning Organization, vol. 16 no. 1
Type: Research Article
ISSN: 0969-6474

Keywords

Article
Publication date: 24 April 2007

Paula Kujansivu and Antti Lönnqvist

This paper seeks to provide an empirical view of the present state of intellectual capital (IC) in Finnish companies. It also examines the relationship between the…

3891

Abstract

Purpose

This paper seeks to provide an empirical view of the present state of intellectual capital (IC) in Finnish companies. It also examines the relationship between the concepts value of IC and efficiency of IC.

Design/methodology/approach

Calculated Intangible Value (CIV), which measures the monetary value of IC, and Value Added Intellectual Coefficient (VAICTM), which describes how a company's IC adds value to the company, were applied to approximately 20,000 companies per year during the period 2001‐2003 and studied using correlation analysis.

Findings

Value and efficiency of IC are described in 11 industries in both SMEs and large companies. The theoretically unclear relationship between the value and efficiency of IC remains vague even after the empirical analysis. Calculating the value of IC in relative terms by dividing the value of a company's IC by the value of its tangible assets was found to be illustrative in comparing different industries.

Research limitations/implications

The measures used are based on financial statement information and their validity is questionable. However, the large set of data examined has a positive effect on the reliability of the study.

Practical implications

The results in this paper highlight the absolute or relative value, and thus importance, of IC for a company, depending on the industry.

Originality/value

The industry level analysis of IC and the implementation of scarcely used CIV measure in a large set of companies enhance the existing knowledge of the measurement of IC. The analysis of the relationship between CIV and VAICTM measures has not previously been done.

Details

Journal of Intellectual Capital, vol. 8 no. 2
Type: Research Article
ISSN: 1469-1930

Keywords

Article
Publication date: 19 October 2010

Fethi Calisir, Cigdem Altin Gumussoy, A. Elvan Bayraktaroğlu and Ece Deniz

The purpose of this paper is to apply Value Added Intellectual Coefficient (VAIC™) of Pulic to compare quoted information technology and communication companies on the…

1533

Abstract

Purpose

The purpose of this paper is to apply Value Added Intellectual Coefficient (VAIC™) of Pulic to compare quoted information technology and communication companies on the Istanbul Stock Exchange (ISE), in terms of intellectual capital efficiency. This study also examines VAIC™, and its components' impact on company performance.

Design/methodology/approach

Multiple regression analysis was employed to identify the variables that significantly contribute to the company performance. Data required to calculate VAIC™ and its components were obtained from the 2005‐2007 annual reports and balance sheets of the companies.

Findings

As a whole, all the companies had a relatively higher human capital efficiency than structural and capital efficiencies. In 2007, Turkcell was the most efficient company based on VAIC™ assessment, while Link Bilgisayar and Plastikkart were the least efficient companies. Additionally, the results of the study revealed that factors such as human capital efficiency, firm leverage, and firm size, predicted profitability well. Among them, human capital efficiency had the highest impact. In addition, capital employed efficiency was found to be a significant predictor of both productivity and return on equity, and the only determinant of market valuation was the firm size.

Practical implications

This study allowed ITC companies to benchmark themselves according to the intellectual capital efficiencies and develop strategies to enhance their company's performance.

Originality/value

This study is the first that measures intellectual capital performance and its impact on the company performance of the quoted information technology and communication companies on the ISE.

Details

Journal of Intellectual Capital, vol. 11 no. 4
Type: Research Article
ISSN: 1469-1930

Keywords

Article
Publication date: 27 July 2010

Gregory Laing, Jillian Dunn and Susan Hughes‐Lucas

This paper aims to examine the extent to which intellectual capital (IC) adds value to a service provider and presents an approach for interpreting the results.

2181

Abstract

Purpose

This paper aims to examine the extent to which intellectual capital (IC) adds value to a service provider and presents an approach for interpreting the results.

Design/methodology/approach

The value added intellectual coefficient (VAIC™) model is used to determine the relevant elements of intellectual capital because it employs existing financial data. The number of subjects was restricted to two companies operating in the Australian hotel industry over a four‐year period (2004‐2007).

Findings

The VAIC™ model provides a robust tool for assessing the efficient use of intellectual capital. The model can be used by management to assess their own organisation's performance without having to rely upon industry standards.

Research limitations/implications

The data derived from published financial statements and the limitations associated with accounting standards may be questionable. However, the financial statements were subject to external audit verification. The restricted number of companies is a limitation to generalisability. However, the two companies are the major players in the Australian hotel industry.

Practical implications

The application of the VAIC™ model presented in this paper provides a basis for practical application for management.

Originality/value

The study provides management with a guide to employing the VAIC™ model and, more importantly, a method for interpreting the results.

Details

Journal of Intellectual Capital, vol. 11 no. 3
Type: Research Article
ISSN: 1469-1930

Keywords

Article
Publication date: 9 January 2009

Kin Hang Chan

The purpose of this paper, which is written in two parts, is to investigate empirically if intellectual capital (IC) has an impact on the financial aspects of…

2252

Abstract

Purpose

The purpose of this paper, which is written in two parts, is to investigate empirically if intellectual capital (IC) has an impact on the financial aspects of organisational performance as well as attempting to identify the IC components that may be the drivers for the leading financial indicators of listed companies. The study sought evidence from the companies of the Hong Kong Stock Exchange.

Design/methodology/approach

Using data of all the constituent companies of the Hang Seng Index of the Hong Kong Stock Exchange from 2001 to 2005 and the VAIC™ methodology used in the measurement of IC by Pulic, regression models were constructed to examine the relationships between IC and the selected financial performance measures of these companies. The research hypotheses and research method are detailed in Part 1 of the paper. In this paper – Part 2, the results and findings of the investigation are analysed and discussed.

Findings

The results of the analysis revealed no conclusive evidence to support a definitive association between IC, as measured by VAIC™, and the four measures of financial performance in the sample companies surveyed in Hong Kong. At best, only a moderate association was recorded between IC and the profitability measures. The study further revealed that physical capital is highly regarded by the companies surveyed for enhancing market valuation, productivity and profitability.

Research limitations/implications

Evidence from Hong Kong shows that there is an overall lack of association between IC and financial performance, which contradicts some prior studies conducted overseas. This may suggest that Hong Kong may be lagging behind, for example, some Asian competitors such as Taiwan and Singapore in IC development. In addition, the empirical results suggest that physical capital continues to play a prominent role in the territory, which may be an indication of Hong Kong's ongoing reliance on “tangibles” as the strategic asset to generate corporate performance. These findings may, however, illustrate that the association between IC and financial indicators such as market valuation may not be a universal and uniform one. Rather, the association may vary from market to market, probably depending on the level of IC awareness in the investors.

Originality/value

It is believed that this is the first study conducted in Hong Kong involving the use of VAIC™ for the measurement of IC. It not only contributes to the knowledge of IC research, but adds to the existing literature of the progress of IC development in relation to financial performance in companies internationally.

Details

The Learning Organization, vol. 16 no. 1
Type: Research Article
ISSN: 0969-6474

Keywords

Article
Publication date: 12 April 2013

Qian Long Kweh, Yee Chuann Chan and Irene Wei Kiong Ting

The purpose of this paper is to investigate the efficiency of Malaysian public‐listed software companies in transforming intellectual capital (IC) into corporate values by…

1517

Abstract

Purpose

The purpose of this paper is to investigate the efficiency of Malaysian public‐listed software companies in transforming intellectual capital (IC) into corporate values by using the data envelopment analysis (DEA) methodology.

Design/methodology/approach

The authors use three individual components of value added intellectual coefficient (VAIC™) as the input variables, and Tobin's Q and return on equity (ROE) as the output variables.

Findings

Examining a sample of 25 companies, findings of this study show that companies listed on the main market of Bursa Malaysia are less efficient than those listed on the ACE market. Among the sample companies, Eduspec Holdings Berhad, which falls in the “stars” zone, is the most efficient company with the highest frequency of reference. The results remain robust despite the criticism about the validity of VAIC™ as an IC indicator.

Practical implications

The benchmarking analysis of this study may shed light for the managers in software companies to benchmark and improve their efficiency in IC management.

Originality/value

This is the first paper to examine the IC efficiency of Malaysian software companies through DEA.

Details

Journal of Intellectual Capital, vol. 14 no. 2
Type: Research Article
ISSN: 1469-1930

Keywords

Open Access
Article
Publication date: 11 March 2022

Md. Anhar Sharif Mollah and Md. Abdur Rouf

Intellectual capital (IC) and financial performance is now a very contemporary issue in the banking sector. The purpose of this study is to investigate empirically the…

Abstract

Purpose

Intellectual capital (IC) and financial performance is now a very contemporary issue in the banking sector. The purpose of this study is to investigate empirically the impact of IC on financial performance of all the listed commercial banks of Bangladesh.

Design/methodology/approach

Bangladesh Bank database and financial statement of the listed commercial banks of Bangladesh for the period of 2014–2018 have been used to collect data. Value added intellectual coefficient (VAICTM) methods have been used for measuring the performance of banks. VAICTM determined IC and its three major components like structural, human and capital employed.

Findings

The results suggest that human capital efficiency (HCE) and capital employed efficiency (CEE) have statistically significant relationships with bank performance, but when VAICTM is divided then structural capital efficiency (SCE) does not have a significant relationship with bank performance.

Research limitations/implications

The study uses only listed banks, but it does not include all the commercial banks specially nationalized commercial banks.

Practical implications

The findings allowed banks to focus more on human capital (HC) and structural capital, because in the present world, HC is considered one of the key factors for the success in business. This study also provides an awareness on how good IC of the banking companies will bring more assistance to a better life of a society.

Originality/value

This is one of the very few studies which examine the impact of IC on bank financial performance in Bangladesh.

Details

Journal of Money and Business, vol. 2 no. 1
Type: Research Article
ISSN: 2634-2596

Keywords

Article
Publication date: 9 September 2021

Irene Wei Kiong Ting, Wen-Min Lu, Qian Long Kweh and Chunya Ren

This study examines the effect of value-added (VA) intellectual capital on business performance from the perspective of productive efficiency, which is derived from its…

Abstract

Purpose

This study examines the effect of value-added (VA) intellectual capital on business performance from the perspective of productive efficiency, which is derived from its main contributors, namely, profitability and marketability efficiencies in two stages.

Design/methodology/approach

First, this study applies a dynamic network slacks-based measure in a data envelopment analysis (DEA) approach to estimate productive efficiency and its components of 766 Taiwan listed electronics companies over the period of 2010–2018. Second, this study performs regression analyses of the association between intellectual capital (IC), which is proxied by VA intellectual coefficient (VAICTM) and estimated DEA efficiency scores through various regression techniques.

Findings

Empirical evidence shows a significantly positive association between VAICTM and productive efficiency. This study finds the same result from the IC components after splitting VAICTM into (1) IC efficiency, which comprises human capital efficiency (HCE) and structural capital efficiency and (2) capital employed efficiency. Further examination reveals that HCE is the sole main contributor of the productive efficiency, and profitability and marketability efficiencies of a company.

Practical implications

The findings of this study highlight the need to discuss the values of intellectual coefficient (IC) from the perspective of productive efficiency for better comprehensiveness.

Originality/value

Although previous studies have shown that IC is a contributor of business performance, this study further zooms in VAIC and examines its effect on the efficiency of a company in transforming its inputs into outputs.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 15 May 2017

Nicholas Asare, Abdul Latif Alhassan, Michael Effah Asamoah and Matthew Ntow-Gyamfi

The purpose of this paper is to examine the relationship between intellectual capital (IC) and profitability of insurance companies in Ghana.

2017

Abstract

Purpose

The purpose of this paper is to examine the relationship between intellectual capital (IC) and profitability of insurance companies in Ghana.

Design/methodology/approach

Data on 36 life and non-life insurance companies from 2007 to 2011 are employed to estimate the value added intellectual coefficient of Pulic (2004, 2008). Using return on assets and underwriting profit as indicators of profitability, the ordinary least squares panel corrected standard errors of Beck and Katz (2005) is used in estimating the relationship in the presence of serial correlation and heteroskedasticity. Leverage, underwriting risk and insurers’ size are used as control variables.

Findings

Non-life insurers have high IC performance comparative to life insurers. This study finds a significant positive relationship between IC and profitability of insurers in Ghana while human capital efficiency is the main driver of insurers’ IC performance.

Practical implications

The study discusses relevance of IC for management of insurance companies in Ghana and other emerging insurance markets in Africa.

Originality/value

This appears to be the first study to examine the impact of IC on profitability of a developing insurance market in Africa.

Details

Journal of Economic and Administrative Sciences, vol. 33 no. 1
Type: Research Article
ISSN: 1026-4116

Keywords

1 – 10 of 170